Greetings, and welcome to the Construction Partners Fourth Quarter and Year-End Fiscal 2024 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Black, Investor Relations. Thank you, sir. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Construction Partners conference call to review fourth-quarter and year-end results for fiscal 2024. 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, November 21, 2024. 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 the statements made in today's discussion that are not historical facts, including statements of expectations, or future events or future financial performance, are forward-looking statements made pursuant to the Safe Harbor provisions 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 detailed 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 release. Construction Partners assumes no obligation to publicly update or revise any forward-looking statements. Now, I would like to turn the call over to Construction Partners' CEO, Jules Smith.

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 are pleased to report a strong finish to our fiscal year 2024—a record year with revenue growth of 17%, net income growth of 41%, adjusted EBITDA growth of 28%, and an EBITDA margin percentage of 12.1%, compared to 11% last year. In addition, the CPI business model of expert local management continues to generate recurring revenue for repeat customers, strong cash flow, and ended the year with cash flow from operations of $209 million. Finally, we completed eight acquisitions in fiscal 2024 that expanded our geographic footprint into new growth markets and enhanced market share across our Sunbelt states. I want to congratulate the now more than 5,800 employees at CPI for their hard work and professionalism delivering a record year. As a family of companies, we are striving to live out our core values: family, opportunity, and excellence. These values help create an incredible place to work, advance careers, and ensure safe worksites daily. Fiscal year 2025 has started strong. Earlier this month, we acquired Lone Star Paving, our new platform company in Texas. This acquisition accelerates CPI’s progress toward our Road Map 2027 goals by two years. Lone Star is a proof of concept for the power of vertical integration, scale, and market excellence. Looking forward, CPI will continue its strategy of smart, strategic acquisitions to expand market share and capacity. The generational transition in our industry provides opportunities for acquisitions, and we remain focused on strategic growth aligned with operational and cultural excellence. Turning now to an overview of the construction demand and funding environment across our Sunbelt states, we are reporting a record backlog of $1.96 billion, representing 16 consecutive quarters of backlog growth. Continued funding from the IIJA and other state infrastructure initiatives ensures a robust demand environment. As we begin our new fiscal year, our team is focused on executing this record backlog while identifying new growth opportunities. Now, I would like to turn the call over to Greg Hoffman.

Thank you, Jules, and good morning, everyone. I will begin with a review of our key performance metrics for fiscal 2024 before discussing our outlook for fiscal 2025. Revenue was $1.82 billion, an increase of 17% compared to last year, with 7% organic revenue growth and 10% from recent acquisitions. Gross profit was $258.3 million, an increase of 32%, and represented 14.2% of revenue, compared to 12.6% last year. General and administrative expenses as a percentage of total revenue increased slightly to 8.3%, compared to 8.1% last year, driven by transaction expenses related to the Lone Star acquisition. Net income was $68.9 million, an increase of 41%, and adjusted EBITDA was $220.6 million, up 28%. For fiscal 2025, we anticipate revenue in the range of $2.48 billion, net income between $97 and $113 million, and adjusted EBITDA between $347 and $377 million. And with that, we will open the call to questions. Operator?

Thank you. We will now be conducting a question-and-answer session.

Hi. Thank you for taking my questions today. Good morning. Regarding fiscal 2025 guidance, how much of the margin progression is from Lone Star versus organic growth?

Good morning, Catherine. Even without Lone Star, we anticipated 50–60 basis points of EBITDA margin expansion, supported by backlog and vertical integration. Lone Star accelerates progress but is not the sole driver of growth.

Would you say half of the margin expansion could be internal versus Lone Star?

Approximately, yes. Lone Star is transformational, but our legacy business continues to make strong strides.

Our next question comes from Adam Thalimer with Thompson Davis.

Hey, good morning, guys. Nice quarter.

Good morning, Adam.

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

Yes, Adam. Initially, our guidance included nine months of Lone Star EBITDA. Now, with 11 months of inclusion, you will see a proportional increase. Generally, we have said that around 30% of EBITDA occurs in the first half of the year and 70% in the second half. This trend remains consistent.

From a seasonality standpoint, Lone Star aligns with the patterns we see in states like Alabama, South Carolina, and Georgia.

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

We expect to convert EBITDA to cash flow from operations in the 85–90% range in 2025. Proceeds from asset disposals will likely trend down as supply chains stabilize, and we receive equipment on time.

Perfect. Thanks, Greg.

Our next question comes from John Ramirez with DA Davidson.

Hi, good morning. Just wanted to clarify—how much of the reported backlog is from Lone Star?

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.

Got it. Thank you.

We have reached the end of the question-and-answer session. I would now like to turn the floor back over to management for closing comments.

Thank you, everyone, for joining us today. We appreciate your time and engagement. Have a wonderful Thanksgiving with your families, and we look forward to speaking with you again soon.

Ladies and gentlemen, this concludes today’s teleconference. Thank you for your participation.