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DATE
Feb. 5, 2026 at 10 a.m. ET
CALL PARTICIPANTS
- Chief Executive Officer — Rick Black
- President — Jules Ned
- Chief Financial Officer — Gregory A. Hoffman
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TAKEAWAYS
- Revenue -- $809.5 million, up 44%, driven by 3.5% organic growth and 40.6% acquisitive growth.
- Gross Profit -- $121.5 million, a 58% increase, resulting in a gross margin of 15%, compared to 13.6% last year.
- General & Administrative Expenses -- Decreased to 7.7% of revenue, down from 7.9% last year.
- Net Income -- $17.2 million; adjusted net income was $26.4 million.
- Adjusted EPS -- $0.47 per diluted share for adjusted net income.
- Adjusted EBITDA -- $112.2 million, up 63%, with adjusted EBITDA margin of 13.9%, compared to 12.2% last year.
- Operating Cash Flow -- $82.6 million, doubling from $40.7 million in the previous period.
- Debt Metrics -- Debt to trailing twelve-month EBITDA ratio of 3.18x, with stated intent to reach approximately 2.5x by late 2026.
- Liquidity -- $104 million in cash, and $163 million available under the credit facility (net of letters of credit).
- Fiscal 2026 Guidance Raised -- Revenue midpoint now $3.52 billion, net income midpoint $156 million, adjusted net income midpoint $166.1 million, adjusted EBITDA midpoint $542 million, and adjusted EBITDA margin expected at 15.34%-15.45%.
- Organic Growth Guidance -- Fiscal year organic growth forecasted at 7%-8%.
- Backlog -- $3.09 billion as of Dec. 31, 2025, covering 80%-85% of the next twelve months' contract revenue.
- Public Contract Awards Outlook -- Management expects federal, state, and local contract awards to increase by 10%-15% in fiscal 2026.
- Acquisition Update -- Completion and integration of three Houston acquisitions (Durwood Green, Vulcan Asphalt Construction, GMJ Paving) within six months, bringing total Houston plants to twelve.
- M&A Revenue Impact -- Management stated, "About $260 to $280 million and the remaining three quarters are gonna be from acquisitions," including GMJ.
- HMA Greenfield Expansion -- New hot mix asphalt plant in Brunswick, Georgia, coming online this quarter, with further greenfield sites planned this and next year.
- Cash-Funded Acquisitions -- GMJ acquisition to be financed entirely from cash flow from operations, with all recent purchase activity ($215 million) requiring $140 million in new borrowing.
- Revenue Split Seasonality -- First half forecast: 42% of annual revenue, and 34% of adjusted EBITDA; second half: 58% of revenue, and 66% of adjusted EBITDA, aligning with construction seasonality.
- Road 2030 Plan -- Long-term plan targets more than $6 billion in revenue, and $1 billion in EBITDA by 2030, with 17% EBITDA margin.
SUMMARY
Management highlighted significant acquisitive and organic growth, maintaining confidence in full-year forecasts and a robust acquisition pipeline. Company guidance was raised across all major metrics, with explicit detail on the contribution from acquisitions and recent integration successes in Houston and Georgia. Public and commercial demand remain steady, with management specifically citing a 10%-15% increase in public contract awards and continued data center, factory, and distribution center work in the Sunbelt. Cash generation and prudent leverage management enable ongoing M&A without reliance on incremental long-term debt, and backlog covers the majority of revenue for the next twelve months.
- CEO Black said, "We expect the size and shape of [the federal surface transportation reauthorization] bill to be known this spring," and indicated confidence in increased annual state funding via formula allocation.
- Ned said, "it's as robust as it's been in twenty-five years," referencing the current pipeline for both platform and tuck-in acquisitions.
- Management stated, "When you have a great management team in that market, and you can continue to add, that's where we start to compound both the top line and the bottom line."
- CEO Black emphasized that in markets with irrational competition, the company redeploys resources to acquired areas offering higher margins, contributing to the acquisitive revenue mix.
- Company remains on track with the "Road 2030" plan, aiming to double revenue and achieve above-market EBITDA margins, underscoring this as the core of its long-term growth narrative.
INDUSTRY GLOSSARY
- HMA: Hot Mix Asphalt; a composite material commonly used for constructing and maintaining road surfaces, and produced by heating and mixing aggregates with liquid asphalt cement.
