Q1 2021 Construction Partners Inc Earnings Call
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Greetings and welcome to the construction Partners, Inc. First quarter 'twenty 'twenty one earnings call.
At this time all participants are in a listen only mode.
The question and answer such a whole part of the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder of this conference is being recorded.
It is now my pleasure to introduce your host Rick Black Investor Relations for construction partners. 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 fiscal year 2021 results. 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 construction partners.
Net.
Information recorded on this call speaks only as of today February Shaw from 'twenty 'twenty. One. So please be advised that any time sensitive information may no longer be accurate as of the date of any replay.
I would also like to remind you that the statements made on today's discussion that are non historical facts, including statements or expectations of future or future events or future financial performance are all considered forward looking statements made pursuant to the safe Harbor provision of the private Securities Litigation Reform Act of 1985.
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 the earnings press release that was issued today for our disclosure on forward looking statements. These factors and 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 EBITDA.
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 the call over to construction partners CEO Charles Owens Charles.
Thank you Rick and good morning, everyone.
With me on the call per day, our Jule Smith, our Chief operating Officer, Alan Palmer, Our Chief Financial Officer, and Ned Fleming, our executive Chairman.
We are pleased without perform worse than the first quarter of physical 2021.
We had solid demand in both our private and public project work during the quarter. In addition.
Our disciplined approach in building project management effective you know the day sale of equipment.
And crews and vertical integration synergies drove the strong financial of bone.
We say story and the funding programs across the states in which we operate where the demand for road repair and maintenance is ongoing.
We also expanded our geographic footprint in the first quarter with four bolt on acquisitions in North Carolina.
We now operate 40, a hot mix asphalt plants, which represents the state markets across the five southeastern states that we serve.
From a federal infrastructure funding perspective.
We remain optimistic about the prospect of a long term funding mechanism and lot of bipartisan support or infrastructure legislation.
We are confident that our nation's infrastructure will continue to be a primary of focus for our country as an economic driver.
On a critical component of.
Public safety.
Based on our current backlog of near term visibility of the business.
We are maintaining our previously announced outlook for the year, which indicates strong growth for <unk>.
Yeah.
Before turning the call over to Joe I'd like to thank our leadership team and more than 2500 employees for their commitment dedication and hard work that enables us to successfully execute our strategy.
I'll now turn the call wrote with the true economy on operations and acquisitions Joe.
Thank you Charles good morning, everyone.
Operationally our business is performing very well our organization continues to demonstrate excellent so across our markets in the states.
This performance is due to the hard work and dedication of our employees and their continued attention to safety protocols as we manage through the Covid pandemic.
One of the thank each of them for their dedication to keeping their teammates safe and our company put out too.
Now, let's take a look at demand and funding for our services.
Overall in the states, where we currently operate demand remained strong for the road repair and maintenance projects. The comprised of the public side of our business.
The state budgets and gas tax collections of strengthening.
We currently expect potential upside in infrastructure spending in Florida, Alabama, and North Carolina, with Georgia, staying relatively flat.
As we mentioned last quarter, the North Carolina D O T has.
The return to normal funding program.
Commercial work throughout our states remained steady and we do not currently see downward pressure or pull back on project bidding in the private market.
While the bidding environment across our states remains very competitive I believe we are well positioned to execute our strategy throughout our geographic footprint.
Turning now to acquisitions.
We have fully integrated all four of the companies we acquired during the first quarter.
I'm very pleased with these new additions on the smooth transition of these businesses into our company.
Moving forward in addition to having access to new markets, we expect the benefit from geographic and cultural synergies provided by these acquisitions.
As a consolidator in our space, we continue to see many opportunities to have conversations throughout our existing states and some adjacent states with potential acquisition candidates.
Our leadership team is actively working to identify and engage with companies that may will fit into our future growth plans.
I'd like now to turn the call over to Alan to discuss our financial results.
Thank you Julie and good morning, everyone.
By highlighting our key performance metrics from the first quarter of fiscal 2021.
