ROAD

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. Construction Partners stock has delivered a very strong 246.0% return over the past five years. The latest valuation checks, however, send a more mixed message, with the Discounted Cash Flow (DCF) estimate pointing to upside while market based multiples look closer to fair value. The 246.0% five year gain suggests Construction Partners has already rewarded long term holders in a big way and raises the bar for future returns to keep pace with past performance. Recent contract wins in public infrastructure and commercial projects, including work linked to AI data center construction, can support expectations for future cash flows. At the same time, uncertainty around federal transportation funding may limit how much value investors are willing to ascribe today. With a value score of 3 out of 6, Construction Partners screens as a mixed picture rather than a clear bargain or clear overvaluation on the broader checks. The issue now is whether the current price already reflects that 29.7% gap between the market value and the intrinsic value indicated by the Discounted Cash Flow (DCF) model. Find out why Construction Partners' -2.4% return over the last year is lagging behind its peers. The Discounted Cash Flow (DCF) method used here estimates what Construction Partners could be worth based on its future cash generation. The model uses the latest twelve-month free cash flow of about $177 million and assumes those cash flows keep growing rather than shrinking, then discounts them back to today. On that basis, the intrinsic value comes out at about $161 per share. That implies the stock is 29.7% undervalued relative to the current share price, so the market price does not fully reflect the cash flow profile that Construction Partners currently generates. The record $3.36 billion backlog reported for fiscal Q3 2026 helps explain why the cash flow outlook used in the model is relatively strong, even if investors remain cautious about federal transportation funding. On these Discounted Cash Flow (DCF) assumptions, Construction Partners stock appears undervalued relative to its estimated intrinsic value. Our Discounted Cash Flow (DCF) analysis suggests Construction Partners is undervalued by 29.7%. Track this in your watchlist or portfolio, or discover 50 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Construction Partners. The P/E ratio is a useful way to see what investors are currently willing to pay for each dollar of Construction Partners earnings. On this measure, Construction Partners trades at about 45.1x earnings, which is above the construction industry average of 34.7x and also higher than the peer group average of 36.4x. That points to investors paying a premium relative to many other construction stocks. The fair P/E ratio estimated for Construction Partners is 44.7x, which is very close to the current 45.1x level. This fair ratio reflects the company’s growth profile, margins, size and risk, including the large public infrastructure and AI related contracts as well as funding uncertainty. With only a small gap between the current and fair multiples, the stock screens as broadly in line with what this framework suggests investors might expect to pay. On the P/E multiple, Construction Partners now looks priced at roughly fair value rather than clearly cheap or expensive. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Construction Partners sit between the valuation puzzle above and the specific assumptions behind it. They spell out what growth, margins and earnings path would need to hold for Construction Partners' stock to be worth materially more or less than today's price, and each one links a fair value to a particular mix of potential catalysts and risks so you can track over time which version of events appears to be unfolding. Share a narrative on Construction Partners' stock and provide a clear, number-driven view on whether the record backlog and raised guidance translate into value at today's price. Add your voice to the Simply Wall St community and track how your case holds up as new results and contract updates arrive. Do you think there's more to the story for Construction Partners? Head over to our Community to see what others are saying! For Construction Partners, the Discounted Cash Flow (DCF) view still points to meaningful upside, while the P/E multiple suggests the stock is now priced roughly in line with peers. That mix leaves the broader valuation checks looking balanced rather than clearly cheap or expensive. The crux from here is whether the current backlog and project pipeline convert into the cash flows implied in the intrinsic value estimate without investors demanding a lower multiple because of funding and execution risks. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ROAD. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Construction Partners delivered a quarter that surpassed Wall Street’s estimates, with management citing strong execution across both organic and acquired businesses as key factors. CEO Jule Smith noted that “cost pass-through” strategies and the ability to adapt rapidly to wet weather conditions enabled the company to maintain growth and profitability. The quarter was also marked by a substantial increase in backlog and continued strength in both public infrastructure and commercial markets, particularly in high-growth regions like Texas and Oklahoma. Is now the time to buy ROAD? Find out in our full research report (it’s free). Revenue: $999.4 million vs analyst estimates of $947.6 million (28.2% year-on-year growth, 5.5% beat) Adjusted EPS: $1.08 vs analyst estimates of $1.01 (6.8% beat) Adjusted EBITDA: $163 million vs analyst estimates of $159.2 million (16.3% margin, 2.4% beat) The company lifted its revenue guidance for the full year to $3.66 billion at the midpoint from $3.62 billion, a 1.1% increase EBITDA guidance for the full year is $564 million at the midpoint, above analyst estimates of $551.8 million Operating Margin: 10.9%, in line with the same quarter last year Backlog: $3.36 billion at quarter end, up 14.3% year on year Market Capitalization: $6.73 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Patrick Brown (Raymond James) asked about the impact of weather on operations and how the company compensates for lost days. CEO Jule Smith explained that productivity gains and flexible scheduling help offset weather disruptions, emphasizing that such effects typically even out over the year. Andrew Wittmann (Baird) questioned the drivers of margin expansion into the fourth quarter. CFO Gregory Hoffman attributed improvements to a combination of seasonal cost leverage and the full integration of recent acquisitions, especially Ellsworth. Kathryn Thompson (Thompson Research Group) pressed for details on how recent acquisitions are contributing to margin improvement. Smith responded that companies like Lone Star Paving and Ellsworth bring strong operational practices and high-margin backlogs, directly supporting earnings growth. Michael Feniger (Bank of America) inquired about the evolving data center opportunity and whether the company’s approach differs from other projects. Smith said the model remains consistent, but that relationships and project size diversity in data centers are driving incremental growth. Adam Thalhimer (Thompson, Davidson & Company) sought clarity on the M&A pipeline and whether platform or tuck-in deals are the focus. Executive Chairman Ned Fleming said the pipeline is robust and includes both types, with the company increasingly seen as an acquirer of choice. In coming quarters, our analysts will be monitoring (1) the pace of data center project wins and execution, (2) progress toward integrating recent acquisitions and realizing associated margin gains, and (3) updates on federal and state infrastructure funding legislation and its impact on backlog. The ability to expand greenfield operations and sustain organic growth will also be key areas of focus. Construction Partners currently trades at $118.58, up from $100.16 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Friday, Aug. 7, 2026 at 10 a.m. ET Investor Relations-Rick Black President and Chief Executive Officer-Fred J. (Jule) Smith, III Chief Financial Officer-Gregory Hoffman Executive Chairman-Ned N. Fleming, III Need a quote from a Motley Fool analyst? Email [email protected] Operator: Greetings, and welcome to the Construction Partners Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Black, with Investor Relations. Please go ahead, sir. Rick Black: Thank you, operator, and good morning, everyone. We appreciate you joining us for the Construction Partners conference call to review third quarter fiscal 2026 results. This call is also being webcast and can be accessed through the audio link on the Events and Presentations page of the Investor Relations section of constructionpartners.net. Information recorded on this call speaks only as of today, which is August 7, 2026. Please be advised that any time-sensitive information may no longer be accurate as of the date of any replay listening or transcript reading. I would also like to remind you that the statements made in today's discussion that are not historical facts including statements of expectations or future events or future financial performance are considered forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. We will be making forward-looking statements as part of today's call that, by their nature, are uncertain and outside of the company's control. Actual results may differ materially. Please refer to our earnings press release for our disclosure on forward-looking statements. These factors as well as other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Management will also refer to non-GAAP measures, including adjusted net income, adjusted EBITDA and adjusted EBITDA margin. Reconciliations to the nearest GAAP measures can be found at the end of today's earnings press release. Construction Partners assumes no obligation to publicly update or revise any forward-looking statements. And now I would like to turn the call over to Construction Partners' CEO, Jule Smith. Jule? F. Smith: Thank you, Rick, and good morning, everyone. We appreciate you joining us for today's call. With me this morning are Greg Hoffman, our Chief Financial Officer; and Ned Fleming, our Executive Chairman. I'd like to start today's call by addressing the approximately 7,200 employees of the CPI family of companies. Thank you all for daily bringing excellence to our operations. Your hard work, talent and unwavering commitment to work safely drove another outstanding quarter, building a record backlog and once again allowing us to raise our fiscal 2026 outlook. Simply put, CPI's success begins with our people and the culture of a close-knit family of companies that we cultivate and maintain daily. Our core values, family, opportunity, respect and excellence, are more than words. They guide how we operate every day. We are a family of companies, but more