- Platform Acquisition: An initial, sizeable acquisition in a new geographic region or business line used as a foundation for subsequent smaller "tuck-in" acquisitions in the same area.
- Tuck-In Acquisition: The purchase of a smaller business integrated into an existing platform to expand scale, capabilities, or geography.
- Backlog: The total value of awarded contracts that are contractually committed but have not yet been recognized as revenue.
Full Conference Call Transcript
Rick Black: Eight states and over 110 local markets. On the public side, both the federal and state governments are continuing their investment in infrastructure to keep up with the growing economies in the Sunbelt. In Q1, we have seen strong public contract bidding throughout our eight states and expect total federal, state, and local contract awards in FY '26 to increase approximately 10 to 15% over FY '25. This is particularly true for the small and medium-sized recurring maintenance projects for state DOTs, cities, and counties that represent a majority of our work. On Capitol Hill, both houses of Congress continue to work with Secretary Duffy on completing a five-year reauthorization of the surface transportation program by September 30.
We expect the size and shape of this bill to be known this spring. From what we have heard so far, we expect the reauthorization to provide a significant increase in the annual funding amount going to the states by pro capital formula, which is good news for Construction Partners, Inc. Both the administration and many members of the congressional transportation committees have stated that they believe the formula method to the states is the best means to prioritize hard infrastructure investments needed to support a growing economy and to ensure timeliness in building these projects. Turning to our growth strategy.
We began fiscal 2026 with two large and strategically important acquisitions that were completed in October, in Houston and in Daytona Beach, Florida. Both businesses now have been fully integrated and are operating well. Earlier this week, we announced another acquisition in Houston. GMJ Paving Company, a leading asphalt paving contractor focused on public infrastructure projects across the greater Houston Metro Area. GMJ's hot mix asphalt plant located in Baytown on the East Side Of Houston expands our coverage of this major metropolitan market and complements our existing Houston assets exceptionally well.
This acquisition represents our twelfth hot mix plant in the Houston market, further strengthening our geographic footprint and providing incremental throughput opportunities at our nearby liquid asphalt terminal at the Houston Port. Last August, we made our first entry into the Houston market with our acquisition of Durwood Green Construction, and then we significantly expanded operations in October with the acquisition of Vulcan's Asphalt Construction assets in Houston. With the addition of GMJ, we are further strengthening our market position and expanding our team with highly skilled, experienced operators who bring deep local market knowledge and strong customer relationships. This positions us well to serve one of the most dynamic and rapidly growing markets in the country.
Expanding our footprints into new markets while gaining market share exemplifies our model and underscores a core element of our growth strategy. Entering the right markets with the right partners. Currently, we see a very robust pipeline of acquisition opportunities across our existing footprint and surrounding states. And we continue to have dialogue with a number of sellers as they determine the best future for their businesses and their valuable workforce. We believe our model as a family of companies with a strong organizational culture makes us the acquirer of choice in our industry. We also remain focused on organic growth as a strong driver of building shareholder value. This quarter, we will bring online an HMA greenfield in Georgia.
This new facility will serve the dynamic Brunswick, Georgia market with its port facility and migration to the Golden Isles regions of South Georgia. As a key part of our organic growth, there are several more greenfield facilities that we plan to bring online later this year and early next year. Before turning the call over to Greg, I want to reiterate the vision we shared last October to our Road 2030 growth plan. This plan outlines our path to again double the size of the company to revenue of more than $6 billion by 2030 utilizing the same strategy we have successfully executed for over two decades.
The plan also targets EBITDA margin growth to approximately 17% and is expected to generate more than $1 billion EBITDA dollars annually. And finally, we are excited about the start of this fiscal year as we prepare for a busy work season building on a record backlog. I'd like now to turn the call over to Greg.
Gregory A. Hoffman: Thank you, Jules. Good morning, everyone. As Jules mentioned, we had a strong start to our fiscal year. Which I will review in more detail before discussing our raised outlook ranges, and then we will open the call to questions. I'll start with a review of our key performance metrics for 2026. Revenue was $809.5 million, an increase of 44% compared to last year. The breakdown of this revenue growth was 3.5% organic growth and 40.6% acquisitive. Gross profit in the first quarter was $121.5 million. An increase of approximately 58% compared to last year. As a percentage of total revenues, gross profit was 15% compared to 13.6% last year.