Compared to the first quarter of fiscal 2020 revenue was $199 million of eight 9% on acquisitions that were completed during the quarter contributed $7 $1 million of revenue.
Gross profit was $36 million of 28, 8%.
Net income was seven $9 million up 44, 1% and.
And adjusted EBITDA was 23 point.
$1 million up 34 four per cent.
And finally, our adjusted EBITDA margin was 12, 1% of 230 basis points.
While continuing to operate using safety protocols implemented to address of the pandemic our managers crews and corporate support are doing a great job of managing the business. We have continued to grow the company and maintained solid margins from.
On the profitability perspective during the quarter, we had excellent execution on our construction projects and also benefited from efficient utilization of crews and equipment as well as high utilization of our hot mix asphalt plants in the liquid asphalt terminal.
We continued to have favorable pricing on the liquid asphalt and diesel fuel during most of the quarter. We're beginning to see the expected price increases on both of these products.
Economy begins to recover.
Turning now to the balance sheet at December 31, 2020, we had $51 $7 million of cash and $38 $3 million of availability under our revolving credit facility. After the reduction per outstanding letters of credit.
At the end of the quarter, our debt to trailing 12 months EBITDA ratio was <unk> nine eight.
This liquidity provides financial flexibility in today's uncertain economic environment and provides capital for potential future acquisitions, allowing us to respond quickly to growth opportunities when they arise cash.
Cash provided by operating activities was 709000 dollar from the three months ended December 31, 2020, compared to $1 7 million dollar from the same period last year.
Capital expenditures for the first quarter of 2021 were $10 $5 million, we still anticipate total capital expenditures for the year of $47 million to $50 million.
<unk> backlog at December 31, 2020 was 655 $6 million compared to $691 million at December 31, 2019.
Approximately 79% of the backlog will be completed in fiscal year 2021.
Turning now to the outlook for fiscal year 2021, we're maintaining the ranges we provided last quarter revenue of $950 billion to $1 billion net income of 42 to $46 $5 million and adjusted EBITDA of 109 on to $119 million.
In summary, we are pleased with our first quarter results I will now turn the call over try executive chairman of <unk> net.
Thank you Alan before we open the call to your questions. It is important to recognize the outstanding performance by all of our leaders managers and employees at CPI. The continue to produce great financial result.
The team does an excellent job of managing the business for growth and profitability, while simultaneously building record backlog.
<unk> operates at a highly effective level, while also expanding its geographic footprint into new markets. Many of the macroeconomic dynamics and positive internal factors that we experienced in the fourth quarter have persisted into this year. In addition, we significantly expanded the number of markets in which we operate through the.
<unk> of 13 hot mix asphalt plants in the past four months.
The recent acquisitions demonstrate CPR of strategic focus is the premier consolidator in a very fragmented industry.
The company is well positioned both organizationally and financially for continued growth.
We remain confident in further expansion opportunities in our south Eastern states with a vision to grow beyond our current footprint under the leadership and direction of our experienced management team and with our strong.
Growth outlook for the year, we are extremely bullish on the future of the company.
With that we'll now take questions operator.
Thank you ladies and gentlemen at this time, we will be conducting a question and answer session.
You'd like to ask a question you May press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press star two if he would like to remove your question from your current from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Please ask one question and one follow up question and then re queue for additional questions.
Our first question comes from the line of Andrew Wittmann with Robert W. Baird. Please proceed with your question.
Oh, great good morning, guys.
Hi, I started it started out with a question on the profit margins in the quarter. It looks like an area of at least two of our model that came in above expectations and so Alan I was wondering what some of the factors that drove the significant gross margin improvement were year over year on a little bit more detail.
The last quarter, you talked about the fact that you did less subcontracting work was the.
The reason for the surprise last quarter.
But were there any other things like significant positive project completions.
As your prior of percentage of completion estimates in the quarter.
Can you maybe talk about oil prices impact on the quarter, then given that theyre starting to rise how much of the headwind that could.
Present for the balance of the fiscal year I think some of those issues that would be helpful for us to understand.
