Construction Partners, Inc. Q4 FY2025 earnings call

• Early in fiscal 2025, the company entered Texas, Oklahoma, and established a platform in Tennessee, and acquired subsidiary brands in Mobile, Alabama, and Houston, Texas. These five acquisitions, along with 8.4% organic growth, led to 54% total revenue growth.
• Fiscal 2025 saw a 92% increase in EBITDA year over year and a record EBITDA margin of 15%.
• Ended fiscal year 2025 with a record project backlog of $3 billion.
• In fiscal 2026, two large acquisitions were completed in October: P and S Paving in Florida and expansion in Houston by acquiring eight hot mix asphalt plants and related assets from Vulcan Materials.
• Hosted Analyst Day in October 2025, where it was reported that CPI eclipsed Roadmap 2027 goals and introduced Road 2030, targeting to double revenue to over $6 billion by 2030 with expanding EBITDA margins.
• Identified four macro trends driving growth: continued migration to the Sunbelt, reshoring of companies, strong public contract bidding, and generational transition in the fragmented construction industry.

In fiscal 2025, Construction Partners achieved significant growth. Revenue was $2.812 billion, an increase of 54% compared to the previous year, with 8.4% organic growth and 45.6% acquisitive growth. Gross profit was $439.1 million, an increase of approximately 70% compared to the prior year, representing 15.6% of total revenues. Adjusted EBITDA was $423.7 million, a 92% increase year over year, with an adjusted EBITDA margin of 15%. The company ended fiscal year 2025 with a record project backlog of $3 billion.

• Fiscal year 2026 revenue range: $3.435 billion.
• Net income range: $150 to $155 million.
• Adjusted net income range: $158.1 to $164.2 million.
• Adjusted EBITDA range: $520 million to $540 million.
• Adjusted EBITDA margin range: 15.3% to 15.4%.
• Anticipated first half of fiscal 2026 to contribute approximately 40% to 42% of annual revenue and 30% to 34% of adjusted EBITDA; second half to contribute remaining revenue and adjusted EBITDA.
• Record project backlog of $3 billion at 09/30/2025, with 80% to 85% of next twelve months' contract revenue covered in backlog.

Q: Could you talk more about integration of recent acquisitions and how it's different today versus five years ago?

A: Ned Fleming mentioned a great team that does diligence, understands strategic benefits, organizational and financial fit. More opportunities now due to generational transition, and integration involves including people throughout the company, with better integration now.

Q: What is the confidence level around getting to a vote on the reauthorization bill by spring?

A: Jules Smith said it's bipartisan, but government shutdown set back momentum, but both chambers are working on the bill and aiming for a vote by spring.

Q: How much rollover M&A revenue should we model for 2026 and impact on margins?

A: Gregory A. Hoffman said 2025 acquisitions carry over $240 to $250 million in revenue, 2026 acquisitions another $200 million, neutral to current margin position.

Q: Is 2026 more bolt-on versus platform M&A?

A: Jules Smith said 2026 will continue bolt-on acquisitions where strategic positives are too much to pass up, while focusing on deleveraging to reach 2.5 times leverage by late 2026.

Q: Any potential revenue-raising initiatives or ballot measures monitored?

A: Jules Smith said all eight states have had ballot initiatives to fund infrastructure, with states taking steps like tax measures to invest in transportation.