Construction Partners, Inc. (ROAD) Earnings Call Transcript & Summary

Hello. Welcome, everyone. I hope you all saw everybody in the room, that there is a WiFi network and password. Feel free to get on there. Are we ready on the webcast? Excellent. Welcome, everyone, today to Construction Partners' Inaugural Analyst Day. We appreciate having you all here in the room and those of you that are joining on the webcast. And we'd also like to thank NASDAQ for hosting us here at their wonderful facility in Times Square. As you can see from our agenda, we are going to have a break -- we're going to have a break after the CFO presentation, just so you're aware. We're also going to have a question-and-answer session at the end of today's presentation. So if you don't mind holding your questions until we get to that part. And then before we get going, we'd like to mirandized everyone so that you're all fully aware of our forward-looking statement, which I will read now. This presentation is being webcast and can be accessed on the audio portion of our Investor Relations website. All information speaks only as of today's event, which is October 4, 2023. So any time-sensitive information may no longer be accurate at the time of any replay reading or listening. I'd 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 considered forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Today, we will be making forward-looking statements as part of today's presentation that may be, by their nature, are uncertain and so today's presentation, for the disclosures on that, you can see our forward-looking statement in the press release that went out this morning. Management will also refer to non-GAAP measures including adjusted EBITDA, adjusted EBITDA margin and net debt. Reconciliations can be found to the newest GAAP measures in our press release. Please also note that references during the presentation about fiscal year refer to a September 30 year-end for Construction Partners. And with that out of the way, we'd now like to get started, and I'd like to introduce one of our co-founders and our Executive Chairman, Ned Fleming. Ned?

Thank you, Rick. It's nice to see everybody. This is a fun story to talk about because it continues to get better. With a lot of stories, you have a great, exciting beginning and it kind of slows down. But in this case, with the people that are in the room that run this business and all 4,000 people that work at this business, this story continues to get more exciting, not less exciting. And so it's exciting for all of us to have the opportunity to talk about a business that we enjoy and that we hope is not only changing the infrastructure of our country, but also changing lives along the way and giving people opportunities. So we're excited about that. So this business certainly has continued to grow and build in ways that Charles and I, as we founded this business, never dreamed. I would say the team and the people that work at this business are better than we ever imagined and they continue to come up with creative and profitable ways to grow this business. So as we began, this is a very enduring growth story. Having been involved with lots of businesses, it's exciting to see what this business has done really for us over the last 20 years. Lots of people in this room have been part of all that. So the first question I want to ask, is there anybody in this room who when they drive home today or get home tomorrow can say their roads are in great shape? Is there anybody that can say that? Nobody is going to raise their hands because the truth is our roads are deteriorated and we need to continue to fix them. If you think about what we've been able to do, we've been able to partner with experienced operators for a long time. We continue to do that to build this business. We're offering services, so we've become more and more vertically integrated, not just in materials but in services, that have really essential needs for society as we grow the society. And that's just not in our part of the country, but everywhere you go. So we've got opportunities to grow geographically. We've got opportunities to grow within our own geography. And this business today, when we stepped back and looked at this back in 2001, it was this large, growing, highly fragmented industry. And today, it's exactly that, except it's larger, people actually know the term infrastructure. When we started out and we would say we're an infrastructure business and we're building roads, people say, infrastructure? Excuse me? Now today, they understand that. The voters understand it, the politicians understand it, and certainly the people driving our roads understand it. So today, no different than it was before. The roads are still given a D grade and the cycle for routine road replacement, which we do is 10 to 15 years, is asphalt getting better? We improve it every year. We improve the ways we take it up. It's also one of the most recycled products in the country, which we're awfully proud of. And believe it or not, those of us that live in cities, we see a lot of concrete roads. But the truth is 94% of all the roads in the country are asphalt. So if you think about from founding to IPO, we went from 0 states and an idea that 2 or 3 people had, to 4 different states. We had 27 asphalt plants at the time that we went public and we had 1,800 employees. So let's fast forward. We've talked about it on the road show. Let's see how we did versus what we told people. So we exceeded every target that we told people on the road show. So those of you that were there, like in a lot of analysts, Andy Wittmann would be one of them, he was there when we talked about being $1 billion. We exceeded it. We got to $1.3 billion. And in that process, we became better at what we do. Our technology is better. We're more vertically integrated, both on the services side and the material side. Annual revenue, we told people would be single to double-digit growth, it actually turned out to be 17.6%. I'll talk about all the things we went through in the economy and we still grew this business profitably. We continue to grow our relative market share business. So as an asphalt business, we really have over 70 different markets that we compete in. And each one of those markets is a 50- to 60-mile radius and we compete with those people in that radius. So if you're one -- if one of our guys is running an area, he's got a lot of markets that he or she has to take care of. We don't compete globally. We compete in that specific market. The number of distinct markets that we compete in is 152% better than we thought it would be. We've done 17 acquisitions since we went public. We continue to grow this business in every aspect. We'll talk today about all the different prongs that we can grow this business. Each one of those that we talked about are true today and that we continue to get better at doing it. So when you think about it, the runway is long. The future for this business is very, very bright. Let's look at how we looked at the IPO. This is a map here of what it looked like when we got started, 27 -- we've got South Carolina there. I think that South Carolina that is, doesn't have any dots in it. And over time, as we walked through COVID, post COVID, inflation, unprecedented environment of labor issues, getting equipment issues, et cetera, through this time, where did we end up? Today, we have -- I think that's going to move. There we go. That's what it looks like today. So we have substantially grown this business. We're almost 3x as many asphalt plants as we had when we started. That continues to grow and get better. We've successfully in this process in addition to not just growing the business through different economic times, one of the great things about this business is it will continue to grow profitably through different economic times. And part of that goes to the management team. Every one of our workers, all over 4,000 of them do a terrific job of doing that. The leaders that are in this room today that I'll talk about have done a terrific job of leading that team in this process as we've grown this business. But not only have we done this, but we've successfully transitioned to the next generation. So Charles Owens, the founder, successfully transitioned this to Jule Smith, the CEO. It has been a real pleasure to work with Jule as we continue to grow this business. Today, we are stronger as a result of Jule's leadership. We continue to be creative with how we handle ideas and thoughts. And this has been a smoother transition of leadership as I've ever been involved with my almost now 40 years of doing this. Jule stepped into and followed somebody that was well-known in the industry and really took that ball and ran with it, and continues to do things and make this company substantially better than it was. Interestingly enough about the transition, behind the scenes of the public transition of CEO, Greg Hoffman, who moved to Raleigh-Durham 2 months after Jule was made CEO. Now the Street and everybody didn't hear about his move for almost 2 years that he was promoted. But he moved 2 months. And Jule and Greg started working together, started to think about and planning what they wanted their relationship to look like and how they wanted to communicate inside the business. One of the signs I think of a great company is that you have people that you can internally promote. So both of these people came up through the ranks. And when we as a Board and a governing body looked at it, we had a decision to make. And it was an easy decision because we had internal candidates to be able to promote. So they knew the people. They understood the business, they understood the culture. We didn't have any issues of outsiders coming in. And both of them picked up the ball and went in directions that have made this company better and they will continue to do that. What I think is most interesting is you usually don't do a transition in the middle of a pandemic. Pretty much when Jule became CEO, the pandemic started. I think it was just months afterwards. One of the first people in the company that got COVID was Jule. And he worked every single day. I remember talking to him and being concerned about it. So we transitioned through a pandemic, we continued to do acquisitions, we had labor issues as the whole world did as we came out of the pandemic, we had issues for materials and costs. So in the process of transitioning, the old saying that iron sharpens iron, well, our iron was the market, and we became sharper. Jule made sure we became sharper in how we bid projects, how we hire people, how we thought through things strategically. And so as a result, today, we are a stronger business. We are better prepared for the future than we ever have been. So when I look at this business today, yes, when we went public and when we started the business, you had a large, highly fragmented market, you had a management team that was -- had been doing it for a long time. I will tell you today with Jule and Greg at the helm, we are better prepared organizationally for the future, we are better prepared financially for the future, and strategically, we continue to do the same thing. We are disciplined with our strategy. You will not see us get off target with how we do things or what we do or how we buy companies. This is a business that's ready for the future. One of the keys to that is every face that's up here. What's interesting about this business is a lot and we talked about this last night, many of these people are businesses that they had run successful businesses, and they've come on board, whether it be Mike Crenshaw, David Ferebee, John Harper, they all came on board as owners of their business. And so this is a company that when Jule runs it as the CEO, that we think like owners. We understand what it is to be owners. It's also evident that, culturally, we care about our people. And it's the 4,000 people that go to work every day. Bob Flowers and I were talking about it this morning, that work hard every single day, that make sure they do what's right, that do things safely, that really drive this business and will continue to drive this business as we grow it. So I want everyone to know that today, although we have transitioned from one founder to a new CEO, Jule has not only has he been fun for me to work with and a pleasure for me to work with, he is creative, he listens well, and he has put this company in a position that we are today is well positioned to take advantage of what I think is a terrific growth path for this company. So for me, it's a true pleasure to not only get to talk about all these people but to introduce my friend and partner, Jule Smith.