Yes, Andy.
As far as the job performance it really was consistent with.
The percentage is last year and what we've seen in the are sucked it in our third and fourth quarter of 2020, but.
But we did continue to benefit from the favorable pricing in the petroleum products, the the liquid asphalt and diesel fuel.
And as we said on our last call. We see that those are beginning to rise and that happened more of the very end of the first quarter and going into the second quarter. So we continued to benefit just like we did in the third and fourth quarter of last year from from that.
We also.
In this quarter, we had a compared to last year, we had a significant increase in the amount of.
Asphalt work that we did our mix of working deluge of asphalt paving and this year, we were able to run.
Run more tons through our plants and sell more tons of therefore be asphalt and aggregate to third parties than we did the same time last year. So both of those in the the utilization of equipment.
But as far as going into the future quarters. There there definitely is the petroleum product prices are increasing.
On the turn more from a hidden tailwind into a headwind and that's really.
What we expected to begin happening in the latter part of that first quarter and into the second and third.
Possibly even into the fourth quarter of this year.
Got it that's helpful. I guess as it relates then to build off of that as it relates to the guidance that you maintained here this quarter.
I was just wondering if you could just kind of take us through the thought process. There I think since you last spoke to US it was only the on the acquisitions and the outer banks that have been added but I would think that those might be at least a little bit of additive can you talk about the decision not to raise the EBITDA with what youre seeing here today on rather.
To maintain where it is.
Well when we talk the last two player.
The acquisition and the outer banks was built into our guidance for the year, because we actually closed that just a couple of days. After we had the call. So when we put together our budget. We knew that was eminent but obviously, we couldn't talk about it until it was public information so our guidance at all for acquisitions built into the.
And so the.
Theres really no change to the guidance because of the new acquisition because it was already built in and typically we don't update our guidance till after the second quarter until the unless theres something the extremely significant that's happened in.
As we've talked about many times before there can be a pretty good fluctuation between our first and second quarter. So until we get through that sector quarter, whether we're down in the first quarter compared to the prior year or up from the first quarter compared to the prior year, we typically don't update or our guidance.
For anything related to how that quarter.
We pretty much look at the.
The first six months from the last six months of.
You know.
This point, we see the year playing out very similar to what we had expected.
And Andy This is net I mean, we think that from a guidance standpoint, we have a very strong growth in our guidance. We're operating at a very high level, we've got positive macro.
With strong demand in the state funding and a robust private sector kind of as a tailwind. So we feel like our guidance is we're excited about performing.
Great. Thanks, guys. Good luck.
Thank you. Our next question comes from the line of Stanley Elliott with Stifel. Please proceed with the question.
Hey, good morning, everyone and thank you guys for taking the question.
On the early in the call you mentioned moving into adjacent markets help I mean is that something that conceivably could happen. This year or is it more of that you are laying the groundwork for something to happen in <unk> and 'twenty two I'm, just curious to how youre thinking about expansion at this point.
Hi, This is Charles.
Yes.
Obviously, a growth company and we're staying focused on growing the company and we've got a lot of conversations going on with the different people in different areas and.
You know at this point in time, all we can say is at what point of known to continue our strategy.
But like we always have and when these opportunities come up we won't close them.
And coming up with the timing of it on the the thought process is.
We've just taken it.
One company and at the time of.
Seller has a lot to do with though or the nurse and the timing on closing yet.
So we're pursuing the edge and we're ready to make any kind of addition to the company at any time.
But we see a lot of opportunities out there right now.
Perfect and then in the second one you mentioned kind of the state cadence on the public funding being pretty good.
With it we had heard that some states might be a little bit cautious early in the year kind of.
Given the the but even though the budgets sort of looking healthy just because of the pandemic, but the chance that they would start to accelerate payments as the construction season starts to kind of take hold is that something you. All are seeing are contemplating within your outlook as we sit here today.
We've got all of this kind of baked into our guidance, but we got so looking at the states that we operate in.
