Summary of Construction Partners Q4 2025 Earnings Call

1Key Financial Results and Metrics

Q4 Revenue: $900 million, a 67% increase year-over-year, with 10.4% attributed to organic growth.

Fiscal Year 2025 Revenue: $2.812 billion, up 54% from the previous year (8.4% organic growth, 45.6% from acquisitions).

Q4 Adjusted EBITDA: $154 million, doubling from Q4 last year; Adjusted EBITDA margin at 17.1%.

Fiscal Year 2025 Adjusted EBITDA: $423.7 million, a 92% increase; Adjusted EBITDA margin at 15%, up from 12.1% in FY 2024.

Net Income: $101.8 million, a 48% increase year-over-year.

Cash Flow from Operations: $291 million, up from $209 million in FY 2024.

Debt to EBITDA Ratio: 3.1 times, with a goal to reduce to approximately 2.5 times by late 2026.

2Strategic Updates and Business Highlights

Acquisitions: Five strategic acquisitions in FY 2025, including entries into Texas and Oklahoma, and expansion in Tennessee, Mobile, and Houston.

Record Project Backlog: $3 billion as of September 30, 2025, with 80-85% of the next twelve months' revenue covered.

Road 2030 Plan: New five-year strategic plan targeting over $6 billion in revenue by 2030, with expected EBITDA margins reaching 17%.

Market Position: Focus on growth in the Sunbelt region, capitalizing on trends such as migration, reshoring, and increased public infrastructure investment.

3Forward Guidance and Outlook

Fiscal Year 2026 Revenue Guidance: Expected between $3.435 billion.

Net Income Guidance: Between $150 million and $155 million; Adjusted net income between $158.1 million and $164.2 million.

Adjusted EBITDA Guidance: Between $520 million and $540 million, with a margin of 15.3% to 15.4%.

Growth Expectations: Anticipated 23% growth in FY 2026, with continued focus on organic growth and strategic acquisitions.

4Bad News, Challenges, or Points of Concern

Integration Challenges: While integration of acquisitions has improved, the complexity of managing multiple acquisitions remains a concern.

Labor Market: Ongoing challenge in attracting and retaining skilled labor, which is crucial for executing projects effectively.

Government Funding: Although current projects are stable, reliance on government funding and potential delays in reauthorization of infrastructure programs could pose risks.

Competitive Pressures: Despite healthy market conditions, the competitive bidding environment remains a constant challenge.

5Notable Q&A Insights

Integration Strategy: Management emphasized improved integration processes due to a strong team and cultural fit with acquired companies, noting smoother transitions compared to previous years.

Government Shutdown Impact: Management confirmed that the recent government shutdown did not significantly affect operations due to funding mechanisms through the Highway Trust Fund.

M&A Strategy: Future M&A is expected to focus on bolt-on acquisitions while maintaining a balance with deleveraging efforts.

Pricing Environment: The bidding environment remains healthy, with stable pricing and costs, particularly in the asphalt market, which is expected to remain manageable in FY 2026. Overall, Construction Partners reported a strong financial performance in FY 2025, driven by strategic acquisitions and organic growth, while outlining an optimistic outlook for FY 2026 amidst some operational challenges.