Skip to content
    CDNL
    Earnings call· Jun 2026(Q2 FY26)

    Cardinal Infrastructure Group Q2 FY26 earnings call CDNL

    Aug 11, 2026 Source

    Executive summary

    Cardinal Infrastructure Group Q2 FY26 — Record Revenue and Backlog, Strategic Acquisition, and Raised Full-Year Guidance

    Cardinal Infrastructure Group delivered record Q2 FY26 revenue and backlog, driven by strong demand across commercial, industrial, and residential end markets, and strategic M&A. While margins faced transitional pressures from operational shifts and weather, the company raised full-year revenue guidance and remains optimistic about future profitability as integration and verticalization efforts mature.

    Highlights

    5

    • Revenue increased 114% year-over-year to $227 million.

    • Total backlog reached a record $866 million, up 35% from the prior year.

    • Full-year revenue guidance raised to a range of $880 million to $900 million, reflecting 95% year-over-year growth at the midpoint.

    • Acquisition of Allied Paving (annual revenue $108 million, 20.3% adjusted EBITDA margin) is meaningfully accretive.

    • First asphalt manufacturing facility completed construction and is ramping as expected.

    Concerns

    4

    • Adjusted EBITDA margins were 12.4%, down from 18.6% in the prior year, below expectations.

    • Adjusted gross margins ended the quarter at 15.9%, down 540 basis points from the prior year.

    • Margin pressure was attributed to increased subcontracted labor/equipment rental costs, deployment shifts from a diversified project mix, and intense weather events in Georgia.

    • Full-year adjusted EBITDA margin expectation updated to a range of 16% to 18%, down from prior 20%+.

    Guidance & targets

    7
    CategoryTargetConfidence
    Full-year revenue
    $880M-$900M
    high materiality
    High
    Full-year adjusted EBITDA margin
    16%-18%
    high materiality
    Medium
    Full-year adjusted EBITDA
    over $150M
    high materiality
    High
    Full-year capital expenditures
    $58M
    medium materiality
    High
    Near-term profitability
    low 20s
    high materiality
    High
    Residential projects rebound
    18 to 24 months
    medium materiality
    Medium
    SG&A as percentage of revenue
    4%
    low materiality
    Medium

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Raleigh market
    Sustained demand across commercial and industrial customer base drove continued share gain.
    		—40% organic growth——
    Charlotte market
    Strong share gains across a diversified end market mix in a high-growth market for Cardinal.
    		—over 40% growth——
    Georgia operations (ALGC)
    Gaining significant momentum and winning larger, more complex work, reinforced as one of the most attractive growth markets in the Southeast.
    Backlog: up 10% since March 31
    		————

    Operational metrics

    17
    Adjusted gross profit
    $36Mup 60% YoY
    Q2 FY26
    Adjusted gross margins
    15.9%down 540 bps YoY
    Q2 FY26

    Impacted by increased subcontracted labor/equipment rental costs, deployment shift, and Georgia weather.

    SG&A expenses
    $9M
    Q2 FY26

    Driven by cost of maturing corporate infrastructure to support scaling public platform.

    Adjusted EBITDA
    $28.1Mup 43% YoY
    Q2 FY26
    Adjusted EBITDA margins
    12.4%down from 18.6% YoY
    Q2 FY26

    Reflecting impacts of subcontracted costs, deployment shifts, and weather.

    Capital expenditures
    $24.7M
    Q2 FY26

    Reflecting completion of asphalt manufacturing facility and continued fleet investments.

    Cash on hand
    $339M
    Q2 FY26

    Ended the quarter in a net cash position.

    Term loan outstanding
    $195M
    Q2 FY26
    Revolving credit facility
    $75M
    Q2 FY26
    Allied Paving annual revenue
    $108M
    Annual

    Acquired company's annual revenue.

    Allied Paving adjusted EBITDA margin
    20.3%
    Annual

    Acquired company's adjusted EBITDA margin.

    Allied Paving acquisition multiple
    5.5x
    Acquisition

    Roughly 5.5x EBITDA, described as meaningfully accretive.

    First half adjusted EBITDA
    $55Mahead of plan
    H1 FY26
    Safety activities completed
    9,000up 60% YoY
    Q2 FY26

    Documented safety activities by field teams.

    Individually inspected safety items
    57,800
    Q2 FY26

    On weekly site inspections.

    Residential budgetary services activity
    up 3xvs 6 months ago
    Last 6 months

    Indicates potential for significant rebound in projects in 18-24 months.

    Allied Paving revenue contribution
    $28M
    Q4 FY26

    Revenue baked into guidance for Q4 FY26.

    Industry KPIs

    6
    MetricValueDetails
    Total backlog$866MUSD
    End market pipeline—
    Acquisition contribution$108MUSD
    Self perform activity mix—
    Same store organic revenue growth40%%
    Craft skilled labor headcount capacity—

    Orderbook & backlog

    1
    Total backlog$866MQ2 FY26 end

    up 35% YoY

    Balanced growth across commercial and industrial and residential end markets. Close relationship with customers gives strong conviction in timing and profitability of conversion to revenue.

    Product announcements

    1
    ProductTypeDetails
    First asphalt manufacturing facility (Aviator brand)milestone

    Deals & partnerships

    3
    Allied PavingAcquisition of an experienced paving crew and complementary equipment in the North Atlanta market, fitting alongside ALGC's existing grading and site work capabilities. Enables sequencing paving directly behind own teams, compressing project timelines and keeping margin in-house.Annual revenue $108M, 20.3% adjusted EBITDA margin, acquired at ~5.5x EBITDA

    Ninth acquisition since 2021. Sourced and executed by the ALGC leadership team using Cardinal's playbook and capital.