importantly, a company of families. We create opportunities for our employees to build better lives. We treat one another, our customers and our communities with respect. And finally, we strive daily to do ordinary things extraordinarily well for all of the communities that we serve. Our culture has become a meaningful competitive advantage. It enables us to attract, develop and retain exceptional people across our more than 115 individual markets and also positions us as the acquirer of choice for sellers that want to take care of their employees. In the third quarter, we delivered another period of strong execution, growing revenue, net income, adjusted EBITDA and backlog, consistent with the momentum we've built throughout fiscal 2026. During the quarter, our business remained resilient despite continued energy cost inflation and unusually wet weather across many of our markets in May. Our cost pass-through model and strong local market operating teams, together with our disciplined operating strategy, enabled us to execute at a high level and deliver another quarter of profitable growth. Before turning to the current demand environment, I'd like to briefly address federal transportation funding, a topic that has understandably raised questions among investors. As many of you know, a 5-year federal surface transportation funding bill is moving through the congressional authorization process. Let me begin with 3 key points. First, we believe that Congress will ultimately approve and increase the funding level of a new multiyear surface transportation bill that continues to support much needed long-term investment in our nation's road and bridges. Second, while the timing of final passage remains uncertain, the possibility of operating under a continuing resolution is neither new nor concerning for our industry. Finally, based upon what we know today, we do not expect any disruption to federal funding or project activity in either fiscal 2026 or fiscal 2027. Now let's discuss where things stand today. Earlier this year, the BUILD America 250 Act was introduced in the House of Representatives and subsequently advanced out of committee with an overwhelming bipartisan support of a 62 to 2 vote, positioning the legislation for consideration by the full House. While the bill must still pass both chambers of Congress and be signed by the President before becoming law, the House bill represents an important milestone in the reauthorization process. As currently drafted, BUILD America 250 Act provides approximately 7.2% more funding over the life of the bill than the highway and public transportation funding included in the IIJA. And when you dig into the details of the actual programs funded and compare where the money will be spent, the dollars targeted to hard infrastructure projects will have an even greater increase than the past 5 years. It's also worth noting that for 2 decades, in each of the last 3 surface transportation reauthorizations, including IIJA, the FAST Act and MAP-21, the final enacted legislation ultimately provided higher funding levels than the initial House proposal. 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. Importantly, we do not believe a CR would have a meaningful impact on our business or industry activity in fiscal 2027. Approximately 45% of IIJA funding has yet to be deployed, and we continue to see very healthy bid activity, project lettings and contract awards across our markets as reflected in our record backlog. Turning now to the demand for commercial development. As it relates to one of today's fastest-growing end markets, AI data centers, we have been serving data center projects across our footprint for many years. While activity in this segment has accelerated meaningfully, our strategy remains unchanged. We will continue to pursue attractive opportunities in the local markets and states where we already operate. With an estimated 70% to 75% of new data center construction nationally expected to occur in our existing states, we believe CPI is well positioned to participate in this growth through disciplined bidding, established relationships with general contractors and a focus on projects that meet our commercial margin objectives. Today, our teams are actively bidding and building data center projects, including several notable examples. In Texas, Lone Star Paving is actively working on a portfolio of data center projects in Central Texas and has a pipeline of opportunities exceeding $100 million in contract value. In Oklahoma, where we recently expanded our Overland platform through the addition of Ellsworth, we are building AI data center projects totaling approximately $100 million with a current pipeline of opportunities exceeding $130 million. Other newly won commercial projects range from construction for national retailers to hospitals, to corporate campuses and manufacturing facilities. These examples represent only a portion of the more than 1,000 commercial sector projects we expect to build this year across our 8 states and over 115 local markets. On the public side, federal and state governments continue to invest in infrastructure to support the growing economies across the Sunbelt. From large market-specific projects to recurring repair and maintenance work for state DOTs, cities and counties, as well as lane widenings and road expansion projects, publicly funded work remains robust. As examples of some of our recent public wins in just one of our states, Florida, we won a contract to reconstruct the existing