Construction Partners, Inc.: FY2024 Performance and FY2025 Outlook
Monday, Oct 21, 2024 6:11 am ET
2min read Construction Partners, Inc. (CPI), a vertically integrated civil infrastructure company, recently announced its preliminary fiscal 2024 financial results and provided an outlook for fiscal 2025. The company's strong performance in FY2024 was driven by organic growth, acquisitions, and a robust bidding environment, setting the stage for continued growth in the coming year.
CPI's revenue and net income growth in FY2024 compared favorably to industry peers and historical trends. The company reported revenue of $1.84 billion, an increase of 22.7% year-over-year, and net income of $75.3 million, up 23.8% from the previous year. This growth was fueled by a 22.7% increase in revenues and a 30% increase in gross profit, driven by strong demand and favorable pricing conditions.
The impact of acquisitions and organic growth on CPI's Adjusted EBITDA and Adjusted EBITDA margin in FY2024 was significant. The company's Adjusted EBITDA increased by 30.5% to $223.5 million, while its Adjusted EBITDA margin expanded by 120 basis points to 12.1%. Organic growth contributed to approximately 13% of the company's revenue growth in the quarter, while acquisitions accounted for the remainder.
CPI's project backlog and bidding environment played a crucial role in its financial performance in FY2024. The company's backlog increased to $1.86 billion at the end of the fiscal year, up from $1.59 billion in the previous year. The strong bidding environment contributed to this growth, as CPI secured new projects and expanded its market share.
The key drivers behind CPI's raised outlook for FY2025 align with its ROAD-Map 2027 goals. The company expects to generate revenue in the range of $2.1 billion to $2.2 billion, representing a year-over-year growth of 14% to 16%. This growth is expected to be driven by organic growth, acquisitions, and the integration of recent acquisitions. CPI also anticipates an Adjusted EBITDA margin of 13% to 14% in FY2025, which would be an improvement over the 12.1% margin achieved in FY2024.
The Lone Star acquisition is expected to significantly impact CPI's FY2025 outlook. The transaction, valued at $654 million in cash and 3 million shares, is anticipated to generate an annualized run-rate contribution of $530 million of revenue and $120 million of Adjusted EBITDA in fiscal 2025. This acquisition will allow CPI to enter the Texas market and expand its geographic footprint, further enhancing its growth prospects.
CPI's FY2025 outlook reflects the company's strategic goals, such as ROAD-Map 2027. The company aims to achieve an Adjusted EBITDA margin of 13% to 14% in FY2025, two years ahead of its original target. This outlook demonstrates CPI's commitment to executing its growth strategy and creating value for shareholders through improving returns on capital.
In conclusion, Construction Partners, Inc. delivered strong financial performance in FY2024, driven by organic growth, acquisitions, and a favorable bidding environment. The company's raised outlook for FY2025, supported by the Lone Star acquisition, reflects its commitment to achieving its strategic goals and creating value for shareholders. As CPI continues to execute its growth strategy, investors can expect the company to maintain its momentum and deliver strong performance in the coming years.
CPI's revenue and net income growth in FY2024 compared favorably to industry peers and historical trends. The company reported revenue of $1.84 billion, an increase of 22.7% year-over-year, and net income of $75.3 million, up 23.8% from the previous year. This growth was fueled by a 22.7% increase in revenues and a 30% increase in gross profit, driven by strong demand and favorable pricing conditions.
The impact of acquisitions and organic growth on CPI's Adjusted EBITDA and Adjusted EBITDA margin in FY2024 was significant. The company's Adjusted EBITDA increased by 30.5% to $223.5 million, while its Adjusted EBITDA margin expanded by 120 basis points to 12.1%. Organic growth contributed to approximately 13% of the company's revenue growth in the quarter, while acquisitions accounted for the remainder.
CPI's project backlog and bidding environment played a crucial role in its financial performance in FY2024. The company's backlog increased to $1.86 billion at the end of the fiscal year, up from $1.59 billion in the previous year. The strong bidding environment contributed to this growth, as CPI secured new projects and expanded its market share.
The key drivers behind CPI's raised outlook for FY2025 align with its ROAD-Map 2027 goals. The company expects to generate revenue in the range of $2.1 billion to $2.2 billion, representing a year-over-year growth of 14% to 16%. This growth is expected to be driven by organic growth, acquisitions, and the integration of recent acquisitions. CPI also anticipates an Adjusted EBITDA margin of 13% to 14% in FY2025, which would be an improvement over the 12.1% margin achieved in FY2024.
The Lone Star acquisition is expected to significantly impact CPI's FY2025 outlook. The transaction, valued at $654 million in cash and 3 million shares, is anticipated to generate an annualized run-rate contribution of $530 million of revenue and $120 million of Adjusted EBITDA in fiscal 2025. This acquisition will allow CPI to enter the Texas market and expand its geographic footprint, further enhancing its growth prospects.
CPI's FY2025 outlook reflects the company's strategic goals, such as ROAD-Map 2027. The company aims to achieve an Adjusted EBITDA margin of 13% to 14% in FY2025, two years ahead of its original target. This outlook demonstrates CPI's commitment to executing its growth strategy and creating value for shareholders through improving returns on capital.
In conclusion, Construction Partners, Inc. delivered strong financial performance in FY2024, driven by organic growth, acquisitions, and a favorable bidding environment. The company's raised outlook for FY2025, supported by the Lone Star acquisition, reflects its commitment to achieving its strategic goals and creating value for shareholders. As CPI continues to execute its growth strategy, investors can expect the company to maintain its momentum and deliver strong performance in the coming years.
Disclaimer: the above is a summary showing certain market information. AInvest is not responsible for any data errors, omissions or other information that may be displayed incorrectly as the data is derived from a third party source. Communications displaying market prices, data and other information available in this post are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any security. Please do your own research when investing. All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss in a down market.