Good morning. Thank you for coming to our Analyst Day. Now some of you are wondering, okay, Jule, when was that picture taken? And I would tell you, I know it was the last couple of days of March 2021. And I know that because it was just a couple of days before Charles' retirement party and me taking over. That guy looks so relaxed and confident, right? So anyway, Charles has been a wonderful mentor to me and many of the guys in this room for well over a decade. And hopefully, you'll hear today that the company that he worked so hard to build over the last 2 decades is strong and ready for the next 2 decades. So today, we want to share with you our strategic plan of what we call ROAD-Map 2027. Now we like our ticker symbol, ROAD. You hear us use it a lot, roadmap, roadworthy, road ahead. We do try to avoid at all costs using the term road kill. But other than that, we love using our term and ROAD-Map 2027 is simply standard operating procedure for us. We update our strategic plan every 5 years -- I mean, every year and look out 5 years. And so really, today, we're just sharing with you what our updated strategic plan is. And when I say we, I mean our leadership team at CPI. As Ned said, these are very experienced talent, some of the best in the industry. You'll hear from someone today, Greg Hoffman, our Chief Financial Officer; Nelson Flemming, our Vice President of Strategy and Business Development; David Ferebee, President of Ferebee; and Mike Crenshaw, President of King Asphalt, they'll participate in a panel later on. But we also have here Bob Flowers, President of CW Roberts; John Harper, the President of Wiregrass, Brad Armstrong, our Senior Vice President of Operations; Heather Reece Akins, the President of Scruggs Company in Georgia; Dr. Heather Dele, our Vice President of Sustainability; and Ryan Brooks, our Senior Vice President for Legal. These -- this leadership team is what works on this strategic plan all the time and helps make sure we have a vision of where we're going. Now any 5-year plan, as you're looking out, is going to have some element of uncertainty. It's going to have certain assumptions that need to be made. And for us, the 2 main assumptions I want to communicate today that we're making in this 5-year plan are this: that the federal and state funding mechanisms that are currently in place and working -- working well, that they continue and that there's no severe economic recession. You'll hear us talk today about being seasonal, not cyclical. And so our model is built that we can handle the normal economic cycles and move back and forth between private work and public work. But we are making the reasonable assumption, we hope, that there's not a severe slowing of economic activity. So Road Map 2027 is a 5-year plan. The first year is actually the year we just finished midnight last Saturday, which was our fiscal year 2023. We are going to announce and have an earnings release in late November. It's typical. But this morning, we released our results, the prerelease. And we're pleased to tell you that we've had a good year in 2023. Our revenue is -- we anticipate being up 19% to 20%, and our adjusted EBITDA up 51% to 55%. And in late -- in -- a year ago, at the end of fiscal year '22, where we had grown the top line 42% and the EBITDA, the bottom line, 20%, we said our goal for 2023 is to simply reverse those, and to get back to double-digit EBITDA margins. And so we're pleased to share with you today that we've accomplished that. Now for us, the year and especially the second half of the year, for us it felt a lot just getting back to normal, things getting back to normal, which is good. And we told you that when we were working through that pre-inflationary backlog during 2022, we said, hey, we were hit in the summer of 2021 with the surprise of ramping inflation that we hadn't seen in over a decade. And we had to work through and build those jobs we had contracts for. But we told the market that our model would adjust, and that throughout our 60 to 70 areas, they would start turning in and submitting bids that had those costs covered with contingencies and escalators. And we also said at the same time that, due to the strong demand, we were starting to see 250 to 300 basis points of pricing power on the margin side. And so what's really been apparent in the last 2 quarters is those costs were covered and those margins are starting to come through. So we're excited about 2023 and we're looking forward to the new fiscal year, which just got started on Monday of this week. So where do we go from here? And that's really our ROAD-Map 2027, is where we go in the next 4 years. And just to put some numbers on it, we see that over the next 4 years, continuing to grow at 15% to 20% annually, which would put our top line somewhere in the $2.7 billion to $3.2 billion range. And we see that our EBITDA margins not only get back to 12%, but that we over the course of those 4 years, achieve an EBITDA margin of 13% to 14% or 50 to 75 basis points annually. So -- and for us, that's really continuing to do what CPI has done historically as a growth company. So if you do the math, and everyone in here is really good at math, you can see that, okay, a company in the range of $3 billion revenue and $400 million of EBITDA, that's going to create a lot of shareholder value. And that's good and we're excited about that. But the really good news for our shareholders and great news for us as the leadership team is that we're not announcing today any new vision, any new product, any new concept, any new strategic plan. In fact, the big news today is that there's really no big new news. But the concept that the company was founded on, the strategic plan that has been working for the last 20 years, we see that for the next 5 years continues to be a sound plan, continues to be even more relevant with a growth runway and a macro environment that makes it more powerful and potent than ever. And so that's exciting for us. So I wanted to now just take you through briefly and just touch on 6 points of our strategic plan and share with you a little bit of maybe some insight into what we see as sort of the secret sauce that makes CPI successful. The first thing we'll go is the Asphalt Centered Infrastructure Company. And that is simply that we organize around an asphalt manufacturing facility, and that builds for us a market. And you can see here, Ned's map took us to the end of 2022. This is where we are today. We've been busy in 2023, and Monday, first day of our fiscal year 2024. We added Walhalla, South Carolina to the map. So you can see here, we organized around that hot mix Asphalt plant in these markets, and that creates a competitive advantage in that market. We're going to talk a little bit about that. But today, we're over 4,000 employees. We have about 60% of our revenue continuing to come from public projects. We're in 6 states now, with 67 markets around hot-mix Asphalt plants. We have 13 aggregate facilities and 2 liquid Asphalt terminals. We'll talk a little bit more about those. And you can see here the footprint, we'll talk a little bit about the geography there and talk about some of those light-gray states that we get asked about so often, all right? Now we say we're reasonably focused in the Sunbelt or the Southeast. And a couple of years ago, I started joking that if the Southeastern Football Conference could define Texas and Oklahoma the Southeast, we could, too. But a few months ago, I realized I've got to stop using college football conferences to define geography. We're -- so we're no longer going to use that. But we're in the Sun Belt, in the Southeast, and for us, we think that's a tremendous advantage. It's the fastest-growing part of the country with the strongest economy. And there's 2 really big drivers of that. And first is residential migration. I'm not going to go through all the numbers there, but there is tremendous growth in people moving to the Southeast. And that not only drives economic opportunities on the private side, but also the public side. So in the fall of 2021 when the opportunity came up to potentially move to Nashville and to get some operations in Nashville, I said, "Well, I'm going to go out there and ride a rail." So I spent a day riding around Nashville. And I was shock at how much growth, how many projects, how many construction cranes I saw. But what really shocked me even more was how the roads were struggling to keep up and how many 3 or 4 cycle light delays I was sitting at just because it was struggling to keep up the infrastructure. And so private development not only creates that opportunity, it creates the need to develop -- to invest in public infrastructure. So we have residential migration, but we also have business migration. One of the things that made Nashville grow so much was just the fact that so many businesses are relocating to Nashville. They're following their workers. We see a lot of reshoring businesses that want to strengthen their supply chains, moving back to the United States. And when they look at the map, they're making the same calculation as the residents are. They're saying, where can we go that has low taxes, good weather, and in the case of businesses, nonunion labor force? And so more than any time I can remember, we're building and working on sites that are manufacturing facilities, industrial warehouses, labs. So those 2 things really drive the economic activity in the Southeast and it's coming right at us, right? The next point, and this is really one of the strongest ingredients of our secret sauce, is we organize in local markets with the local workforce. You can see that map on the right is our Oak Park Asphalt plant, with the green dot as an aggregate facility nearby that supplies that plant. And that circle around it's about 40 to 50-mile radius. And that's how far you can haul asphalt. And that creates, in our industry, a relative market share business, where you know the market, you know the dynamics, and you can stay right there. But for us, what's so important is we develop a local workforce that stays in that area, that sleeps in their beds every night, and are experts in that business. And that does help to attract and retain a tenured, long-term workforce. But for us, what that also really means is they become experts in that area and we can then participate in the revenue in that market, the recurring revenue. And this is something that's so important, is in those local markets, the state DOTs, the cities, the counties, but even the private general contractors, developers, they're going to spend a certain amount of money in those markets. And what we want is to have a steady effort by our local workforce to capture that. And so not only do they get to know these customers, they know how to do business with these customers. In our company in Raleigh, North Carolina, our North Carolina platform has been there operating in that city for almost 100 years. And I saw how powerful that was to know. For example, we had a team that constantly every year did the projects for Pulte Homes. And they knew how does Pulte want these projects to be bid? How do they -- what's important