airfield pavement apron at the main passenger terminal of Pensacola International Airport, involving demolition of existing pavements, new storm drainage and installation of subgrade and base courses, a multifaceted project that will begin in September and run through the fall of 2027. For the Florida DOT, we recently were awarded 2 contracts totaling over $80 million to build new rest stop areas along the I-4 corridor. These projects also strengthen our presence with a key transportation client while showcasing our ability to efficiently deliver large, complex infrastructure projects. In addition to these projects, we continue to win project awards across our 8 states for resurfacing and repair projects. This is our typical and sustainable work that drives our company forward quarter after quarter and year after year. Overall, at the state funding level, we continue to see increased budgets and healthy project letting activity across our states. Turning to our growth strategy. Last month, we completed another strategic acquisition with the purchase of Ellsworth Construction, a leading asphalt manufacturing and construction company in Oklahoma. I'd like to welcome Nathan Ellsworth and his group of talented construction professionals to the CPI family of companies. Under our Oklahoma platform company, Overland Construction, Ellsworth expands our footprint in the state and significantly strengthens our presence in the rapidly growing Tulsa and Oklahoma City metropolitan areas. The acquisition adds experienced employees, strategically located facilities and a strong reputation for execution while further expanding our capabilities in the fast-growing data center construction market. Ellsworth's established position in Oklahoma complements Overland's extensive data center portfolio in North Texas, creating additional opportunities to service this attractive and expanding end market. We continue to benefit from the ongoing generational transition occurring across our industry and maintain a robust pipeline of high-quality acquisition opportunities throughout our existing footprint and adjacent Sunbelt states. We remain actively engaged in discussions with prospective sellers and encouraged by the opportunities ahead. Organic growth remains an equally important component of our long-term strategy as evidenced by our strong organic growth, both in this quarter and for our entire fiscal year 2026. We continue to invest in our existing business by increasing capacity, broadening our geographic reach and enhancing our vertical integration network. As part of these efforts, we expect to bring several greenfield facilities online later this year, extending our reach into attractive high-growth markets that are currently underserved. Finally, I'd like to say that we are excited not only for the results of this quarter and expected for this fiscal year, but also for the outlook ahead for fiscal year 2027 that begins October 1. At CPI, our leadership team annually reads a book together and several of these books we studied are by the renowned business author, Jim Collins. An important concept that we learned from Collins is the idea of the 20-mile march, having the discipline and planning to make consistent and steady progress toward your goal. Our ROAD 2030 5-year plan outlines our strategy to each year have a consistent march of controlled, profitable growth as we execute on our strategy. Today, we are raising our fiscal 2026 guidance to reflect over 30% growth on both top line revenue and bottom line margins. And looking forward to fiscal year 2027, we anticipate strong organic growth again, and we already have approximately $140 million of acquisitive revenue carrying over from this year. So another typical CPI year of growth is developing, and we will continue to march forward with discipline to deliver long-term strategic value for our shareholders. And with that, I'd like now to turn the call over to Greg. Gregory Hoffman: Thank you, Jule, and good morning, everyone. As Jule mentioned, we reported a strong third quarter, maintaining the outperformance we experienced in the first 6 months of the year. I will review the quarter in more detail before discussing our raised outlook. I'll start with a review of our key performance metrics for the third quarter of fiscal 2026. Revenue was $999.4 million, an increase of 28.2% compared to last year. The breakdown of this revenue growth was 8.9% organic and 19.3% acquisitive. Gross profit in the third quarter was $168.4 million, an increase of approximately 28% compared to last year. As a percentage of total revenues, gross profit was 16.8% compared to 16.9% last year. General and administrative expenses as a percentage of total revenue in the third quarter decreased to 6.3% from 6.5% in Q3 2025. Net income was $59.6 million and adjusted net income was $60.6 million. Earnings per diluted share for adjusted net income was $1.08. Adjusted EBITDA was $163 million, an increase of 24% compared to last year. Adjusted EBITDA margin for the quarter was 16.3%. You can find GAAP to non-GAAP reconciliations at the end of today's earnings release. Turning now to the balance sheet. We had $95 million of cash and cash equivalents and $599 million available under our credit facility at June 30, net of a reduction for outstanding letters of credit. During the quarter, we amended our Term Loan A and revolver credit agreement as well as our Term Loan B credit agreement. First, we amended the existing revolving credit facility under the Term Loan A