Just take Alabama for example is going to be up quite a bit in highway bidding, Georgia is going to be basically in Florida.
So on the downturn, but basically you can leave the downtime and as these mega jobs debt.
They're not going to have but they are committed to do a lot of resurfacing in 'twenty 'twenty, one 'twenty of 25 about five point that the.
With the work so.
North Carolina, but giving the example.
D O T, let probably less than about 150 million of this year to date on technique.
All of them track the letter by 100 debt.
About one 6 billion.
And so that's going to be a substantial turnaround. So when you look at the states we operate in where.
We're aware of and we're seeing traffic and we're seeing that.
Tax receipts come in that are.
Net near levels, where the more before the pandemic so.
And just on top of that with the Covid.
COVID-19 leads with Lake deal you know Theres another $1 2 billion debt went out to where we operate to the.
D O Ts and you know when we don't think of all of that obviously will turn into a mirror.
<unk> debt the table, because we think the D O T a safe, but what they have and but we do expect over the next.
Assembled.
The time period of the years.
To see additional funding there.
The good thing about North Carolina.
The bullish obviously from made a lot of acquisitions there.
Their cash balance and the D O T. A minimum is about 300 million and they're sitting net about.
About $1 1 billion right now so we see a lot of good things just going to come out of the.
Not only care Atlanta, but.
All of the states will be operating and so we're very bullish on Oh.
Got it for this year.
Great guys. Thank you very much I appreciate it.
Our next question comes from the line of Josh Wilson with Raymond James. Please proceed with your question.
Yes. Good morning, Thanks for taking my question and congrats on the quarter.
Thank you Josh.
Wanted to clarify something I think last quarter. You said you are the year on year increase in sales for the full year on your guidance was about half from acquisitions and half from organic growth is that still the case or has the balance of acquired and organic shifted now that you're at one quarter end.
No it hasn't.
It all in one of the things that I think was a little confusing and of course, obviously there was only so much information we can put out.
Hey, everyone an indication of what the acquisition revenue would be by the statement you just repeated but I think people probably kind of in putting out their guidance assumed that the cadence would be similar to ours, where there's about 20% the first and second quarter. Each in 30 of the law.
Last but these acquisitions two of them weren't made one of them. We operated at one week and then we were shut down for Christmas of the another one was the first of December so they really only contributed about $7 1 million for the first quarter revenue, but.
90% or more of what they will contribute will be in the second third and fourth quarter, but the the split has not changed at all.
Got it and then your.
Days receivable improved a fair amount of year on year.
Where are we at as far as the cash flows coming out of the Dot's in cash.
We assume the sort of days continue going forward.
Yes.
Pretty much stabilized with that I've mentioned before or something that can throw that off a little bit is how much we do in the last month of the quarter and of.
That can can have on the impact.
Because basically all of those the all of that revenue was in receivables plus a little bit carried over but the way we calculated our days receivables were actually down probably about a half to one day.
When you calculate it based on the actual month that closed out so.
We have.
We've seen throughout the pandemic.
The states in the counties have really worked hard to make sure they don't get behind in their payments. So we're very pleased with that.
Okay, I'll turn it over the others. Good luck with the next quarter.
Thank you.
Our next question comes from the line of Michael sitting here with Bank of America. Please proceed with your question.
Yes, hi, everyone. Thanks for.
Squeezing me in and taking my questions on that.
At the end of the year ended December we saw that COVID-19 relief package. It included 10 billion I think of eight keys I think even just mentioned I think is it is the number of $1 2 billion that is going to the dot's in your five states and maybe you can just.
Talk about that if I understand that that that billion might not go specifically to two road maintenance of road paving but actually help with the bidding environment. If there is some more bids out there but.
But people you compete with maybe going for certain projects. So the open up better opportunities elsewhere, just trying to think about how this reset stimulus on went directly to the dot's at the end of the year is that of 2021 impact of the take a long time for that might filter through how both the understand how much of the benefit that can be.
Alright the.
As you know the states the say the $10 billion Mark in emergency aid and.
