Construction Partners, Inc. · NASDAQ:ROAD
Construction Partners — Investor Day (October 2023)
61 slides from Construction Partners's investor day presentation, Oct 4, 2023
Slide 1: Exhibit 99.2
Exhibit 99.2
Slide 2: Today's Agenda
Today’s Agenda Welcome Rick Black Investor Relations An Enduring Growth Story Ned Flemin Executive Chairman ROAD-Map 2027 Jule Smith Chief Executive Officer Executing a Proven Strategy Greg Hoffman Chief Financial Officer Growth: A Core Competency Nelson Fleming VP of Strategy & Business Development
Slide 3: Forward-Looking Statements
Forward-Looking Statements “ statements” Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 4. These statements may be identified by the use of words such as “seek” “continue,” ‘Seumates “predict,” “potential,” targeting,” “could,” “might,” ire" “wil” expect,” shoul
Slide 4: An Enduring Growth Story
An Enduring Growth Story CONSTRUCTION Ned Fleming
Slide 5: An Enduring Growth Story: 2001 to 2018
An Enduring Growth Story: 2001 to 2018 Founded in 2001 with a Simple, 3-Point Thesis: Founding to IPO Statistics @ Partnered with experienced operators that knew how to \ i See State Footprint oa. 0 27 Distinct Local'Markets Tie _— a 2 1,800 Headcount build a great company... ...Offering services th
Slide 6: In 2022 Exceeded 5-year Targets from IPO
In 2022 Exceeded 5-year Targets from IPO v _ >. PF aoe ge Inb. Achieve revenue above $1 billion - i. v Annual revenue growth: single to low double digits v share and expand geographic footprint Growth in Number of Distinct Local Markets Continue to grow relative market 122% 19 Acquisitions Page 6
Slide 7: 2018 IPO to 2022
2018 IPO to 2022 May 3, 2018 September 30, 2022 (day before IPO) (FY 2022) | @ Production Facility ( Added Since IPO Page 7
Slide 8: Successful Management Transition
Successful Management Transition a,» ab Jule Smith Greg Hoffman Chief Executive Officer Chief Finai Page 8
Slide 9: Experienced Leadership Team
Experienced Leadership Team Jule Smith ad Hoff: 5 Chief Executive Orficer 5 cet eal oma Bob Flowers John Harper Ty Johnson David Ferebee Mike Crenshaw Reece Akins §. Brett Armstrong Robert Baugnon Nelson Fleming Ryan Brooks John Walker Heather Dylla ‘SVP Operations VP Per VP Strategy & Business SVP
Slide 10: ROAD-Map 2027
ROAD-Map 2027 CONSTRUCTION INC. Jule Smith
Slide 11: A Leading Infrastructure Company
CONSTRUCTION =—_—siSENE. A LEADING INFRASTRUCTURE COMPANY ROAD-Map 2027
Slide 12: Financial Outlook Update: FY 2023
Financial Outlook Update: FY 23 Revenue, +19-20% YoY Growth $1.547-1.557bn $1.3bn FY 22A FY 23E Adjusted EBITDA, +51-55% YoY Growth $111mm Margin | 8.5% FY 22A $168-172mm Margin | 10.9-11.0% FY 23E Page 12
Slide 13: ROAD-Map 2027 - Where We're Going
ROAD-Map 2027 - Where We're Going Revenue, Adjusted EBITDA Margin,,,, +15-20% CAGR +50-75 bps annually Yaa 7-3.2bn _—___— 7 13-14% FY 23E FY 27E FY 23E FY 27E Page 13
Slide 14: Same Proven Strategy
Same Proven Strategy k Asphalt-centered Infrastructure Company Short Duration, Low Risk Projects KA ~~ Multiple Avenues for Growth in Fragmented Industry Page 14
Slide 15: Asphalt-centered Infrastructure Company
Asphalt-centered Infrastructure Company Page 15
Slide 16: Regionally Focused in Sunbelt
Regionally Focused in Sunbelt Meaningful population migration ... Top 50 Fastest Growing Metros 2020-2022) Population Growth, 2.5% CPI States 2020-2022 Other States | 0.1% 21 Metros in CPI States 29 10.7% Metros in Other States 2010-2020 ME 6.2% Leading to growth in... weve Boo ae Public Infrastruct
Slide 17: Regionally Focused in Sunbelt: Business Migration
Re egi fjonally Focused in Sunbelt Meaningful business migration ... me THE WALL STREET JOURNAL \ 3 y (HE WALL STREET JOURNAL erica Is Back in the Factory Business OFFICE OF THE GOVERNOR jorate Tax Breaks Surge in Push for £ BMW Investing $1.7 Billion to Expand S.c. |and Electrie-Vehicle Factories M