revolver credit agreement from $500 million to $700 million. In addition, we refinanced and replaced in full all outstanding term loans under the Term Loan B credit agreement to reduce the interest rate margins payable and provided for incremental term loans in the amount of $300 million. As of the end of the quarter, our debt to trailing 12 months EBITDA ratio decreased to 3.1x. We remain committed to our strategy of reducing the leverage ratio to approximately 2.5x to support sustained profitable growth. In the third quarter of fiscal 2026, cash flow from operations was $93.1 million, up from $83 million in Q3 of fiscal 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 are raising our fiscal 2026 outlook to reflect the outperformance of Q3 and to include the contribution of our newest acquisition, Ellsworth Construction. Our new ranges are: revenue in the range of $3.64 billion to $3.68 billion; net income in the range of $165 million to $168 million; adjusted net income in the range of $177.6 million to $181.4 million; adjusted EBITDA in the range of $559 million to $569 million and adjusted EBITDA margin in the range of 15.35% (sic) [ 15.36% ] to 15.46%. Lastly, we had a record project backlog of $3.36 billion at June 30, 2026. We have approximately 80% to 85% of the next 12 months' contract revenue covered in backlog. And with that, we will open the call to questions. Operator? Operator: [Operator Instructions] Our first question comes from Tyler Brown with Raymond James. Patrick Brown: Greg, a couple of quick modeling clarifications, if I could. So one, can you kind of size what the asphalt pass-through revenue impact to growth was? And is that in organic growth? Two, what is the expected total M&A contribution in the '26 guidance? And then three, did I hear it right, Jule, that $140 million rolls into next year? Sorry, I know there's a lot there, but I appreciate that. Gregory Hoffman: Yes, no problem. Yes. So as you know, we're indexed on liquid AC, and certainly, there was an impact there in this fiscal quarter. We're probably $8 million to $10 million of additional revenue for the quarter. And -- but that's spread kind of both on the acquisitive side and the organic side, right, because it depends where in the geographical footprint it came. So I think your next question was what's the acquisitive in the next quarter? F. Smith: Tyler, I think the midpoint of our guidance growth is around 30% now for overall growth for the year. And if you take out 8% organic growth, and that leaves about 22% from acquisitive, which I think at the midpoint of our guidance is somewhere around $780 million to $790 million, if I'm doing my math right. Well, I was just going to say you're right. We've got about $140 million of those acquisitions of that revenue carrying over now into FY '27. Patrick Brown: Okay. Perfect. Okay. So Jule, obviously, it's a really strong quarter. You called out May. It was very wet. So maybe you can help us just understand a bit how the business works a little bit better. So when we see the weather data, what are some things that we should consider, let's call it, regarding your operational flexibility. For example, does the timing of the rain matter if you guys -- because I think typically, you're working late at night, early in the morning. So maybe afternoon showers don't impact you as much? Or do you push workdays into the weekend if you miss? Or do you just run double time when it's nice outside? But maybe you can just kind of help us understand how you navigate weather in what is clearly an outdoor sport. F. Smith: Right. That's a good question, Tyler. You're right in some of what you said. Obviously, when it rains, we cannot work when it's wet. In our work season, it's hot, and so it dries out pretty quick. But those days that we miss do create the need to be more productive to make up because our customers still want their projects delivered. So when it rains during the one day, we might make up for it on the weekend. And so when it dries out, we can make a lot of time up. I would just continue to say, as you've heard me say before, weather for us almost always evens out. We had some good weather quarters in the first and second quarter. This quarter was a little wetter than normal. So it's -- it can be part of the narrative quarter-to-quarter. But for the year, it almost never is part of the story. Patrick Brown: Okay. Okay. Fair. Good. And then my last one here. I appreciate all the color on IIJA replacement and obviously continuing resolution, et cetera. But kind of a bigger picture question. But let's call it in times of more funding uncertainty, if we want to call it that, could there be more of a shift toward those $2 million to $3 million resurfacing projects versus, call it, larger multiyear projects? Is that what happens at the state DOT level? Or am I just kind of overthinking that? F. Smith: No, you're not overthinking it. We've been discussing that in the last month or so. And Ned's older than me. He's seen a lot more. So I'm going to let him speak to the history of continuing resolutions and how that's affected the business. Ned Fleming: I guess, Tyler, what we really just learned is experience does have its benefits from time to time. Thank you, Jule. I think the easy answer to your question is yes. But if we take a historical perspective, first and foremost, we're at an all-time funding high from a federal level. Number two is the states continue to find ways to create capital for their own projects as well as to match the