The from the COVID-19 relief and you know what.
Do you anticipate the D O teams getting their house in the order, where they may have had a little bit of shortfall, but we do anticipate.
This $1 2 billion debt going into the four states that we all of that that were hot mix asphalt plants and right now we do think that we're going to see that start trickling in.
Latter part of in the 2021 year later part of the 2021.
Our fiscal year. So you know, we think that that's going on where you're going to stay a little bit there, but you know.
What we're looking at.
More than anything is kind of on whats happening in each one of the stage without this really that we're seeing you know of.
North Carolina coming back with the huge program and we see Florida. The in Oh, you take out the Mega jobs in which the Georgia being flat in Alabama, having a real good.
The funding so we anticipate the the pending the big good the relief package.
The world kind of being policies about how we'd look at that we felt like some of that could be like you say in the latter part of 2021 of them but.
The bigger.
The optimistic that we're going to see some of this get into the into the bidding.
Of the Lettings and we've got lots of lot of this will obviously be the type work that we concentrate on is the repairs and maintenance and because it can.
Really important.
The roadways immediately.
So that's kind of why I thought process is and it seems like every time, we explored things we've got the the cities and the counties and the D O D and <unk>.
And different agencies. The chamber of Commerce is all of trying to figure out all of the increase the spending on infrastructure and it is really kind of liked about how important this infrastructure of expanding is the news they import it.
And everyone recognizes all of the Domino effect when they do let highways.
Many people are touch from the informant standpoint, so we're very bullish on the day.
Funding core of our 2021, yeah for sure.
Okay.
That's helpful. That's great and I think going back to one of the earlier questions.
The concern for the stock and for the company is that the margin has been incredibly strong.
Of this impact was seen with ease of fuel petroleum and liquid asphalt prices and now all of a sudden the the strong margin expansion that you guys have been reporting is going to swing the other way because of the rise of of crude and diesel can you help us understand Alan.
Some of the benefit Youre seeing on the margins maybe quantify how much is it coming from.
Better utilization better mix.
Those feel like that's more structural going forward, while raw materials are going to swing from from quarter to quarter. So if there's any way you could help maybe quantify how much the benefit over the last few quarters from margins has been from from diesel. So we can see how much of it is from the the lower material prices.
<unk> versus <unk>.
Actually getting better utilization of your equipment and better mix. Thank you.
Okay.
Yes.
Said before.
I've tried to quantify a little bit in general terms, because we can't calculate a specific amount but.
But I think the example of lot of used in the past is that if if prices are moving down on those products. The and generally we're going to have a tailwind as how I referred to it and that might be of million million of half dollars, let's say in the course of the year and then when you.
You have the headwind when theyre going up during the period that theyre going up because you don't have every contract hedged and with the.
Price increases that are built into it than you might have a million of a million and a half dollars of of headwind. So as we look at it it's not.
Very significant except during that period, where you switch from if you switch from a tailwind to the headwind.
So part of what drove our margins and I alluded to this earlier in this quarter is anytime we run a lot more tons of asphalt because we have a very diverse.
The mix of jobs, then we're going to be running more tonnes through the asphalt plants, which have a fairly high fixed cost so.
This quarter compared to the same quarter last year, we ran even though on a revenue was up 9%, which is nothing to be ashamed of our tons were up.
Almost 25% so one of our highest fixed cost areas are the asphalt plants. So we're gonna picked up extra margin there and we've talked about that and when we talk about the 40% in the first six months on the 60% of in the last six months. The other thing is that also drives a lot of our very expensive equipment.
That's doing the asphalt paving which the.
The highest volume of resurfacing in asphalt paving that we normally do is in the last six months of the year, but this year because of the weather conditions and other things we were able to do a lot more so the jobs themselves don't vary in percentage of profit, but the <unk>.
The other kind of fixed cost areas of locked our shop and our asphalt plants. They produce additional margin in that it can turn into like we saw this quarter.
One on 1.5% of additional margin.
Over the course of the year, that's going to come back in line.