to them? And they got to where they were practically a part of that development team for Pulte Homes. The same thing in the airport and working at the Raleigh Durham Airport and just knowing what's important to the airport, what's coming up, and partnering with them. But it also goes to local knowledge. We -- the teams in Raleigh became experts at the geology. Raleigh, you have rock in a lot of places. Some of the rock you have to dynamite and some of the rock you can rip with a bulldozer. And if you know which is which, that's a tremendous competitive advantage in those bids. And so that is so important. It's the same way across the Southeast, in Florida, Georgia, Alabama, South Carolina. These companies, these local workforces are experts in that market, know those customers, and generate recurring revenue. All right? Another part of our strategy is the type of work we go after. We avoid the big mega projects that inherently have high risk. The work we do is mostly shorter duration, smaller projects that are higher margin and lower risk. And for us, that gives us the opportunity to turn over our backlog every year and to have vision of our projects, but it also, this type of work has upside. And so historically, at CPI, in the course of working on thousands of projects in a year, a lot of those will finish at a higher than bid margin. And so for us, the type of work we go after is a big part of our strategic plan. And the last point is we're a growth company. And we have multiple avenues for growth. And Nelson is going to cover this in more detail, so I'm just going to talk about a few high points. But part of our Road Map plan, we see is continuing to grow at that 15% to 20% per year. And as we've told you for many years, we still think it will be true, we see about half of that being organic growth and about half of that being acquisitive on average. Some years it's going to vary. But for us, our first focus and the way we think we can build the most shareholder value is focus on organic growth, right? Whether it be a crew or expanding capacity in our current market at a 3x multiple or going to an adjacent market and establishing a greenfield at about a 4x multiple. We see that is a powerful way to build value. And I get the question often, well, Jule, if that's so good, why don't you always just greenfield or grow organically? And the answer is that's not always the right answer. There are some times where an acquisition makes the most sense to enter the market. And so acquisitive growth has been and continue to be a big part of our story. We've done a lot of acquisitions, as Ned said, and we've gotten good at them, as we did on just Monday in South Carolina. So we've learned how to evaluate potential acquisitions, what makes a good strategic fit, what's going to be a good market to be in. And so we talk to a lot of sellers. And we are the acquirer of choice in the Southeast as Ned said. And there's really 3 reasons why that is. We've developed a reputation of treating people fairly -- of dealing fairly for these sellers. And that's important in our industry. The second thing that's important to folks that are looking to sell is they need confidentiality. It's very important to those sellers that they'd be dealing with someone that knows how to keep confidence. And the third and most important thing is we know how to take care of their workforce. That is so important to these sellers, is they want to know because they're going to see these people at the ball fields and in the grocery stores and in that church. And they want to be able to look at them and say, we took care of you, we gave you a better situation. So acquisitive growth is going to continue to be important to that, and when we talk to sellers the opportunity to join CPI is an attractive one, these sellers are almost always very, very successful family businesses. They've done very well. And now they're moving to the stage of their family where they're playing a retirement and they're planning the next generation and how to transfer their wealth to them. And the CPI opportunity to try I know this because, in 2010, my family was looking at opportunities to sell Fred Smith Company and evaluating different opportunities. And for me, when I heard the opportunity in talking with Charles Owens to join CPI, to me, that was very attractive, to continue doing what I love with the management team in North Carolina that was very talented, but to have CPI behind us with the resources and the capital to take advantage of opportunities. And we built tremendous shareholder value over the next decade working with CPI. So for me, I really have lived that and understand the power in that. All right? So you've heard Ned talk about the thesis of aging roads. Well, we've seen the last few years that our nation, our states, have gotten serious about starting to invest in that. The IIJA, which we talk a lot about, is a 5-year plan. You can see on the slide, 47% annual increase on average in the highway funding program. But for CPI, the IIJA is so much more than highways. There's a lot of money to invest in airports, railroads, ports, even the charging stations that are going to be built, need infrastructure around them. And so for us, that's a lot of opportunities to work. And it's really just getting started. I get asked a lot, well, is the funding going yet? And the reality is yes, it is, but it's -- there's going to be more impact than '24 than there was for us in fiscal year '23 because, it so often does, it takes time for that money to get flowing. So we see the IIJA as something that's going to affect our P&L statement for the next 6 to 7 years. But also in our states, and our states all have healthy normal funding mechanisms, but we've seen them take the initiative to invest in aging infrastructure. Florida, just as you can see, just passed a $7 billion additional program for their infrastructure in their state. Tennessee just passed a $3 billion additional investment. Mayors in South Carolina is trying to expedite projects and put $850 million to it. So we -- the opportunity and the demand is going to be there because our states and our federal government know they have to invest in infrastructure. But the reality is 4 years from now, our infrastructure is not going to be all repaired. This is really just a down payment on something that's going to take decades to get fixed. So once the IIJA is over, there'll be another investment to fix our infrastructure. So as we're working in this demand environment and we're growing on the top line, how do we continue to expand the bottom line and grow margins? And for us, there's really 3 parts of that plan for us other than the demand environment. The first is we want to build better markets. We want to continue to grow. We want to be the #1 or #2 player in our markets and build better markets. For us, every now and then, we'll get an opportunity to make an acquisition in a local market and grow our market share. But we also want to be smarter in the markets we're in. And it's amazing what new technology and this artificial intelligence is allowing us to do. And we're trying to use that to its fullest extent, Power BI. We're able to put into the hands of these area managers more information about their market dynamics than ever before. That helps us be smarter bidders on bid day. The second part of our margin expansion strategy is vertical integration, which is simply capture more margin along the value chain. There are a lot of examples of vertical integration, but the 2 that are just most powerful and easy to understand are Asphalt terminals. Four years ago, we had the opportunity to buy the Asphalt terminal at the Gulf Coast in Panama -- Panama City. And we said at the time that would add 20 to 30 basis points to the bottom line of the company, and it's delivering. And so 2 months ago, we just opened our second terminal in North Alabama to service from Birmingham to Nashville. And so those types of investments will allow us without growing the top line, still just buying the same materials we were going to buy anyway, to capture that margin and to grow the bottom line. And then the third lever of margin expansion is, it's not anything dramatic, but over time it can be powerful, and that's scale. If we're going to grow the top line 15% to 20%, let's focus on growing our fixed costs slower. And that can lead to 10 to 15 basis points we estimate per year dropping to the bottom line. Over the course of the 5-year strategic plan, that can be pretty powerful. So those are the 3 ways we want to grow the bottom line. But we want to do it the right way. And for us, we want to focus on building a sustainable future. We want to do that by focusing on safety, by focusing on upward mobility for our workforce, by having representation and regulation. That picture right there is of our Vice President of Sustainability, Dr. Heather Dele, who is with us today. And we're very proud that Heather is one of the foremost leading experts on sustainability and infrastructure in our nation. She's at the table when the federal government is working with the industry and state governments to figure out how we're going to build sustainable infrastructure, what are the rules going to be. And so for us, that's something important, that our industry is moving into spacing, and we want to have a seat at the table, and Heather provides that to us. And then we want to have sustainable production. So for us, really, that really means 2 things: take care of our people and be responsible citizens. And we do that through living out our 4 core values. The first is family. We say we're a family of companies, but more important, we were a company of families. And safety is the very most solid commitment we make to those families, is we're going to get our worker back home to their loved ones safe each night. And we have to focus on that daily. We can't ever take our eye off that. The second is opportunity. As I said, we have a very diverse workforce. We want to give them opportunities to grow and build better lives for them and their families. And so we want to use the growth that's coming to create opportunities for them for upward mobility. The third is respect. As Heather sitting at the table working on regulations, we want to respect our communities, we want to respect the environment, we want to take care of it, and participate in that. And finally is excellence. We believe that we can achieve every target in this ROAD-Map 2027 and do it in a sustainable way by doing things with excellence. So that's our all core values and how we'll do things right. All right? Lastly, I just want to tell you, Ned told you, 2 years -- 2 months into my tenure, Greg moved to Raleigh. And I've known Greg for a long time. We have worked together in CPI. He was in Alabama, I was in North Carolina and -- but he moved to Raleigh. He's been right by my side the last 2 years, very relaxed and no stress. But he's just been a wonderful partner. He's just done a great job navigating through working with Allen through a very smooth transition. And he is a key part of our success as a company. So I'm going to -- now bring up Greg.