Slide 18: Local Markets & Workforce
Local Markets & Workforce Local markets defined as ~50-mile radius around plants given temperature sensitivity of HMA Favorable Local Market Dynamic + Local market knowledge and relationships provides competitive moat * Hiring and retention advantage as a local operator building jobs where our emplo
Slide 19: Reoccurring Public & Private Revenue
Reoccurring Public & Private Revenue Public Private + Steady stream of maintenance-related + Long-standing relationships with GCs and contracts let by state DOTs and developers of all sizes in high-growth markets municipalities throughout the year * Turnkey capabilities and reputation for quality *
Slide 20: Short Duration, Low Risk Projects
Short Duration, Low Risk Projects Completed Projects by Size FY 18- FY 22 $o-1mm TT co% $1-2mm 11% $2-3mm [6% $3-4mm ff 4% $4-5mm ff 3% $5mm+ [7% 6-9 Months Average Project Duration Page 20
Slide 21: Multiple Avenues for Growth in Fragmented Industry
Multiple Avenues for Growth in Fragmented Industry Continuing historical annual revenue growth rate of 15-20% to achieve the targeted $2.7-3.2bn revenue by 2027 ~5-6x Multiple of EBITDA to our core business y + Paving crews Organic Expansion of services or + Utilities crews ~3y Multiple of EBITDA fa
Slide 22: Investment in Aging Infrastructure
Investment in Aging Infrastructure Funding for Pavement-Related Infrastructure Accelerating State Investment in 2023 by DOT Fiscal Year,,, Florida - Transportation infrastructure investment $7bn over four years with Moving Forward Florida $78bn $8thn legislation, —— _ $55bn 32% Tennessee - Budget in
Slide 23: ROAD-Map 2027 - Margin Expansion
ROAD-Map 2027 - Margin Expansion Utilizing three levers of margin growth to increase Adjusted EBITDA Margin = 50-75 bps annually and achieve 13-14% Adjusted EBITDA Margin by 2027 p Building Better #1 or #2 player in each * Leveraging technology to © of our local markets provide improved market Marke
Slide 24: Building A Sustainable Future
Building A Sustainable Future “Ps Workforce Mobility ry Li ae Representation in Regulation Sustainable Production Page 24
Slide 25: A Family of Companies
(7 ///a@us OPPORTUNITY eee We are a family of companies We provide opportunities to 123014 ie EXCELLENCE PO AIA pa We respect each of our We strive to do ordinary but, more importantly, a build better lives. : employees, customers, and things extraordinarily well. company of families. ZU 5 ‘communit
Slide 26: Executing a Proven Strategy
Executing a Proven Strategy gS yy CONSTRUCTION INC. Greg Hoffman
Slide 27: Proven Strategy with Consistent Visibility
\ Proven Strategy with Consistent Visibility \ La . ; CPI Seasonal, Not Cyclical Operations 7! i Compelling Outlook and Long-Term Targets / Strong Financial Flexibility for Growth
Slide 28: Track Record of Sustainable Growth: Revenue and Net Income
Track Record of Sustainable Growth: FY 23 Revenue,, +19% | Midpoint Growth $1.547-1.557bn $1.3bn $911mm | | Net Income,, +113% | Midpoint Growth $44,8-47mm $20mm $21mm FY 21A FY 202A FY 236 Page 28
Slide 29: Track Record of Sustainable Growth: Adjusted EBITDA
Track Record of Sustainable Growth: FY 23 Adjusted EBITDA,, Adjusted EBITDA Margin,, +53% | Midpoint Growth +28% | Midpoint Growth $168-172mm 10.9-11.0% a 9.9% qn 711mm 8.5% - P| a B FY 21A FY 22A FY 23 FY 21A FY 22A FY 23E Page 29
Slide 30: Proven Strategy with Consistent Visibility: Backlog
Proven Strategy with Consistent Visibility Construction Project Backlog $ $1.3bn $1.3bn $1.46n $1.5bn $1.5bn $1.6bn 1.1bn Qi FY22 Q2 FY22 Q3 FY22 Q4 FY22 Qt FY23 Q2 FY23 Q3 FY23 Historic Rise in Project Backlog + Approximately 75-85% of backlog is expected to be completed in the next 12 months 11 co
Slide 31: Seasonal, Not Cyclical
Seasonal, Not Cyclical Historical Revenue Split,, by Public vs Non-Public Not Cyclical - Opportunity to pivot 37% to high-demand markets 63% Non-Public Public Historical Revenue Split,, Historical Adj. EBITDA Split,, by Half Year by Half Year Seasonal - Outdoor operations ~30% impacted by daylight ~
