ROAD — Construction Partners, Inc.

Summary of Construction Partners Q4 2025 Earnings Call

1. Key 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.

2. Strategic 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.

3. Forward 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.

4. Bad 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.

5. Notable 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.