8-K: Construction Partners Expands into Tennessee with Acquisition of PRI

Construction Partners, Inc. (CPI) has acquired PRI of East Tennessee, Inc. and Pavement Restorations, Inc., expanding its infrastructure business in Tennessee.

Summary

• Construction Partners, Inc. (CPI) has acquired PRI of East Tennessee, Inc. and Pavement Restorations, Inc. (collectively, PRI).
• PRI is an asphalt manufacturing and construction business headquartered in Knoxville, Tennessee.
• Pavement Restorations, Inc. is a pavement preservation business headquartered in Milan, Tennessee.
• PRI provides construction and paving services for public and private projects in northeastern Tennessee from its hot-mix asphalt plant in Knoxville.
• PRI also provides pavement preservation and specialized sitework services.
• The acquisition adds nearly 300 employees to CPI.
• CPI intends to transition the management of its pre-existing Tennessee operations, which include three hot-mix asphalt plants in the Nashville metro area, to PRI.

Sentiment

Score: 8

Explanation: The announcement is positive, indicating strategic growth and expansion into a new market. The management commentary is optimistic about future opportunities in Tennessee.

Positives

• CPI expands its geographic footprint into Tennessee.
• The acquisition adds a hot-mix asphalt plant and a pavement preservation business.
• PRI has an experienced management team.
• The State of Tennessee is ripe with organic and acquisitive growth opportunities, driven by strong economic growth, favorable demographic trends, and a healthy transportation funding program.
• The acquisition complements CPI's current operations and enhances its ability to meet the growing demand for pavement preservation.

Risks

• The press release contains forward-looking statements that are subject to risks and uncertainties.
• Actual results could differ materially from those expressed in the forward-looking statements.

Future Outlook

CPI expects continued success in the Tennessee market and aims to meet the growing demand for pavement preservation.

Management Comments

• Fred J. (Jule) Smith, III, the Company's President and Chief Executive Officer, said, 'We are pleased to welcome PRI and its nearly 300 employees to the CPI family of companies as our platform company in Tennessee.'
• Smith also stated that the company now stretches the length of the state, from Knoxville in the east to the greater Memphis metro area in the west.
• Smith noted that the combined PRI organization will benefit from the technical expertise and visionary leadership of Jon Hargett and Greg Ailshie.
• Smith stated that the State of Tennessee is ripe with organic and acquisitive growth opportunities, driven by strong economic growth, favorable demographic trends, and a healthy transportation funding program.

Industry Context

The acquisition reflects a trend of consolidation in the civil infrastructure industry, with companies seeking to expand their geographic reach and service offerings.

Comparison to Industry Standards

• Without specific financial details, it's difficult to compare this acquisition directly to industry benchmarks.
• However, acquisitions of regional asphalt and paving companies are common in the construction industry, with valuations typically based on multiples of revenue or EBITDA.
• Companies like Vulcan Materials, Martin Marietta Materials, and Summit Materials also actively acquire smaller players to expand their market presence.

Management Changes

Stakeholder Impact

• Shareholders: Positive impact due to expansion and growth potential.
• Employees: Potential opportunities for career advancement within the expanded organization.
• Customers: Access to a wider range of services and expertise.
• Suppliers: Potential for increased business volume.

Next Steps

• Transition management of existing Tennessee operations to PRI.
• Integrate PRI into the CPI family of companies.
• Pursue organic and acquisitive growth opportunities in Tennessee.

Key Dates

Keywords

acquisition, construction partners, PRI of East Tennessee, pavement restorations, infrastructure, Tennessee, asphalt, paving, pavement preservation