federal funding. The third thing that we learned is it does not really affect operations. Capital continues to flow. During the Obama administration, about 4.5 years of it, we lived through a continuing resolution. It's just a fact. You can go Google it, use any of the AI you want. And what we learned is there were no disruptions. There were more maintenance and short-term projects because people are waiting on the longer-term funding to make big project decisions. Number three is the states really stepped up and created funding. And I'm talking about local governments and municipalities. The last piece, which has always been real interesting to me that we figured out is we continue to have very strong opportunities for acquisition growth. So from a historical perspective, I would say those 4.5 years were some of the best years the company had. Operator: Our next question comes from Andrew Wittmann with Baird. Andrew J. Wittmann: I don't know, I just want to talk about the fourth quarter implied margin here. Obviously, it's another step-up. I guess it's implying around flat year-over-year despite some of the inflationary commodities. So obviously, you're getting that pass-through and discussed that already. Is there anything more to it than that, Greg? Is it just really the seasonal cost leverage that gives you the 3Q to 4Q bump? Is there help from Ellsworth in terms of the margin up or down in terms of the mix that, that brings in with the backlog that they bring to you? Just kind of curious about some of the other puts and takes into that fourth quarter. Gregory Hoffman: Yes. Certainly, Ellsworth is a help. Other acquisitions we've made throughout the year are a help and become fully integrated in the fourth quarter and start turning on the revenue and the margin. I would also say that just like every fourth quarter, as you start over absorbing all that fixed cost, that just really starts the engine moving and starts generating more profit and more EBITDA. Andrew J. Wittmann: Got it. And then I guess just broader, bigger picture, besides the crude complex, are there any other inflationary or deflationary factors that you're seeing in your cost structure right now? The one that I always like to check in on is labor. But maybe anything else, Jule, that you'd make a comment on there? F. Smith: Andy, I don't -- I can't think of anything that's out of the ordinary. We're experiencing normal cost adjustments with labor, concrete, pipe. And we have a pass-through model. And so as you know, every day, our estimators are turning in bids and they're putting the current input cost in with some contingency factors in there. So there's really nothing that's affecting our business in an outsized way. And even the energy costs, we've started immediately putting that in our pass-through model, and that's what you're seeing now reflected in our guidance. Operator: Our next question comes from Kathryn Thompson with the Thompson Research Group. Kathryn Thompson: I know you focused a bit on the guidance and the raise. But even I guess stepping back and look at the forest for the trees, you have the obvious top line add. But for the companies that you have acquired, let's just say, within the past 6 to 12 months, how much of overall margin improvement or operational improvement is adding to this raised momentum and earnings growth as we go into the balance of the year? Because it's understandable, like, you've acquired companies, but you're also seeing some margin improvement on top of it. Help us connect the dots on that, if you could. F. Smith: Thank you, Kathryn. I think obviously, in 2025, when we added Lone Star Paving, that was a transformational acquisition. It took us from 12% to 15% EBITDA margins. And then you've seen this year us take another step, kind of, along our path. And clearly, the new acquisitions we've made are helping that. Durwood Greene, GMJ, Lone Star Paving in Tennessee and now Ellsworth, they all are really good companies that have good margin in their backlogs. They're well-run operations. And so we are -- the acquisitions that we're adding are helping us become more profitable. Kathryn Thompson: Okay. I know we focused a little bit on the federal side for the new highway bill reauthorization. But we hosted a meeting with TxDOT in June, and they were pretty optimistic, I mean, even with CRs. What are your other state DOTs telling you about what they are or are not doing or their overall perspective on this federal highway bill reauthorization? And importantly, how they're planning in and around that journey? F. Smith: Yes. Kathryn, I've heard what the Texas DOT said at that meeting in June. And I think the other states would largely say the same thing. They don't expect any interruption in their planning. Obviously, everybody would like to get the 5-year bill passed, and we think that will happen late this fall. And so the DOTs may do a little more short-term projects at the very beginning. But once the 5-year bill passes, they'll start planning longer-term projects. But there should be really no interruption to the states' programs. Operator: Our next question comes from Michael Feniger with Bank of America. Michael Feniger: Gentlemen, just on the data centers, I mean, maybe for you, Jule, just is there anything different on how you guys are tackling this opportunity or going after it? Is it more than just your normal type of work and services? Are there other ways you can deploy the team and get a couple more bites out of the apple? Is the pricing or