Construction Partners, Inc. Q2 FY2026 earnings call

• CEO Jewel Smith thanked employees for hard work in Q2, noting they exceeded profitability expectations and grew backlog, allowing raising outlook for FY26. Focus on family of companies culture, including keeping low employee turnover, lowering benefit costs, and surveying employees for feedback. - Favorable weather in Q2 allowed efficient work and volume increase. Energy volatility had limited impact due to protection of liquid asphalt index on over 80% of revenue. - Strong demand for construction projects in public infrastructure and commercial development. Examples of projects in Texas, Tennessee, Alabama. - Completed acquisition of Four Star Paving, fourth acquisition in fiscal 2026 and 17th since start of fiscal 2024. New Gastonia North Carolina Greenfield to begin operations, servicing large contract expanding and widening I-85. Plan to bring online more Greenfield facilities later this year and early next year.

In Q2, revenue was $769.2 million, an increase of 35% compared to last year. Breakdown of revenue growth was 11% organic and 24% acquisitive. Gross profit in Q2 was $98.9 million, an increase of approximately 39% compared to last year, with gross profit as a percentage of total revenues being 12.9% compared to 12.5% last year. Net income was $9.2 million, adjusted net income was $10.4 million, earnings per diluted share for adjusted net income was 18 cents. Adjusted EBITDA was $93.3 million, an increase of 35% compared to last year, with adjusted EBITDA margin for the quarter being 12.1%. Cash flow from operations in Q2 of fiscal 2026 was $65.2 million, up from $55.6 million in Q2 of fiscal 2025. At March 31st, there was $77 million of cash and cash equivalents and $150 million available under the credit facility, net of a reduction for outstanding letters of credit. Debt to trailing 12-month EBITDA ratio was 3.23 times. Project backlog was $3.14 billion at March 31, 2026, with approximately 80% to 85% of the next 12 months' contract revenue covered in backlog.

• Raised fiscal 2026 outlook: Revenue in the range of $3.59 to $3.65 billion. Net income in the range of $159 to $162 million. Adjusted net income in the range of $170.4 to $174.2 million. Adjusted EBITDA in the range of $552 to $564 million. Adjusted EBITDA margin in the range of 15.38% to 15.45%. - Anticipate cash flow generated during third quarter to fund Four Star Paving acquisition without additional long-term debt. Expect to convert 75% to 85% of VivaDOT's cash flow from operations in FY26.

Q: Follow up on M&A, contribution from acquisitions, margin profile.

A: Jewel, Ned, and Greg discussed active M&A, industry growth, demographics, opportunities in states, and modeling.

Q: On liquid AC, diesel, energy shock, timing delay between incurring costs and rebates from DOTs.

A: Settled monthly in progress payment.

Q: On IIJ reauthorization and Road 2030 target, view on funding level.

A: Anticipate normal mid single digit bump each year.

Q: On data centers, size impact.

A: Data centers becoming more part of work, more being built in markets.

Q: On crude energy, liquid asphalt assumptions in guidance, impact of prior price spikes.

A: Liquid AC and terminals help, evolved hedging program.

Q: On CR, how DOTs respond.

A: Business as usual, states continue work.

Q: Additional details on Four Star Paving, liquid asphalt supply goal.

A: Four Star Paving has ~150 employees, fits with Tennessee assets. Goal to increase internal liquid asphalt supply percentage.