General and administrative expenses as a percentage of total revenue in the first quarter decreased to 7.7% compared to 7.9% last year. Net income was $17.2 million and adjusted net income was $26.4 million. Earnings per diluted share for adjusted net income was 47¢. Adjusted EBITDA was $112.2 million, an increase of 63% compared to last year. Adjusted EBITDA margin was 13.9%, compared to 12.2% last year. You can find GAAP to non-GAAP reconciliations of net income and adjusted EBITDA financial measures at the end of today's earnings release. Turning now to the balance sheet.
We had $104 million of cash and cash equivalents, and $163 million available under our credit facility at December 31, net of reduction for outstanding letters of credit. As of the end of the quarter, our debt to trailing twelve-month EBITDA ratio was 3.18 times. We remain on pace with our strategy of reducing the leverage ratio to approximately 2.5 times by late 2026. To support sustained profitable growth. To that end, we anticipate cash flow generated to effectively fund this week's GMJ paving acquisition without the need for additional long-term debt. Demonstrating the strength of cash flow from our operating model. In 2026, cash flow from operations was $82.6 million up from $40.7 million in 2025.
We expect to convert 75% to 85% of EBITDA to cash flow from operations in fiscal year '26. Turning now to our outlook. We have raised all of our ranges for fiscal year 2026. Revenue in the range of $3.48 to $3.56 billion, net income in the range of $154 to $158 million, adjusted net income in the range of $163.5 to $168.7 million. Adjusted EBITDA in the range of $534 million to $550 million and adjusted EBITDA margin in the range of 15.34% to 15.45%. Our revenue outlook for fiscal 2026 continues to anticipate organic growth of approximately 7% to 8%.
Consistent with historical seasonality, we anticipate the first half of the fiscal year to contribute approximately 42% of the annual revenue and approximately 34% of the adjusted EBITDA. In the second half of the year, during our peak construction season, we expect to deliver the remaining 58% of revenue and approximately 66% of adjusted EBITDA. Lastly, as Jules mentioned, we had a project backlog of $3.09 billion as of 12/31/2025. We have approximately 80% to 85% of the next twelve months' contract revenue covered in backlog. And with that, we will open the call to questions.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. You may press 2 to remove yourself from the queue. For participants using speaker equipment, you may need to pick up your handset before pressing the numbers. Your first question comes from Adam Thalhimer with Thompson Davis and Company. Please go ahead.
Adam Thalhimer: Hey, good morning, guys. Great quarter.
Rick Black: Good morning, Adam.
Adam Thalhimer: Hey, Jules, can you give some more color on the acquisition pipeline? You said it was robust. I'm just curious what the mix there is between potential platform deals and potential tuck-ins.
Rick Black: Yeah, Adam. As you know, we talk to a lot of folks all the time. And we look at a lot of things. And I would say we're continuing to be busy with that. We did three platform acquisitions last year. And so that's created a lot of new opportunities in Texas, Oklahoma, and Tennessee now that we have a great management team in each state. So we're busy, but at the same time, we pass on a lot of things that aren't a good strategic cultural fit. So you're gonna see us continue to make acquisitions that we think are just compelling and great strategic fits. Adam, why don't I let Ned weigh in on the big picture?
You know, as we look toward our strategic growth model? You know, Adam, I would say over the last twenty-five years, it's as active now as it's ever been. I think what you're really starting to see both on the platform side as well as the tuck-ins. I mean, obviously, when you do three platforms in a year, it gives you a lot of opportunities for organic growth as well as tuck-in acquisitions. But the generational transfer continues to give us opportunities to do acquisitions both what I would call tuck-ins as well as platforms.
But, obviously, given last year with the three platforms, we've got a lot of tuck-in acquisitions as in those states as well as a lot of organic growth opportunities in those states. But I would say it's as robust as it's been in twenty-five years. Maybe even to some extent because we did three platforms in one year, see, we've got more opportunities.
Adam Thalhimer: Awesome. Yeah. Thanks for that. And then, Jules, I wanted to ask you, you said in your prepared remarks I think you mentioned this, a site prep job for data centers. Just wondering I haven't heard that before. Just wondering if you could expand on the size of that project and what your scope might be.