Thank you, Jule, and good morning, everybody. Those are nice words, thank you. So Jule and Ned have talked about a proven strategy, right? So Alan Palmer, our former CFO, hired me in 1993 at a predecessor company. And that strategy, Charles Owens, later Ned, and Alan essentially, started then. I didn't know that I was engaged in that strategy, but I was. I know now we're doing exactly the same thing now as we were then. A lot of people in this room where there right beside me engaged in that strategy. So it's not just -- it doesn't just go back to when we went public; it goes back to that 1993 date when Alan hired me. So it's kind of a cool story, and it works the same. They've said there's no change and they're right. I'm doing the same things. Maybe I was in a little bit different position back then. So doing the same things today that I was doing then. It works, it works, it works. So let's talk about what this proven strategy looks like. So first of all, we'll talk about a track record for sustainable growth. I will talk about a proven strategy of consistent visibility with our backlog that is only getting better and I will talk about our business is seasonal, not cyclical. And then we want to show you the proven strategy and how it works in our targets, and outlook. And then finally, we want to show you the financial flexibility we have right now to be able to execute the strategy through 2027. So as Jule mentioned, we had a strong finish to the year. I will get a little bit more into the numbers. But let me talk you through this -- a little bit of this preliminary information. So I'm not going to start with '21, I'll start with '22, which we had $1.3 billion in revenue and a midpoint growth that we're in now preliminary releasing of 19% is $1.547 billion to $1.557 billion, a tightened range and a raise. Net income also increased 113% to $44.8 million to $47 million. Adjusted EBITDA is up 53% from $111 million to a range of $168 million to $172 million. And then adjusted EBITDA margin, this slide -- I mean, this part of the slide does look like it goes with the rest, does it. We talked about that. The $1 billion worth of backlog that we -- was not inflation-adjusted and seemingly overnight, inflation went from 2% to 9% in '21. So it took a little hit on our margin that year. And then while we largely finished most of that backlog in '22, we certainly took a margin hit down to 8.5%. But now I'm pleased to announce that the new margin for '23, the new preliminary margin for '23 is 10.9% to 11% to a 28% midpoint growth, also a tightening and a raise from our previous guidance. So let's talk about that consistent visibility. This doesn't show all 11 quarters, which is in the box below, but there has been a consistent increase in our backlog for 11 quarters. It's very unusual in this business. We usually build backlog in kind of the off-peak season and then burn more than we build in the construction season. It hasn't happened. I think that speaks to a couple of things. First of all, we're growing, right? So as we grow, our backlog grows. But I think more importantly, it's the demand. The demand is there for us to continue to build into our backlog, more visibility for the next 12 months and 75% to 80% of that next 12 months is in that backlog. And so it provides us exactly what we need from a revenue standpoint to know and understand what's going to happen as well as a margin. So seasonal, not cyclical. Jule talked a little bit about this as well. We're a 3-year run rate of 63%, public 37% nonpublic private. Basically, the beauty of this model is -- and all these guys in this room can tell you that they can flip from one to the other in each of their local markets depending on what the needs are, depending where the demand is. So that's really helpful. It continues the growth that we currently enjoy. The seasonal side of the business, from a modeling standpoint, so 60% of our revenue is in the back half of the year, 40% is in the first half of the year. And then the same thing or similarly is true of our EBITDA, 70% of EBITDA is in the back half of the year and 30% is in the first half of the year. And that's primarily just related to shortening of days in our nonpeak season, right, and whether that we have to deal with through that time. Okay. So we have a strong cash flow conversion model. We traditionally generated a lot of cash in this company. The growth and margin enhancement that Jule mentioned continue to drive new EBITDA dollars. So those will continue to grow. But the way we think about this conversion model to get to retained cash flow is start with adjusted EBITDA, then back out maintenance CapEx, which is 3.25% of our revenue. And we know that's what it is because we have predictive models that tell us how we need to take care of and how we need to replace existing equipment within our infrastructure. Okay? And then finally, we removed interest and taxes to come up with retained cash flow. And that's leaving 52% to 60% of retained cash flow, that what we want to do with that is invest it in high growth or high return capital investments. And then for the Road Map going forward through 2027, our goal is to hit that 60% moving forward. And then I'm pleased to announce too that preliminary 2023 numbers for cash flow from operations are $155 million to $160 million, which compared to $16 million last year is a nice change. And then now let's talk about the initial guidance for 2024. We are announcing continued top and bottom line growth in '24, which represents a return to our normal pace of growth and fully operating our strategy for all of '24. So remember that in 2023, discussed earlier and Jule did too, that we worked through some of that pre-inflationary backlog, just now largely complete. So we've already talked about '23 numbers, so just right into the '24 guidance. 15% increase, takes us to $1.75 billion to $1.825 billion. Net income increases 41% to $63 million to $70 million. And then adjusted EBITDA, 22% increase to the midpoint of $197 million to $219 million. And then the midpoint growth of EBITDA margin to 11.3% to 12%. Now turn to the financial outlook update for the Road Map 2027. Revenue growth and Jule mentioned this a minute ago, revenue growth assumes continued 15% to 20% growth on the top line and 50 to 75 basis points annually of EBITDA. This also assumes on the top line a 50-50 split between organic and acquisitive revenue. So with that, 2027 revenue is expected to be $2.7 billion to $3.2 billion; net income, $145 million to $171 million. Adjusted EBITDA increase of 20% to 27% gets us to $351 million to $448 million. And then EBITDA margin increases over time 50 to 75 basis points to 13% to 14%. So let's talk about the strong flexibility we have for that growth. How are we going to get there? Well, first of all, I'm pleased to announce that in fiscal -- fiscal year '23 ends, we are below 2% leverage or 2x leverage ratio. So that's a nice drop from this time last year of 3.06x to approximately 1.9x. So it's a good story. So I think that's where we want to live, right? That 2.5 -- I'm sorry, 1.5x to 2.5x, we're there now. As we make acquisitions, certainly, that's going to lever up a little bit, but within that band of 2.5x to 1.5x. So cash is another strong story. Obviously, talked about cash flow from operations. We are left with $55 million in the -- on our books as of 9/30, approximately. That was after essentially keeping debt flat year-over-year, okay? So that cash was put to good use. For dry powder, so this is what gets us to 2027. Thanks to our banking partners, we have available dry powder of $448 million to handle the growth over the next 3 years. And then the final point I want to make is we have an interest rate swap in place. So on $300 million worth of term debt, we have a fixed rate of 3.6% to enjoy through 2027. So with that, next, we will hear from Nelson Fleming, VP of Strategy and Business Development, who will talk about how we use all this money. But first, I think we're going to have a -- take a 10- or 15-minute break. [Break]

