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Construction Partners (ROAD) Q3 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q3 FY26)· Industrials· Aug 7, 2026

Source: earnings call transcript

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

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

Orderbook & backlog

Total backlog $3.36B June 30, 2026

record high

12-month contract revenue covered in backlog 80% to 85% June 30, 2026

Expected to convert within the next 12 months.

Deals & partnerships

Ellsworth Construction Acquisition 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

Continued energy cost inflation Ongoing

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

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

Unusually wet weather Q3 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 resolution Late 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

Federal transportation funding bill passage

Late this fall (FY27)
Current Build America 250 Act passed House committee, moving through Congress.
Target Approval 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.

Find out whether ROAD delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.