Rick Black: Yeah, Adam. You know, we wanted to highlight just a few of the commercial projects we were doing. Currently, because we talked about that there are several macro trends that are driving the commercial markets now. Migration to the Sunbelt, but also the reshoring. Which is creating a lot of manufacturing facilities, moving back to America, and people wanting to build in America. And so I just thought, let's give a few highlights of these. And there were there's a long list to choose from. But data centers are part of that. And we're building more data centers than I had the time to list in the remarks, but it's one part of what we do.
Factories, distribution centers, there's a pretty strong demand for those things in our Southern and Southeastern markets. So we don't travel around, and specialize in data centers, but they're a big part of what we do. And sometimes, like in South Carolina, we're participating more in the site work, and it's a larger contract. And sometimes, we're doing the paving. For a data center. Just like we would do for an Amazon warehouse or a school project. So we did want to highlight just some of the commercial projects that are getting bid and built now.
Adam Thalhimer: Yeah. Thank you for detailing that. And, I will turn it over. Thanks.
Rick Black: Alright. Thanks, Adam.
Operator: Next question, Catherine Thompson with Thompson Research Group. Please go ahead.
Catherine Thompson: Hi, thank you for taking my questions today. Just first, I wanted to focus on organic growth. Just reconfirm that you had kind of low to mid-single around 3.5% organic growth in the quarter. But you also gave guidance for a 7% to 8% organic growth range for the full year. Could you help us bridge what you're seeing today and also how much adverse weather in Q1 may impact or may have impacted the quarter?
Rick Black: Yeah, Catherine. Good question. Our organic growth expectations for the fiscal year are still 7% to 8%. Just as we normally do. In Q1, the difference between our organic growth and what sort of that seven to 8% range was about $19 million. And when you looked at that, there were two factors. That really created that. The first is in North Carolina. We had about three projects that we expected to do in Q1 that got a late start just due to the customer not being ready for us. And those are now underway. The second thing as you can imagine, we in 110 local markets, we have competitive dynamics. Across the board. Some markets are healthy.
Some markets are more competitive. We had one market where irrational competition, we said, you know what? Let's move equipment and do work at higher margins in some adjacent markets. We just so happen where that equipment moved was acquisitions we've made in the last twelve months. So that revenue was counted as acquisitive growth. So that happens from time to time. But we still anticipate our organic growth being in that normal range for the year.
Catherine Thompson: Okay. Great. Thank you for that. And as you maybe you have different color about you know, obviously, very active M&A in calendar 2025 and into early 2026. Could you give just maybe a little bit more color in terms of your strategy and thoughts in terms of integration and how that has progressed over the past twelve to fifteen months? Thank you.
Rick Black: Yeah. Catherine, you know, we've done seven acquisitions since the Lone Star acquisition last fall. And integration is a big part of what we do is as Ned has said on the calls before, it's a core competency. That Construction Partners, Inc. has developed over two decades. And so we have to be good at integrating these companies. I would say, for example, in Houston, Durwood Green has done a great job of integrating with Lone Star, our platform company, since August. But then those guys have done a great job of integrating the Vulcan assets, in October. And they just had a great day one earlier this week with GMJ.
And so as we can integrate these companies in, we start to create organic growth opportunities in the future. When you have a great management team in that market, and you can continue to add, that's where we start to compound both the top line and the bottom line and start to make one plus one equal two and a half. And that's part of our strategy, and I would say it's gone well.
Catherine Thompson: Okay. Great. Thanks very much, and I'll hop back in the queue.
Rick Black: Thanks. Thanks, Catherine.
Operator: Next question is from Andrew Wittmann with Baird. Please go ahead.
Andrew John Wittmann: Yes, great. Thanks for taking my questions. I guess maybe for Greg. I wanted to ask about the seasonality of the business. We heard your comments here about the first half, second half revenue and EBITDA splits here. And obviously, the first quarter came in very strong and ahead of at least the Street's expectations. But the ramification of that means that the second quarter guidance actually looks a little bit light. And so I was just wondering if there's something we need to understand there. Certainly, the weather here in the last couple of weeks in the South has been particularly notable.
I'm wondering if that's a factor or if there's something else that explains the second quarter implied guidance there.