Greg mentioned towards the end of his presentation that we have this $448 million to spend and I'm going to walk you through how that's going to work. In this next portion of the presentation, I'm going to provide you a more detailed look at those 3 levers of growth that Jule mentioned earlier, with case studies that demonstrate the opportunity that's in front of us. Touching on the latter 2 levers: The greenfield and acquisitive. Just since inception, we have successfully integrated just under 40 acquisitions and established nearly a dozen greenfields, demonstrating a core competency that has been part and parcel to our strategy since the beginning. And it's going to continue to be as we look to achieve those ROAD-Map 27 targets. And additionally, on this first one, organic, we've had great success over the years expanding organically, growing one of our platform companies by nearly 3x through almost exclusively organic means. And to that point, organic, the first of our 3 growth levers, as Jule previously mentioned, that's our primary focus. And on these type things, we can increase or enhance our service offerings in an existing market by outfitting new crews, allowing us to capture more revenue and more margin in markets with outsized demand. So what we have here is a case study of a typical mainline paving crew, comprises of about 10 to 12 crew members. It's -- they can generate roughly $8 million of annual revenue. And it's a modest investment, right, at a favorable multiple, 3x, that we can execute on very quickly, right? If the work is there, our personnel departments, led by Robert Baugnon, who's going to be part of the panel discussion coming up, they're continuously training new forming so that they're prepared to lead their own crew if and when the opportunity comes. Turning to the greenfields. I'll quote one of our founders by saying, he used to say, with the greenfield, specifically, these HMA plant greenfields, you're looking for a hole in the market. And what he meant by that was you're looking for an adjacent market with good long-term demands and positive competitive dynamics that you can leverage your existing organization nearby to stand up a new area. And that initial investment range we've got there, that $4 million to $8 million, that's dependent on a couple of different factors. But primarily, it's the size of the plant and the age of the plant that you're installing in that new location. And so here, I wanted to give you some insight into what a greenfield can look like in a few different stages of development. This one here, in particular, has had a little bit of time to mature. This one is in Plant City, Florida, all right? It's between Tampa, Florida and Lakeland, Florida, high-growth corridor. And we erected a used plant there in May of 2017, so about a year prior to doing the IPO, and its first full year of operation was 2018. So looking at the chart there down at the bottom left, in year 3, by year 3, we're doing about $20 million of revenue. And you fast forward another 3 years, by year 6, we were doing about $40 million of revenue. This year, year 7, so fiscal year '24, we're going to do just over $60 million of revenue. And identifying these new markets to enter via greenfield, it takes vision, it takes long-term planning. I've got a group of guys that really heads that up underneath me. They do a great job. And we're constantly planning and evaluating markets where this is a useful lever to grow. Moving to the final lever, the acquisitions, these ones, they get all the press, but we've made some headway over the years, right, building better markets through acquisitions. And as this map illustrates, there are plenty of more opportunities in the 6 states we're in, as well as the 7 states in the Sun Belt that eventually we're going to plan on expanding into. And the factors motivating these privately held businesses to sell over the years, it really hasn't changed, right? It's -- I think Jule mentioned earlier, decision to retire, maybe a lack of a succession plan or conversely, as was the case with our next slide, the desire to grow their business with a partner that fit their culture and could help them execute on opportunities to grow. And that was the case with King Asphalt, Mike Crenshaw, he's another member of the panel coming up. In October of '21 with 3 plants, 158 employees headquartered in the white-hot Greenville, South Carolina metro area, King became CPI South Carolina platform company. And like all our platform companies, they have a couple of different features, right? They possess a strong management team. They're operating in growing markets. They have a track record of operational excellence and they have a competency and an ability to grow both organically as well as acquisitively. So I'm going to take you kind of through King's story over the last couple of years here. So their first bolt-on, it happened about 9 months after becoming part of the CPI family. King integrated and executed on the acquisition of Southern Asphalt there in the Myrtle Beach area. It was a 2-plant operation that immediately put King in the 2 fastest-growing markets in South Carolina between Greenville, South Carolina and Myrtle Beach. And we talk in terms of types of acquisitions, platforms and bolt-ons, and the easiest way to put it is the way they differ is bolt-ons are generally smaller, and therefore, they are great candidates to be folded into an existing operating company. The second bolt-on that King did happen a couple of months later, the acquisition of Pickens Construction. They added another plant in the upstate that expanded their footprint further south, so they picked up some new bidding markets. And then the next bolt-on, just a few months after that, returning to coastal South Carolina, we had a chance to build a better market with our third bolt-on there, an acquisition of one plant in Myrtle Beach that kind of helps us meet the capacity and all the demands of that white-hot market there. And then as you guys probably saw on Monday, their fourth and final bolt-on, we added another plant in the upstate that expanded King's footprint there further west into County -- County just a small 1 plant operation that took us to 8 plants. And I want to camp out on this picture here because -- this is what we call a day 1. This is closing day. And these are emotional days, both for the owner as he's addressing employees, talking about how he's -- talking about his decision to sell the business, introducing new ownership. A lot of these people have worked for that owner for 10, 20, in some cases, even upwards of 30 years. And it's important to win those day 1s. And I feel like we've developed a really nice formula to reinsure employees that they've got a job. And most importantly, that we're going to take care of them and their families. They're not going to take a step back professionally. They're not going to take a step back from a compensation standpoint. And it's an important part of what we do from an acquisition standpoint. And this is really the juncture that the platform companies, they take center stage at this point, addressing employees, figuring out how to onboard them, putting into the right roles. And really from the point of day 1, going forward, they're responsible for integrating these bolt-on acquisitions. So in summation here, within 2 years, King added 5 plants to expand to an 8-plant footprint. They went from 158 employees to over 400. And as you can see here on the map, there's plenty of white space to grow between the Greenville area and the Myrtle Beach area. So the opportunities are out there for them to continue the buy-and-build strategy that we've employed throughout the State of South Carolina. So now I'm going to kind of take you through a couple of different types of acquisitions. What we just went through in the case study with King and their various bolt-ons, you'll notice that all those companies had similar features, right? They had an asphalt plant that had paving crews. They had base crews. But -- and those are what I would really call kind of middle of the fairway type deals for us. But there's also a large universe of additional opportunities on the material side of things. Jule mentioned earlier, the liquid asphalt terminal in coastal Florida that we acquired back in 2019. But also, and this is the focus of these next 2 slides, there's those construction services businesses out there. And these are services-only business. There's not a materials component, so there's not an Asphalt plant, there's not an aggregate plant. But as this slide illustrates, this greatly expands the number of acquisition opportunities that we can execute on to build shareholder value. So I'm going to take you through 3 recent examples here. We acquired a grading contractor in Wilson, North Carolina. We acquired a grading contractor in Pensacola, Florida that also did utilities work. And we acquired a commercial grading contractor in Southern side in Alabama. And these are all examples of construction-only contractors in markets that we're already in. And that's the key distinction about these type deals, is they're meant to support and expand our core Asphalt operations in markets that we're already in, in those existing markets. They're there to complement those ongoing operations, allowing us to capture more revenue and more margin, kind of similar to adding new crews. So in summary, there's obviously taking you through this, there's no shortage of opportunities from the acquisitive side of things. We've got a long, long runway to grow there. We get approached every day, it seems like with new opportunities. There's plenty of opportunities that we're trying to track down from a greenfield side of things. There's a lot of untapped markets that have the demand to support another Asphalt producer. And there's plenty of organic growth opportunities. We've got so many of them between the operating companies that we have that you've got a sequence amount similar to acquisitions. But our job is to help cultivate these opportunities and hopefully pick the best ones and hopefully they're the right ones. So now that I've walked you through how we grow, I'd like to turn it back over to Jule Smith to lead the panel discussion.