And that's why we give annual guidance and we don't focus on quarter to quarter, because we've had the year or two ago, where we had a very slow first quarter and there was a lot of concern debt well youre not going to meet your guidance and we had a very robust second quarter and we.
Caught up in that one quarter of the same thing can happen going both ways. That's why again, we look at our business in six month, Inc. For much of.
We still see very strong we still see our outlook for the year of happening.
Getting to that guidance.
If some of the additional jobs that we're talking about here with the.
Covid relief money come into our bidding in the third quarter and fourth quarter, then obviously that could impact our full year guidance at that point, but we're just not going on we're not going to adjust our guidance for the things that we hope might happen we base. It on what we see and what we've got on backlog and on.
Our backlog gives us a lot better feel for the rest of the year than we had.
12 months ago, where our backlog was still down so.
But we're not going to just.
Typically in that for after that first quarter, because there are too many things that can happen in the second quarter that we won't know until it's finished.
That that makes that makes sense and I guess just lastly.
With what you have seen maybe in January is.
Is are you seeing on more competitive bidding environment isn't it more more stable I know, it's just it's still early days this year.
I'm just curious of your seeing anything unusual that's kind of played out I guess early in your in your second quarter.
Hi, This is Charles do you want to take that question on.
I know you've done a lot of the.
Got it.
All of our operations and just kind of.
Net kind of handle that please.
Sure. Thanks, Josh Yes the.
The bidding environment that we are experiencing and seeing in all of our states continues to remain very competitive as it always is and that's not changed.
North Carolina, obviously with them resuming lettings.
It starts out.
Very competitive and we hope that will normalize through the winter and spring.
As it normally does.
But we had a very successful fall building backlog.
And not only performing as Alan said running a lot of tons.
But building backlog and so we've got a lot of a lot of people doing a great job on these four states not only doing work of getting work from the future.
Okay.
Thank you.
Yeah.
Our next question comes from the line of Adam The Al Hemmer with Thompson Davis. Please proceed with your question.
Oh, Hey, good morning, guys, Hey, Jos.
I actually wanted to continue on with that competitive environment discussion I'm just curious if it's.
It's impacted the margins in your backlog at all.
Okay.
Adam Yes, I mean, we continue to.
<unk>.
Build backlog on when it's competitive.
Our backlog margin can shrink of few basis points, and but typically, especially with North Carolina being a big part of what we do right now.
That's affecting it but we see it normalizing we see the markets we acquired in North Carolina.
The very good markets and so as it normalizes we.
Just as we typically do we think that we will see those margins continue to grow but it is it continues to be a very competitive bidding environment in all of the states.
The Florida, Alabama, and Georgia, when does that normally change by the way like what the state like North Carolina.
Yeah.
Well I think they went from very few bids to.
More of bids I mean does it kind of after 12 months of things normalizing the margins might get better.
Well, Adam I think whenever you have a very unique situation where state stops bidding work for over 12 months.
Asphalt and contractors get low low worth and they need to cover the fixed cost of their plants does that as Alan alluded to when they start back letting work people are going to be aggressive and getting work on their books.
With the North Carolina program, they've come out with a very strong program and we see that.
And on.
I think it won't take 12 months to normalize I think people once they get some work on the books to cover fixed cost prices will get back to normal fairly quickly.
Okay.
And just lastly are you seeing any change in seller expectations.
Based on the.
I don't know I mean potential for big Federal.
Infrastructure, Bill and I mean are sellers asking for higher price.
I mean this Alan I mean, all we can talk about is historically.
With regard of that and we've had periods, where they were downturns and even during the Covid. I mean, we were negotiating these four companies that we bought during Covid and if there was any kind of uncertainty or whatever like we've never seen it was probably due on that and it really did not impact of the prices that they were expect.
Ignore the way that we price companies to Bob on.
Historically when.
Sellers are looking at selling and they're talking about the the bright future and what could happen.
We tell them is we're if you want to achieve that bright future you keep running the company and you can make that money, but if we've got to go out and make it we're not going to pay you for it and I mean, that's just brutally how we.