    Piedmont PipeAdded wet utilities capabilities in Charlotte, building further density in an existing market. Enables faster sequencing between scopes and less reliance on subcontracted labor.

    Acquired in May.

    ALGCAcquisition of a platform that is now sourcing and executing its own bolt-on deals.

    Closed a little over 5 months ago. The team has absorbed Cardinal's operating model and is now executing deals like Allied Paving.

    Capital programs

    2
    First asphalt manufacturing facility (Aviator brand)completed

    Benefit: Reduce reliance on third-party asphalt suppliers, ability to serve outside customers.

    Completed construction in Q2 FY26, ramping as expected. Will give ability to serve outside customers in time.

    Second asphalt manufacturing facilityplanned
    Spent to date: Land secured, permits in place

    Land already secured for a second facility. Company will apply operational lessons from the first plant before determining size and model.

    Risks & headwinds

    5
    Increased subcontracted labor and equipment rental costsQ2 FY26

    Contributed to 540 basis points YoY decline in adjusted gross margins.

    Mitigation: Operational improvements and recent acquisitions (Piedmont, Allied) are expected to help recover these one-time costs by building turnkey capabilities.

    Deployment shift from diversified project mix and crew retentionQ2 FY26

    Caused some underutilized crew capacity as deployment models adjusted to the new mix.

    Mitigation: Deployment models are now aligned, and the company expects to avoid similar misses going forward.

    Intense weather events in GeorgiaQ2 FY26

    Slowed deployment of high-margin work at ALGC.

    Mitigation: Diversifying geographic footprint is expected to mute the impact of localized disruptions on overall results over time.

    Higher general and administrative (G&A) expensesQ2 FY26, expected to moderate as a percentage of revenue

    $9 million or 4% of revenue in Q2 FY26.

    Mitigation: Investments in systems and processes for corporate infrastructure are necessary for scaling, and the percentage is expected to decrease as the company grows into it.

    Residential market pricing concessionsCurrent, ongoing

    Some clients are asking for pricing concessions.

    Mitigation: Company will only accept projects that meet margin requirements, or explore options to maintain margin through schedule compression/additional resources. Otherwise, they will focus on other end markets.

    What to watch in Q3 FY26

    5

    Margin Recovery in Charlotte

    Next quarter
    CurrentSubcontractor costs and crew utilization challenges in Q2
    TargetDecrease in subcontractor costs and improved crew utilization

    Why it matters

    Charlotte was a key driver of Q2 margin pressure; recovery is essential for achieving H2 guidance and demonstrating effective integration of Piedmont Pipe.

    Yes, -- very much so.

    Q&A highlights

    5

    What caused the margin pressure in Q2, how much was one-time, and was it geographically concentrated?

    Mike Rowe identified four headwinds: increased one-time subcontracted labor/rental costs, deployment shifts from diversified project mix, Georgia weather, and higher SG&A for corporate maturity. He emphasized these are transitional, not structural, and expects recovery.

    “we had 4 headwinds that helped us or hurt us. And those 4 things were -- we talked about it increased onetime labor -- sub labor -- subcontractor labor, rental cost, rental expense cost. We had to deploy to keep up with the customer base.”

    asked by Louie Dipalma · answered by Mike Rowe

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic M&A and Integration Success

    The acquisition of Allied Paving, sourced and executed by the ALGC team, highlights the successful integration of Cardinal's playbook and capital. This demonstrates the ability of acquired platforms to drive their own growth, enabling Cardinal's leadership to pursue broader organic and M&A opportunities. This model of bolt-on acquisitions to build turnkey capabilities is expected to be a differentiator for future growth.

    02

    Robust Market Dynamics and Growth Drivers

    Cardinal is experiencing strong demand across commercial and industrial end markets, with a notable recovery in commercial retail. Residential demand in the Southeast remains robust, driven by significant population migration and structural housing undersupply in core markets like Raleigh and Charlotte. This provides a long-term backdrop for continued expansion, despite some national builder margin compression.

    03

    Operational Verticalization and Efficiency Initiatives

    The completion of the first asphalt manufacturing facility in Raleigh and the Piedmont Pipe acquisition in Charlotte are key steps in enhancing vertical integration. These initiatives reduce reliance on third-party subcontractors, compress project timelines, and keep margins in-house. The company is also investing in fleet deployment, equipment management, and a new CRM system to improve operational visibility and efficiency.

    04

    Transitional Margin Pressures and Outlook

    Q2 margins were below expectations due to increased subcontracted labor and equipment rental costs in new markets, crew deployment shifts related to a diversified project mix, and weather impact🌐s in Georgia. Management views these as transitional, not structural, and anticipates recovery in the second half of FY26 as operational alignments, integration synergies, and the contribution from new acquisitions like Allied Paving materialize.

    05

    Strong Balance Sheet and Disciplined Capital Deployment

    A successful follow-on equity offering has strengthened Cardinal's balance sheet, resulting in $339 million of cash on hand and a net cash position. This provides substantial capacity to fund both organic investments and a deep acquisition pipeline. The accretive acquisition of Allied Paving, executed at approximately 5.5x EBITDA, exemplifies the disciplined use of these proceeds.

    AI-generated summary of the company’s earnings call. Not investment advice.