While they're setting up, Joseph, if you would go back to the slide showing our current footprint, the map that we had. I promised you that I'd talk about new states, and I realized I didn't hit that, and I want to go through that. Just to briefly point out -- that's good right there. So I get asked a lot of times, well, Jule, when do you -- when is CPI going to a new state? And I say, well, we just entered 2 new states in 2 years. And -- but they see this map and they say, "Well, what about Texas? What about Oklahoma, Virginia, Mississippi, Louisiana." And I would just say this, we are always having conversations with people in new states but we also have a lot of opportunity in the states we're in. There's a lot of white space in the 6 states we're in. And those opportunities give us a chance to leverage not only our existing management structure and the people that are there in our platform companies. It also drives throughput through our vertical integration facilities. And so the answer is we look at both. But the one thing we're not going to do is, just because assets come up for sale, hopscotch around and do that. We're going to go into a new state. We're going to have a good management team. We're going to make sure that it's organized and that we can deliver excellent execution. So we will be in these states at some point in the future. I can't tell you when but we're going to make sure to do it in a thoughtful way. So I want to cover that. So I'm excited now to introduce for you these guys, our panel. And I'm going to get them to share a little bit of their insight, but I first want to introduce them and tell you who these guys are. You just heard from Nelson and Nelson is in a lot of ways like my right arm. There's much growth opportunities as we have. Nelson, as our VP of Strategy and Business Development, helps navigate all those opportunities. But more than that, he also helps us focus on our strategic plan. He is the keeper of Road Map each year. And so that grows organically from each of our area managers, they have a part in Road Map. If you look -- it's a long document, but the area manager for Bob in Pensacola, Mat Garden, he's got his part of that Road Map, and so it's built up organically. And so Nelson is extremely important in making sure that our strategy is being executed on and we're looking at these growth opportunities. Robert Baugnon, our VP of Business Development, right here. I've known Robert for the better part of 2 decades. And a lot like Greg and I, Robert came up through the operating companies. He's been in the trenches as my VP of Personnel. So that is a tremendous advantage as we navigate attracting and retaining a workforce in an environment where, generationally, the workforce for our industry is shrinking. Robert's job is to turn that to be a competitive advantage for CPI. And for him to have the knowledge and to understand what it makes -- what it takes to make a successful workforce, the mindset of the people that work at Asphalt plants and on grading crews, is a tremendous advantage for CPI. So we're going to be talking a little bit about the workforce. But then these 2 guys in the middle, they are the 2 newest platform companies to join CPI. First, Mike Crenshaw, President of King Asphalt, who Nelson just showed you, has not had a very laid back first 2 years at CPI. So -- but his team -- I met Mike in the May of 2021, where he reached out to CPI and said, "Hey, I'd like to talk to you." And so I went to Greenville, started meeting with Mike and we would ride around. And I just got to know them. And what was so impressive was not only was that company located in a dynamic area of Greenville, South Carolina, but that was a company of character. Mike cared about his people. He led them well, but he had such a great team. And I said, you know that's the company that can fill in this hole for CPI in South Carolina, we can grow with. And it's happened exactly like that. And so we're really excited with the growth we've had in South Carolina. I promised Mike, we'd give them at least a month or 2 before we do another acquisition in South Carolina. And then finally, David Ferebee. We -- Ferebee Corporation joined the CPI family of companies, and just this last December. So David has gone through its inaugural voyage and just finished up. And I promised him before the first year was out, I would have them on the worldwide web in New York City. And so I've delivered on that promise. So -- but for Ferebee Corporation, David is from Charlotte. He and his family founded that business in Charlotte, they're experts in that market. It's a huge growing market. And so to have someone like David Ferebee, whose business is just so strategically located, to have a great team that knows that market and David is just -- he's a native and that is a huge advantage. So guys, I want to just start out and ask you a few questions, just to help share a little bit about what our secret sauce is. So first, Mike and David, I want to ask you, why did you choose CPI as an acquirer for your business? What about the opportunity to join CPI as a platform company appeal to you?