Frame that so we generally don't see.
Major changes.
And prices that we pay that doesn't mean expectations of sellers don't change.
We're very disciplined in how we value companies and.
Being many of these companies don't have a lot of other choices and even if they did they want to sell to someone that's going to treat their employees right that are going to continue the kind of the culture of those companies and they fit in well with us. So we don't see a lot moving either because of taxes might go up or down.
Or the economy is looking good or it is not looking as good it really is more of.
Function of the fair market value of their property plant and equipment and what kind of.
Market that they're in debt, we can go in and achieve some synergies and what we can do run into the business.
Great answer Okay. Thanks, Alan talk to you later.
Hi, Adam This is Charles let me just add on the pad.
Of this.
The durable is talking about keep in mind that we have 48 distinct market areas in all of those market areas.
Our deferred in the half Victor.
Net returns in a lot of those markets and they have different.
Type work other than maintenance in the market. So when you look at or talk about the competitiveness is hard to say.
You know it's.
Where we're looking at just one company because we've got 48 depth of market areas in every one of our of competitive.
And the.
But it's not a lot weird the pending obviously as you can see we don't depend on just one state or one market.
The way we're situated in the way our strategic plan is laid out.
Is is we got we got 48 markets. The go Gurt and Bill work with so I just wanted to make the you kept that in mind the.
Kind of the way our strategy and the marketing is debt.
We have set up in this company.
Sure.
Our next question comes from the line of Brent Thielman with D.
Davidson. Please proceed with your question.
Hey, Thank you good morning.
Good morning, Ryan.
Hey, Alan the.
The step up in SG&A should we see that fade from that.
As soon as the one timers from the acquisition activity in the quarter.
There is.
In the quarter. There is really about just under 400000 related to acquisitions, but but for the most part of that should be pretty close to the cadence for the rest of this year.
We don't have another quarter.
We've been adding some personnel because of the significant growth that we see in the.
<unk>.
Organic side and some opportunities that we see as far as strengthening our.
Teams and everything so some of that is related to that and then of course the the acquisitions.
During this quarter were only partial in there for the quarter. So there'll be four quarters going forward just like the revenue was only about 10%.
Of what they would get for the year. The same thing was with their overheads, so but that that amount should be fairly consistent throughout this year for the next three quarters or so.
And Alan but you're talking of absolute dollars or as a percentage of the yes, I'm talking about dollars not percentages the percentages will obviously change in the the.
The months in.
In the quarters that we've got 50% more revenue than we do this quarter I'm talking about the dollars.
Okay.
Okay, and then a lot of.
A lot of questions around.
The pipeline of M&A can you can you guys update us just on plans on the Greenfield side.
What you're thinking about over the next 12 months to 24 months.
The asphalt plants things like that I think it'd be interesting to hear.
Hi, This is Charles from months from our growth strategy, obviously, we're vertically integrated they would be looking at all of the.
The materials that come in to make in the hot mix asphalt in the building construction jobs and so you know.
We got a lot of opportunities there.
Looked at from.
Bolt on operation to a.
Building on to our our integration of our operation and so we just have a lot of targets out there that we've been talking to it.
We feel good about on one situation.
And we will like I said at the time of.
Those of Gotta be the right.
And the seller.
So we are excited about what we see and the opportunity brought more.
And we are.
To further say something of that with regard to that I mean, we're constantly looking at other greenfield sites both for.
Our vertical integration strategy as far as getting more in the aggregates are getting more into liquid asphalt and when that makes sense.
We will execute on that and then just additional asphalt plants a lot of that has to do with the timing of of markets that were wanting to go into when they're kind of growing are there new markets that things are happening. So it's not unusual for us to have greenfield sites that we own.
On that at some point, we will put on asphalt plant and it might be one that we acquire in an acquisition where.
Because of the proximity to one of our plants. It frees up another one so those are things that we're constantly trying to do.
But the timing there is somewhat when it makes sense to go in there because of the amount of work that's going to be available or plant becomes available that we've got within our one of the acquisitions that we make.
