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    ROAD
    Earnings call· Jun 2026(Q3 FY26)

    Construction Partners Q3 FY26 earnings call ROAD

    Aug 7, 2026 Source

    Executive summary

    Construction Partners Q3 FY26 — Record Backlog and Raised Outlook

    Construction Partners delivered a strong Q3 FY26, marked by record backlog and significant revenue and EBITDA growth, leading to a raised full-year outlook. The company demonstrated resilience against weather and inflation, leveraging its pass-through model and operational flexibility. Strategic acquisitions, particularly in the growing data center market, continue to be a key driver of expansion, with a robust M&A pipeline expected to remain active.

    Highlights

    5

    • Achieved record project backlog of $3.36 billion at June 30, 2026.

    • Revenue increased 28.2% year-over-year to $999.4 million in Q3 FY26.

    • Adjusted EBITDA grew 24% year-over-year to $163 million in Q3 FY26.

    • Raised fiscal year 2026 revenue guidance to $3.64 billion to $3.68 billion.

    • Raised fiscal year 2026 adjusted EBITDA guidance to $559 million to $569 million.

    Concerns

    2

    • Experienced unusually wet weather across many markets in May, impacting Q3 operations.

    • Navigated continued energy cost inflation, though largely mitigated by pass-through model.

    Guidance & targets

    9
    CategoryTargetConfidence
    Fiscal Year 2026 Revenue
    $3.64B to $3.68B
    high materiality
    High
    Fiscal Year 2026 Net Income
    $165M to $168M
    medium materiality
    High
    Fiscal Year 2026 Adjusted Net Income
    $177.6M to $181.4M
    high materiality
    High
    Fiscal Year 2026 Adjusted EBITDA
    $559M to $569M
    high materiality
    High
    Fiscal Year 2026 Adjusted EBITDA Margin
    15.35% to 15.46%
    high materiality
    High
    Fiscal Year 2026 Cash Flow from Operations Conversion
    75% to 85% of EBITDA
    medium materiality
    High
    Fiscal Year 2027 Acquisitive Revenue Carryover
    $140M
    medium materiality
    High
    Fiscal Year 2027 Organic Growth
    strong organic growth again
    medium materiality
    Medium
    Long-term Leverage Ratio Target
    approximately 2.5x
    high materiality
    High

    Operational metrics

    29
    Revenue growth
    28.2%YoY
    Q3 FY26

    Total revenue growth for the quarter.

    Organic revenue growth
    8.9%
    Q3 FY26

    Portion of revenue growth attributed to organic operations.

    Acquisitive revenue growth
    19.3%
    Q3 FY26

    Portion of revenue growth attributed to acquisitions.

    Gross profit
    $168.4Mup 28%
    Q3 FY26

    Gross profit for the quarter.

    Gross profit margin
    16.8%vs 16.9% last year
    Q3 FY26

    Gross profit as a percentage of total revenues.

    General and administrative expenses as % of total revenue
    6.3%decreased from 6.5% in Q3 2025
    Q3 FY26

    Efficiency improvement in G&A expenses.

    Adjusted Net Income
    $60.6M
    Q3 FY26

    Adjusted net income for the quarter.

    Adjusted EPS
    $1.08
    Q3 FY26

    Earnings per diluted share for adjusted net income.

    Adjusted EBITDA
    $163Mup 24%
    Q3 FY26

    Adjusted EBITDA for the quarter.

    Adjusted EBITDA margin
    16.3%
    Q3 FY26

    Adjusted EBITDA as a percentage of revenue.

    Cash and cash equivalents
    $95M
    Q3 FY26

    Balance at quarter end.

    Available credit facility
    $599M
    Q3 FY26

    Amount available under credit facility, net of outstanding letters of credit.

    Debt to trailing 12 months EBITDA ratio
    3.17xdecreased
    Q3 FY26

    Leverage ratio at quarter end.

    Asphalt pass-through revenue impact
    $8M to $10M
    Q3 FY26

    Additional revenue generated due to asphalt pass-through model.

    M&A contribution to FY26 growth
    22%
    FY26

    Estimated contribution of acquisitions to full-year growth.

    Revolving credit facility increase
    from $500M to $700M
    Q3 FY26

    Amendment to existing revolving credit facility.

    Incremental term loans
    $300M
    Q3 FY26

    Additional term loans secured during the quarter.

    IIJA funding yet to be deployed
    45%
    current

    Percentage of Infrastructure Investment and Jobs Act funding not yet deployed.

    Data center construction in CPI states
    70% to 75%
    current

    Estimated national share of new data center construction occurring in CPI's operating states.

    Data center project pipeline
    exceeding $100M
    current

    Pipeline of opportunities for data center projects in Central Texas.

    Data center projects
    $100M
    current

    Current AI data center projects being built in Oklahoma.

    Data center project pipeline
    exceeding $130M
    current

    Pipeline of opportunities for data center projects in Oklahoma.

    Commercial sector projects
    over 1,000
    this year

    Expected number of commercial projects across 8 states and 115 local markets.

    Florida DOT contracts
    $80M
    recent

    Awarded contracts for public work in Florida.

    Employee count
    approximately 7,200
    current

    Total number of employees across CPI family of companies.

    Number of local markets
    over 115
    current

    Number of local markets where CPI operates.

    Number of states
    8
    current

    Number of states where CPI operates.