Who'll go first? We were looking for somebody who would really take care of our people. We had seen some acquisitions locally that had not gone so well. The cultures of the company had been destroyed. People had left the companies. The last thing we wanted was to get involved in something like that. We really wanted a company that we needed, would take care of our people, had a great culture, and would allow our people to grow. So it was really important for us to be able to see our culture continue, our identity continue, and to be able to give our employees opportunities to grow.

David?

No. We, again, we're a small family-owned, basically, the principles were my father, my brother and I. And we've been in business about 38 years, and none of our children or family members were interested. And so we were looking at how to transition the business and from the succession side of things. And so we've been approached several times over the years. But we started researching and pulled up CPI. And again, the -- it's just one of those things where it seemed to fit for us in that you had somebody who understood our business, was not going to come in and recreate the world that we live in, especially for our employees, similar to that, so you don't have just a huge defection because we're all fortunate, like I said, the people assets that make our business strong and key people who have been with us for a long time. But based on our conversations and meeting, there was just a comfort level there that we felt, moving forward, would make the best sense for us, and it has. And that's where we are.

One other important part that we had was we did have such a good leadership team. The fact that we could still continue to run our business locally was really important for us. And that's something that CPI allows us.

That was a big part of what appealed to me back in 2010. All right, Robert. So I said -- I told him what your challenge was. So how are you managing the generational loss of workers over time in the construction industry and how you're going to turn this into a competitive advantage?

So we have to be creative, to say the least. We joke around about and you hear about the aging workforce, but we literally have employees from 18 to 80. It's -- we have a significant advantage over other companies because we're able to take, with our size and scale, take those employees that are maybe at the twilight part of their career and use that experience and knowledge to our advantage, put them in training roles, put them in roles where they're mentoring and helping to grow these younger folks. I mean, at this point in time, we're in high schools. We're to that point where we're chasing and attracting employees, trying to find them in high schools now. That's a different type of model that we have to feed. We have to feed a different kind of emotion there. Now we're looking at growth and how am I going to grow and what's my path and putting together formal programs. I think Nelson mentioned it earlier with these paving crews and stuff, we're putting the other formal programs that are documented with specific steps to train and grow foremen. We saw this coming a number of years ago. We've got to build these people up ourselves. There are no foremen trees out in our yards so we go shake and people just fall out. We've got to build them ourselves. And then we've got this key group of middle management that we really need to hold on to, by incentivizing them through long-term incentive programs, stock reward programs, that incentivize them for staying with us and holding on. That helps us align that key management group of middle managers with the company's goals. We're going to take advantage of everything that we can bring to bear and hold on to these employees, because without them, Nelson over here can acquire all the companies we want to, but we're not holding on to these people and taking advantage of their strengths, but we're not going anywhere.

Yes. The yellow iron is valuable, but the people are where it's all at. All right, Nelson, how do you source deals at CPI? And how do you work with the platform presidents to assess opportunities and to be effective in their state?

Yes. My favorite part of my job is the acquisition side of things is just a highly collaborative effort and that is the case from a sourcing standpoint as well. I see a lot of opportunities, my department sees a lot of opportunities to come in, those inbound leads that maybe sellers decided to get representation. We see all those opportunities in our region of the country. But more often and throughout our history, it's been relationships that these operators that have been operating in their states for 20, 30, even 40 years in some cases, they've developed relationships with people in their industry just either through competing with them, through just getting to know them through industry associations. So from a sourcing side of things, we've got a lot of people that are on the lookout for deals, that are able to help source. And so we see a lot of opportunities from that standpoint.

Great. All right. Mike and David, so you talked about what joining CPI meant for you and your families, from your partners. What did it mean for your employees joining CPI in your workforce?