Gregory A. Hoffman: No, Andy. I think that you know, what we say a lot is that our first half of the year and second half of the year are very similar. Year over year. And our weather within each half of that year balances out. You have some good weather and you have some bad weather. You know, I think that we're essentially reiterating what we said from the beginning that, you know, it's gonna be a standard year. With the expectations that we gave to the market. So don't think there's any negative connotation. I think it's just reiterating what we said at the beginning of the year.
Rick Black: Okay. Got it. I sorry. Did you wanna add special? Yeah. I just wanna say, you know, we don't try to overthink things like that. You know? Yes. Weather was good in the first quarter. We don't know what the second quarter will be. You know, the certainly, last two weeks throughout the Southeast and we've had some ice and snow. And so you think, well, that should affect January. But when you look, the first two weeks of January were really good, so we're right on kinda plan. And we expect winter weather in January. You remember last January, we had a lot of snow. We even had snow on the beaches in Pensacola.
But by the end of the quarter, it turned out to be a really good quarter. So, I would just say we don't really try to overthink it. We're not in any way trying to communicate something about the second quarter. We're just sort of trying to say that's our normal revenue and EBITDA split. In the course of a normal year.
Andrew John Wittmann: Okay. That makes sense. I appreciate that. And then I guess you had a comment on your view on the public sector bidding. I think you said that you expected the awards to be up 10 to 15%. I don't know if they had a similar comment on commercial. Certainly sounded like the projects that you're doing are keeping you positive there as well. But did you have a view on where the awards or could be or the increase in backlog could be in the commercial side? Is it the same level of strength? Is the public stronger? Just maybe some context around how you're seeing that developing as the year plays out.
Rick Black: Yeah. Andy, I would say the commercial market, we've continued to use the word steady. I would say if anything, we feel like this spring and summer could be stronger. On the commercial market. But the reality is when we look at our backlog, it stayed pretty steady. If anything, it's gone up, Greg. Think a couple percent in the public. Yeah. But the reality is that could be just that the acquisitions we made last spring and summer with Overland and PRI focus a little more on the public side of things. What we do have is good data. On the public awards from ARPDA which says, look.
The state, local, and federal, when you look at the overall contract awards, it's gonna be up 10 to 15% this year. And that's the data we really go by and what we see.
Andrew John Wittmann: I see. Just final cleanup question for me. Greg, I didn't know if you could quantify how much of that revenue got switched between in that competitive market where you move the crews out to the acquired market, is that a quantifiable amount of revenue? I'm just kinda curious to help inform the quarter a little bit better.
Gregory A. Hoffman: Yeah. Jules, when he addressed that earlier, talked about $19 million of maybe moved and or, you know, addressed in different markets. Now it says about half and half.
Andrew John Wittmann: Okay. Great. That's all I wanted to know. Thank you so much.
Gregory A. Hoffman: Thank you, Andy. Thanks, Andy.
Operator: Next question, Ethan Trollinger with Raymond James. Please proceed.
Ethan Trollinger: This is Ethan on for Tyler. Morning, Ethan. Hey, Ethan.
Gregory A. Hoffman: Thanks. Yeah. So, Greg, I know not a ton has changed on the M&A front, but just from a modeling perspective, could you update us on what the M&A rollover impact to revenue is in fiscal '26 based on the guidance?
Gregory A. Hoffman: Yeah. Absolutely, Ethan. About $260 to $280 million and the remaining three quarters are gonna be from acquisitions.
Ethan Trollinger: Okay. Great. And then, Jules, just to
Gregory A. Hoffman: I'm sorry. That does include GMJ, the acquisition we just made recently.
Ethan Trollinger: Okay. Very helpful. And then Jules, just a bigger picture question. But you guys closed the GMJ acquisition in Houston earlier this week. I think is maybe the third acquisition in Houston, say, the last six months. I was hoping to get a little more color on the evolution of that market. Could you maybe talk about how the margin profile in Houston has changed or is expected to change? Versus maybe the Durwood baseline? And do you guys see even more M&A opportunity in that market longer term?