Slide 32: Strong Cash Flow Conversion Model
Strong Cash Flow Conversion Model Expected record-high FY 23 operating cash flow highlights operational efficiency and organizational emphasis on cash flow generation Investing in Growth Adjusted EBITDA, Stable and growing cash flow base with reoccurring revenue sources. Progressing (© Maintenance C
Slide 33: Initial Guidance - FY 2024: Revenue and Net Income
Initial Guidance - FY 24 Revenue,, Net Income,, +15% | Midpoint Growth +41% | Midpoint Growth $1.75-1.825bn $63-70mm $1.547-1.557bn tocccc- FY 23E FY 24E FY 23E FY 24E Lf 7 i Page 33
Slide 34: Initial Guidance - FY 2024: Adjusted EBITDA
Initial Guidance - FY 24 Adjusted EBITDA,, Adjusted EBITDA Margin,, +22% | Midpoint Growth +6% | Midpoint Growth z 11.3-12.0% $197218mm 10.9-11.0% = maneen FY 23E FY 24E FY 23E FY 24E Ja 7 Page 34
Slide 35: ROAD-Map 2027: Revenue and Net Income
ROAD-Map 2027 Revenue,, +15-20% | FY 23-27 CAGR $2.7-3.2bn - 7 1.75-1.82: $1.547-1.5570 * 78-1.825bn FY 23E FY 24E FY 27E Net Income,, +34-38% | FY 23-27 CAGR $145-171mm I ! $63-70mm $44.8-47mm FY 23E FY 246 FY 27E Page 35
Slide 36: ROAD-Map 2027: Adjusted EBITDA
ROAD-Map 2027 Adjusted EBITDA,, +20-27% | FY 23-27 CAGR $351-448mm roy $168-172mm $197-219mm FY 23E FY 24E FY 27E Adjusted EBITDA Margin,, +50-75 | Annual bps 10.9-11.0% 11.3-12.0% = = FY 23E FY 24E FY 27E Page 36
Slide 37: Strong Financial Flexibility for Growth
Strong Financial Flexibility for Growth We see 1.5-2.5x as a healthy leverage ratio for sustained, profitable growth Net Debt to Adjusted EBITDA,, ~$55mm) Cash - As of 9/30/23 3.06x 1.75-2.50x 1.50-2.50x Interest Rate Swap — Fixing the ~1.90x en | ma $300mm Company's rate at 3.6% on $300mm of === ]
Slide 38: Slide 38
Slide 39: Growth: A Core Competency
Growth: A Core Competency CONSTRUCTION Nelson Fleming
Slide 40: Three Levers of Growth - Case Studies
Three Levers of Growth - Case Studies Continuing historical annual revenue growth rate of 15-20% to achieve the targeted $2.7-3.2bn revenue by 2027 Acquisitive ~5-6x Multiple of EBITDA Acquiring businesses within and in complement to our core business a + Paving crews Organic Expansion of services o
Slide 41: Case Study: Organic
Case Study: Organic CPI can increase or enhance its service offerings by developing new crews and adding the necessary equipment to capture more revenue and margin in our existing markets Typical Mainline Paving Crew “em Investment “Soom Annual Revenue ow) Crew Members i, Return Multiple Li LPI aa P
Slide 42: Case Study: Greenfield
Case Study: Greenfield HMA greenfields allow CPI to leverage local leadership, market knowledge, and back-office infrastructure to expand into underserved, adjacent geographies at an attractive rate of return Typical HMA Plant G field Stone) Investment Plant City, FL Est. May 2017 *) Return Multiple
Slide 43: Long Acquisitive Runway in Core Business
Long Acquisitive Runway in Core Business Privately Owned HMA Plants,, 145 Privately Owned Asphalt Producers in CPI States,, 151 Privately Owned Asphalt Producers in Nearby States, Page 43
Slide 44: Case Study: Acquisitive - King Asphalt
Case Study: Acquisitive * Acquired South Carolina-based company with a HMA Footprint October 2021 strong management team and well-funded DOT 9 program in the growing Upstate region 9 9 King Asphalt 158 Headcount 3 HMA Plants Page 44
Slide 45: Case Study: Acquisitive - Southern Asphalt
Case Study: Acquisitive * Geographic expansion of newly-acquired platform company into the fast-growing Myrtle Beach market Southern Asphalt 5 HMA Plants SOUTHERN ASPHALT HMA Footprint August 2022 Page 45
Slide 46: Case Study: Acquisitive - Pickens Construction