Yeah.
Got it okay, well thanks for all of the color of best of luck.
Thank you.
Our next.
Income from the line of Andrew Whitman with Robert W. Baird. Please proceed with your question.
Oh, great. Thanks, guys for letting me in with a couple of follow ups. The first one is just more of a technical question, but.
But it has to do with the acquisitions I think in the in the script Alan you said.
The revenue from companies acquired in the quarter was like southern and <unk>.
Something million dollars.
There was another acquisition that was.
Now some of that wasn't closed in this quarter from it.
And in fact, I think you guys announced the two Florida Hot mix asphalt plants last March I think they also contributed so I guess the question was what's.
It was the sort of I think $7 million in the first quarter of the total inorganic revenue contribution or was that just from the deals and if not could you tell us what the total inorganic contribution to revenue and actually to backlog in the quarter that'd be helpful.
Yes. The total revenue was 12 point too. So there was $5 one from the the one in Florida that were sort of two asphalt plants that you referred to the 7.1 related to the four that were made in this quarter.
And the only were in there for a partial period.
Period, So that's why single that out but the total amount was $12 2 million. So that the left us with just over $3 million of organic growth.
Which was we were very pleased with coast last year, our first quarter was a very strong quarter.
Where we ended up doing almost 22% of our full year revenue. So this year the last year to grow that much organically, we were very pleased with that.
The backlog contribution from the deals would be helpful. As well if you have it handy.
Andy I don't have that exactly I will say that it was very small.
The backlog that we acquired with these companies now we have added a good bit of backlog in markets that these companies represent so there is a substantial portion of our non I mean, our 12 31 backlog includes jobs that were won in these markets in North Carolina.
Presenting on bidding, but as far as acquired backlog I don't have an exact number on that but it was it was we're typically in on.
On acquisition, we would acquire about six months worth of revenue I would say here, we probably average.
60 to 90 days at the ASP because they were all in North Carolina, which is dual referred to lit virtually no work in the last 12 months.
Thank you for that perspective, the last question I wanted to ask about was the comment you made on the F O b the volumes and liquidity, so theyre up 25%, while the revenues of nine it seems like a pretty big <unk>.
And I know that historically, you guys have been pretty selective or judicious on.
On doing <unk> revenues.
The reasons to do it there's reasons not to do it.
And I was just wondering why this quarter had such a big influx of it.
Compared to other times, where maybe you haven't.
The elected to fill those orders.
Yeah.
The clarify one thing there of the 20 <unk> of approximately 22%.
Of all total and so we were up in our own self perform tons as well as the the <unk> tons.
And so.
That goes back to the self perform tons increase that we had.
It's what drives more tons that mean more equipment usage. So it was both <unk> and those.
I mean, there's always been an emphasis for us to sell fob the tons those are.
Good for us because it runs more volume through the plant.
It also generally is so too.
The smaller companies that do some of the jobs that debt.
We might not do the smaller projects or things like that so we're always striving to increase our <unk> tons. The reason that I.
Said for the part of the higher volume this quarter.
We had conditions, where it was a little bit warmer we had more opportunity to put downturns and so did those.
Contractors', who are out doing some of those smaller private work projects. So.
On.
It's always an emphasis just like we'd like to sell a lot of aggregate to third parties, although we consume the majority of it ourselves and our <unk>.
The aggregate facilities so.
The.
It just.
The weather was favorable in October November and even in December.
The substantial portion of our.
The increase in sales compared to last year actually happened in the month of December which typically is in many of our markets. Just not you really can't lay very much asphalt in those months because of the temperature requirements.
Okay, great. Thank you for the explanation so have a good day and good weekend.
Thank you Anne.
Okay.
There are no further questions in the queue I'd like to hand, the call back to management for closing remarks.
Okay. Thank you very much and thank you everyone wants the filling in the call of the day and we look forward to speaking with you on the next the complex volatile number one.
<unk>.
Thanks, Bob.
Goodbye.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.