Rick Black: Yeah. Ethan, love to talk about Houston. Houston we're very pleased with how Brad Green and his management team, Jonathan, Daniel Green, those guys are third-generation Houston contractors. And so that management team combined with the Lone Star management team Houston has started off great. They've made a meaningful contribution to this quarter. Those guys did a great job of integrating the Vulcan workforce into their operation. And then with GMJ, the acquisition we made this week, that's an example of where not only is their asphalt plant geographically helps us more on the East Side Of Houston but Loopy Munoz and his family and his business they really have a strong niche in the public infrastructure paving.
Have great relationships with public grading contractors that do work in Texas. And so that's really very complementary to what Durwood Green has historically done. And so this is an example of just adding not only management team and workforce, but it's also adding market share in Houston.
Ethan Trollinger: Okay. That's great color. And then just one last one, Obviously, you know, Houston's uniquely big compared to some of your other markets, but are there other big metros that you aren't in today that could come together like Houston? Or did just the stars kind of align there? Could you maybe talk a little bit more about that?
Rick Black: Well, I mean, I think it's this is Ned. By the way. It's as a board and as a company, strategically, we're always looking for metropolitan areas like Houston. You know, we've historically, for the last twenty-five years, invested capital in growth areas. Houston is maybe the second fastest growing city in the country. So, yeah, there are other metropolitan areas that are like that we've identified. That will continue to look for the right companies, particularly on the platform side, be able to invest in those areas. So I think one of the things historically we've done a really good job of is being in the areas where the demographic growth drives organic growth for the country.
Ethan Trollinger: Awesome. Thanks, guys. Really appreciate the time.
Rick Black: Alright. Thanks, Ethan.
Operator: Next question, Nandita Nayyar with Bank of America. Everyone. This is Nandita Nayyar on for Mike. Thanks for taking my questions. Thank you. Did you miss hey. So you mentioned, you know, leverage is currently around, you know, 3.2 times. You know, you plan to delever to around 2.5 ish by the end of the year. Could you just talk a bit more about your confidence in hitting that target also, just could we see you guys doing more M&A this year? And I mean, I think the answer to that would probably be yes just given the strong pipeline. But just curious, would those also mostly be funded by cash from ops? Just like GMJ?
Gregory A. Hoffman: Yeah. Sure, Nandita. That's right. Yeah. 3.18 is where we are currently. We're still very positive about hitting that guidance of, you know, getting closer to two and a half times by the end of the calendar year. And, you know, I think that what will continue what you'll see to continue is what you'll see in our cash flow is that we've had $215 million worth of purchase price, and only borrowed $140 million. And like you said, GMJ, the expectation is that purchase price will be covered in cash as well. So you know, we keep doing that. The business keeps generating cash. Like it has historically.
Why and what it does or what it has done throughout the beginning of this year we should be good with that guidance.
Rick Black: And, Nandita, I would just reiterate we're gonna continue to look at opportunities. We're gonna pass on opportunities that aren't strategically compelling. We're not gonna GMJ is a great example of one where we said, look. This is a great opportunity. And so we're gonna continue to make acquisitions. We're gonna continue to use cash more and more to pay for those, and you'll see as that EBITDA rolls through, the leverage ratio will come down.
Nandita Nayyar: Gotcha. That's super helpful. And, just another one, guys. You know, we've been hearing a slight change in the tone regarding the reauthorization bill with you know, some conversations around the CR potentially entering the discussion. Just curious what you've you know, what's the latest on the ground that you guys have been hearing regarding the reauthorization?
Rick Black: Well, as I said in the prepared remarks, we feel really good about both houses of Congress, both committees on transportation are working on the reauthorization. And the expectation is they'll get that done by September 30. We like what we're hearing about the size and the scope. Of it and the fact that it's gonna be focused more on hard infrastructure coming the funds coming to the states through the formula method. So but, you know, we've had CRs in the past, and that's really just a continuation of where we are. But if you look back, what we expect is guided by history over the last two decades.
When you look at it, they've always reauthorized the five-year plan, and they've always reauthorized it for higher than the previous. Bill. So we fully expect that history will continue to repeat and that we'll get a new surface transportation bill at a higher level for the next five years.
Nandita Nayyar: Gotcha. That's super helpful. Thank you, guys. We'll pass it along.
Operator: Thank you. I would like to turn the floor over to management. For closing remarks.
Rick Black: Alright. We want to thank everyone for being with us today. We look forward to speaking again in the future.
Operator: This is with teleconference. You may disconnect your lines at this time, and thank you for your participation.