Case Study: Acquisitive * Geographic expansion in the Upstate with the addition of one HMA plant and multiple crews Pickens Construction 6 we PICKENS CONSTRUCTION HMA Footprint April 2023 Page 46
Slide 47: Case Study: Acquisitive - Myrtle Beach HMA Plant
Case Study: Acquisitive * Acquisition of one HMA plant, providing additional HMA Footprint . — . August 2023 capacity to meet significant local demand in the 9 fastest-growing county in South Carolina, We ce: 9 eb Beach HMA Plant 7 HMA Plants Page 47
Slide 48: Case Study: Acquisitive - Hubbard Paving & Grading
Case Study: Acquisitive * One-plant operation added on October 24, HMA Footprint October 2023 expanding footprint in the Upstate further west Ve ce Hubbard Paving & © 9 Grading 18 Pa) Page 48
Slide 49: Case Study: Acquisitive - King Expansion
Case Study: Acquisitive * Within two years, King added five plants to expand HMA Footprint Current to an eight-plant footprint with meaningful white- B space and untapped, high-growth metros remaining 9 ce. 9 9 [ad oat. J 158 eal 400 - Headcount Headcount Pd Page 49
Slide 50: Additional Acquisition Opportunities
Additional Acquisition Opportunities 2,000+ Non-Asphalt Producing Highway, Street, Bridge, and Utility Companies,, Non-Asphalt Producers in CPI States,, Sample Company Types for Vertical Integration Trucking 181 / \ Striping QV Utilities 40%, Bridges Companies 1,000 0 Earth work == 5) Barriers Re Tr
Slide 51: Case Study: Vertical Integration - Services
Case Study: Vertical Integration - Services CPI can enhance its service capabilities in existing markets and augment revenue and margin by acquiring “construction-only” contractors at attractive valuations —, southern site May 2023 Grading & sitework \. contractor October 2021 Grading & utilities Li
Slide 52: Panel Discussion
Panel Discussion CONSTRUCTION INC. FUE Mike Crenshaw David Ferebee Robert Baugnon Nelson Fleming
Slide 53: A Leading Infrastructure Company
CONSTRUCTION =—_—siSENE. A LEADING INFRASTRUCTURE COMPANY ROAD-Map 2027
Slide 54: STRUCTION
STRUCTION
Slide 55: Thank You
Thank You A Family of Companies FY corsrveron AnTMERS ING, CYR CONTRACTING, INC. rc FRED SMITH COMPANY. Yat | WIREGRASS | CONSTRUCTION | COMPAN YING.
Slide 56: Appendix
Appendix CPI f__|
Slide 57: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA represents net income before, as applicable from time to time, (i) interest expense, net, (ii) provision (benefit) for income taxes, (iii) depreciation, depletion, accretion and amortization, (iv) equity-based compensation expense, (v) loss on the extingui
Slide 58: Total Long-Term Debt to Net Debt Reconciliation
Total Long-Term Debt to Net Debt Reconciliation Fiscal Year Ended September 30, 2023 (Unaudited, in thousands) Total long-term debt Less: Cash Net Debt Adjusted EBITDA Leverage Ratio Fiscal Year Ended September 30, 2028 Preliminary Results Low $ 376,850 55,000 321,850 $ 165,000 1.92x $ High 376,850
Slide 59: Net Income to Adjusted EBITDA Reconciliation
Net Income to Adjusted EBITDA Reconciliation Fiscal Years Ended September 30, 2022 and 2021 (In thousands) For the Fiscal Year Ended September 30, 2022 2021 Net income $ 21,376 $ 20,177 Interest expense, net 7,701 2,404 Provision for income taxes 6,915 8,349 Depreciation, depletion, accretion and am
Slide 60: Net Income to Adjusted EBITDA Reconciliation
Net Income to Adjusted EBITDA Reconciliation Fiscal Year 2023 Updated Outlook (Unaudited, in thousands) Net income Interest expense, net Provision for income taxes Depreciation, depletion, accretion and amortization Equity-based compensation expense Management fees and expenses, Adjusted EBITDA Adju
Slide 61: Net Income to Adjusted EBITDA Reconciliation
Net Income to Adjusted EBITDA Reconciliation Fiscal Year 2024 Outlook (Unaudited, in thousands) Net income Interest expense, net Provision for income taxes Depreciation, depletion, accretion and amortization Equity-based compensation expense Adjusted EBITDA Adjusted EBITDA Margin $ oe For the Fiscal