Well, again, a seamless continuity of leadership and management. Again, CPI brought to the table, again, the resources and capital and expertise from other companies. But at the same time, we -- the employees again were #1 in that transition. And they -- again, we were very careful in trying to be discrete and not get people upset or wondering a lot of questions and so forth, because again we didn't want that to occur. And knock on wood, I think we did a good job of that and we had very little fallout from that from an employee side of things. But at the same time, what happened, I think from day 1, the benefits side definitely came to light in the health care. Again, we were a smaller group. With a larger group of CPI, we were able to offer better health care, and again, comparable savings plan, 401(k) and so forth. And again, the concept of you weren't losing your benefits in any shape or form, we were going to operate just as we had before. So that was a lot of comfort in the employee side of things. And again, the savings plan with some of the stock options that you incorporate, a lot of people have taken on to that, where we didn't have that option before. So we just broadened the base of the things that we could offer to them and they were as good or better than what they've had before. And I think that came across as a very positive.

Great. Mike?

I agree with David on the confidentiality. That was huge for us. We did not want to get our employees upset. We didn't want to lose employees leading up to the sale. We were able to keep it quiet until the day of, which was extraordinary in today's markets. It's really important for our people that with CPI, with a lot of family companies, there's like a plateau how far your employees can grow. With Construction Partners, there is no plateau. They could start out on a crew and end up one day running the company or even working into the CPI realm. So that was important for them, is being able to allow them to grow. We had such a young group, so eager to grow, but they were just kind of reaching that plateau, and this just opened a whole new door for them. So really excited about that. Also one thing too is it allowed us -- it allowed them to grow. We allowed them to grow -- our company to grow. And we could vertically integrate into other services that we've never even thought about. So that would help our whole company become stronger.

Great. Yes, I remember one time I was walking around with Mike in the summer, and of course, when you're just talking to the owner, you're sort of like you're the insurance guy, that bonding guy, right? You can go out on the crew and say he is from CPI. But we were watching a big cement reclamation project and [indiscernible] was the guy running the crew. And now with this growth, he's the area manager for the Upstate Region. He's just a wonderful, smart guy, but just creates a tremendous growth opportunity for him. Robert, what's your approach to a new acquisition to make it help the platform companies making a successful integration? What's important to that process?

So I've participated in a number of these acquisitions, both as the local representative when I was with Fred Smith Company, before Jule decided to make Mike's life busy over here at one point in time when I was with Fred Smith Company, we completed 4 acquisitions in 10 weeks. It felt like we were doing an acquisition about every 2 or 3 weeks. So we were staying in front of a new group of people each time. The key and the most important step is that first day 1. The day 1 is where you get to make your first impression and you get 1 shot at it. And if Mike's making an acquisition that's got 20 people and his guys don't walk in with a positive attitude and our pushing and selling what they're going to bring to the table, and they lose 7 people, that's incredibly disruptive to that operation. The most important part of these acquisitions, I mean, we buy assets, there are asset acquisitions, we're buying the equipment, we're buying the sites and the plants. But equipment and sites and plants don't have free will, the people do. And if we don't sell them, and we don't convince them that this is good for their families, that's all on us, and we can't do that. The equipment manufacturers will sell us equipment all day long. The last time I checked, when the low-boy shows up with a new bulldozer, there's not a carton on the back of the machine that says "Operator enclosed" doesn't happen. We've got to hold on to those folks. So making that sales pitch that day, selling the benefits, selling the culture, talking about the growth opportunities, that is the first and most important step. I always used to take the approach that when that new employee went home that day, went to go see his wife, a crazy thing happened today at work, we got bought, owner sold out, but I think it's going to be a good thing for us. Our benefits -- the benefits just got cheaper. They're really good. It looks like I'm going to get a little extra time off, a little more vacation, a little PTO. That's good for us. So I want them walking home with that in their mind, not what happened today. We got sold. If we've done that, if that's what's happening, we haven't done our job. So that day 1 piece and making that first good impression is the most important part. And then after that, it's -- as both Mike and David have said, giving people the opportunity to grow the size and scale that we provide and the opportunity. Mike's guys have grown significantly over the years. As they've added on these operations, it's given them the opportunity to take a larger piece and take a larger role in the company. And that's an amazing thing for these operating companies.

Right. Nelson, what are the sellers' goals and priorities? You work with them all the time. How do you approach meeting their needs?

Yes. A couple of things have already been mentioned on this topic, but obviously, right off that, they want to know that the person is across the table from them, they can trust. The confidentiality aspect of things is crucially important. And then just the fact that they're worried about their people, right? Those people that have worked for them for such a long time, they're their work family, just as much as their regular family. No different than you or I, you probably see the people you work with more than your families day in and day out. But there's 2 other points that I think resonate with sellers that, hopefully, we articulate and communicate throughout the process, which is the locally driven model, decision-making at the local level. It's a local business, as we've kind of elaborated throughout this presentation, that is an aspect of things whether you're a platform or a bolt-on that really resonates with sellers because they realize the importance of knowing the local market, the relationships they have there. And then I would say that the second point is that you want to make sure that -- they want to make sure that they're dealing with somebody that has the know-how from an acquisitive standpoint. There's not very many companies in our space that acquire businesses. And I think it's crucially important that throughout the process, they feel like they're taken care of. For the most part, you're really only selling a business one time, and it's an emotional process, and part of our job, part of my job throughout that process from the time we start discussions to the time we close, is to shepherd them through the process of selling the business. And I think we do that better than anybody else in our industry.

All right. Final question, Mike and David, you've heard me and Nelson up here talking about opportunities. But what do you see now that you've joined CPI, what do you see as opportunities in your marketplace and state moving forward?

Well, I think Charlotte, again, is, and our general area, is poised for great growth here in the near term and long term. And so we, as being a new member already looking at organic growth within our market. And we see a lot of positive signs then -- and again, we're just trying to figure out what makes the best sense for everybody. But the growth and the upside in our market, we feel, is very strong. And we look forward to that and trying to move forward with that.

Mike?

For us, I guess I talked about a little bit this last night, our state is super strong right now. There's a lot of people moving to our state. Our Myrtle Beach market is -- was recently published as the #1 place to move to in America. Greenville and Spartanburg in the upstate are in the top 15 places to move. So both of those markets are exploding from a commercial standpoint. That's housing and commercial buildings, large tilt-up buildings, warehouse type buildings. But also the DOT. The DOT has been very fortunate to increase their funding in the last 6 years through a gas tax. They've been able to catch some extra funding from the Feds. So both are very strong right now for us in South Carolina. A lot of the counties, they're passing -- they've either passed or trying to pass 1 cent sales taxes to increase the funding for the counties. So we're seeing really growth in all 3 areas in our area right now. And as far as future growth, I mean the Columbia area is a very good market. Charleston market is a very good market. Down toward Augusta, there's a lot of room to grow in South Carolina. And we look forward to it.

Great. thank you, guys. I know you guys -- the market hears from Greg and I a lot. But I'm excited today that you get to see that there's a whole team that really makes this happen, and it's experts like these guys that really make CPI successful. So give them a hand. Thank you. Thank you, guys. We're going to take about a couple of minute break, about a 5-minute break. And then we'll have questions and answers, and Greg and I will be up here to answer those. All right? Thank you. [Break]

Session now and restart our webcast. And our first question is going to come from the esteemed Andy Wittman.