    Overall growth
    over 30%
    FY26

    Expected growth for the full fiscal year.

    Annual margin increase
    30 to 40
    annually

    Expected annual increase in margins.

    Industry KPIs

    7
    MetricValueDetails
    Total backlog$3.36BUSD
    12 month backlog80% to 85%%
    Book to bill ratio—
    End market pipeline70% to 75%%
    Acquisition contributionEllsworth Construction
    Same store organic revenue growth8.9%%
    Craft skilled labor headcount capacityapproximately 7,200employees

    Orderbook & backlog

    2
    Total backlog$3.36BJune 30, 2026

    record high

    12-month contract revenue covered in backlog80% to 85%June 30, 2026

    Expected to convert within the next 12 months.

    Deals & partnerships

    1
    Ellsworth ConstructionAcquisition of a leading asphalt manufacturing and construction company in Oklahoma, expanding CPI's footprint in Tulsa and Oklahoma City and strengthening its data center construction capabilities.

    Completed last month, under CPI's Oklahoma platform company, Overland Construction.

    Risks & headwinds

    3
    Continued energy cost inflationOngoing

    Led to $8M-$10M additional revenue from pass-through in Q3 FY26.

    Mitigation: Cost pass-through model, terminal business, hedging strategies.

    Unusually wet weatherQ3 FY26

    Impacted Q3 FY26 operations, particularly in May.

    Mitigation: Operational flexibility (working weekends, double time), weather impacts typically even out annually.

    Federal transportation funding uncertainty / continuing resolutionLate Fall (FY27)

    Possibility of operating under a continuing resolution (CR) if a new bill is not passed by midterm elections.

    Mitigation: Management confident Congress will approve new bill; CR would maintain FY26 funding levels (highest ever); approximately 45% of IIJA funding yet to be deployed; states have own capital and planning.

    What to watch in Q4 FY26

    5

    Federal transportation funding bill passage

    Late this fall (FY27)
    CurrentBuild America 250 Act passed House committee, moving through Congress.
    TargetApproval and increased funding level of new multiyear surface transportation bill.

    Why it matters

    Determines long-term investment levels in infrastructure, impacting project pipeline and overall demand.

    Given the long-standing bipartisan support for investing in America's transportation infrastructure, we are confident that Congress will ultimately approve a new bill. That said, the legislative calendar continues to tighten as the midterm elections approach, increasing the likelihood of a continuing resolution or CR, to temporarily extend current funding. Should that occur, federal highway funding would remain at fiscal 2026 levels, the highest annual funding levels in the program's history.

    Q&A highlights

    7

    Can you quantify the asphalt pass-through revenue impact, the total M&A contribution to FY26 guidance, and confirm the $140 million revenue carryover to FY27?

    Management clarified that asphalt pass-through added $8 million to $10 million in Q3 revenue, M&A contributes 22% of FY26 growth (approximately $780 million to $790 million), and confirmed $140 million in acquisitive revenue will carry over into FY27.

    “Yes. Well, I was just going to say you're right. We've got about $140 million of those acquisitions. So that revenue carrying over now into FY '27.”

    asked by Patrick Brown · answered by F. Smith

    2 min read5 chapters

    Detailed Narrative

    01

    Federal Transportation Funding Outlook

    Management expressed confidence that Congress will approve an increased funding level for a new multiyear surface transportation bill, despite the timing uncertainty. The Build America 250 Act, which provides approximately 7.2% more funding than the IIJA, has advanced with bipartisan support. While a continuing resolution (CR) is possible due to the legislative calendar, the company does not expect any disruption to federal funding or project activity in fiscal 2026 or 2027, noting that 45% of IIJA funding remains to be deployed.

    02

    Data Center Market Opportunity

    CPI is well-positioned to capitalize on the rapidly growing AI data center construction market, with an estimated 70% to 75% of new national data center construction occurring in its existing states. The company's strategy involves disciplined bidding and established relationships with general contractors. Current projects include a pipeline exceeding $100 million in Central Texas and projects totaling $100 million with a pipeline exceeding $130 million in Oklahoma, showcasing significant opportunities in this end market.

    03

    Acquisition Strategy & Ellsworth Construction

    The company completed the strategic acquisition of Ellsworth Construction in Oklahoma, expanding its footprint and strengthening its presence in the Tulsa and Oklahoma City metropolitan areas. Ellsworth enhances CPI's capabilities in the data center construction market and complements Overland's existing portfolio. CPI continues to benefit from industry consolidation, maintaining a robust pipeline of high-quality acquisition opportunities across its existing and adjacent Sunbelt states, actively pursuing both tuck-in and platform deals.

    04

    Operational Resilience & Weather Impact

    Despite challenges like unusually wet weather in May and continued energy cost inflation, CPI delivered strong Q3 execution. The company's cost pass-through model and local market operating teams enabled high-level performance. Management noted that while weather can impact quarterly results, its effects typically even out over the full fiscal year, and operational flexibility allows for making up lost time.

    05

    ROAD 2030 Plan and Long-term Vision

    CPI's leadership team is guided by its 'ROAD 2030' 5-year plan, which outlines a strategy for consistent and profitable growth, inspired by Jim Collins' '20-mile march' concept. The company aims for annual progress, with fiscal year 2026 expected to achieve over 30% growth in both top-line revenue and bottom-line margins. This disciplined approach is intended to deliver long-term strategic value for shareholders.

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