project length a little different than what you normally look after? Just kind of curious how -- as you guys have built out in some of these geographies and you look at this pipeline on data center work, like is there other things that ROAD can do here that maybe we don't see you guys do on a typical project? F. Smith: Yes. Good question, Michael. Obviously, data centers are a big topic in our economy these days. I would say, first of all, our model hasn't changed. We have 115 local markets. We're in 8 states, and our teams pursue projects in their geography. And so data centers are part of that ecosystem now. So our model hasn't changed. But clearly, there are great opportunities. And we're doing more and more of them simply because we're building relationships with the people that are building them and 70% to 75% of the data centers being built are in our 8 states right now. So they're a growing part of our business, but it's simply -- we're simply allocating people and equipment to the highest-margin opportunities. I would say these projects are good projects. They're nice margin projects. Size varies. There are some really large ones, and there's some that we're doing just a couple of million dollars of paving, and there's some we're doing $30 million or $40 million worth of work. So it varies. But I would just say it's fitting into our overall business model just like a normal commercial project would. Michael Feniger: That makes sense. And just given fuel and liquid asphalt, are you guys seeing -- I know there's the public side, but on the private side and maybe more open market biddings, are you seeing this cost inflation reflected in biddings with your work, but also what you see with others? And how is that, do you think, informing people's views on 2027? I mean, are you thinking any differently, Jule, on your storage capabilities? And do you want more terminals? I'm just, kind of, curious what we've seen this year, how you think that might impact people's bidding and also your own ability for internalization as we head into 2027? F. Smith: Yes. Mike, I would say for us, it really hasn't affected our outlook. We continue to run our business passing through the costs. So it's a normal inflation environment from that standpoint. We do love being in the terminal business. It's been very additive to have that as part of our vertical integration strategy. So we will look for opportunities to expand that part of our business. I'm going to let Greg answer in terms of how it's affecting bidding. Gregory Hoffman: I think, Mike, in the short term, we have the protections we've talked about hedging as well as the terminals as well as the indexes. But over time, I mean, the pass-through model kicks in, right? I mean, so 6 to 9 months, I mean, from 2 or 3 months ago when this all, kind of, kicked off from an energy inflation standpoint, we immediately, as Jule said earlier, start putting in those higher prices in the bids. And so there are already some jobs that we bid with that new pricing mechanism or those new pricing mechanisms and completed the work. I mean, some of the book and burn work that we do. So over the long term, I think all that settles out to be just a normal part of our cost makeup bidding process as we work through the jobs we have on the backlog now. Operator: Our next question comes from Rohit Seth with B. Riley Securities. Rohit Seth: Just curious if you can go through the footprint and talk about which markets are performing better and which ones are maybe lagging? F. Smith: Yes. Rohit, I would just say we're in 115 local markets. They all have different competitive dynamics. They all don't have the same margin profile. But overall, most of the markets, almost all the markets are doing really well. And so we don't really get into the specifics of each market, but generally, you can tell by our guidance that our markets are growing. We're working steadily to make them more profitable, and we expect that to continue into 2027. Operator: Our next question comes from Keith Hughes with Truist Securities. Keith Hughes: The guidance implies some really good margins in the fourth quarter. You touched on this a little bit earlier. But is there anything specific or specifics that are driving the margins up year-over-year, at a pretty strong clip here in the fourth quarter. F. Smith: Yes, Keith, I would just say that's part of what we expected this year. I mean this quarter, we had good margins, but -- and we had some impact from weather and diesel. And we feel like that our pass-through model starts to make that up in the fourth quarter. And obviously, we don't guide for any kind of weather impact. It's too early in the quarter to deal with that, either good or bad weather. So largely, the fourth quarter's guide is what we, kind of, expected for this whole work season. And -- so -- and if you look at it annually, what we're guiding to is that 30 to 40 basis point increase in our margins annually. And so I know we talk about it quarterly, but what we really look at is, are we making progress annually. Operator: Our next question comes from Adam Thalhimer with Thompson, Davidson & Company. Adam Thalhimer: Great quarter. Sorry, you couldn't find an extra $600,000 of sales to have your first $1 billion quarter, but it looks like you're going to get there in September. Gregory Hoffman: Blame the weather. F. Smith: I know. Greg is very accurate, Adam. It came in -- what it came in. Adam Thalhimer: Jule, when you talk about state DOTs and budgets on the public side, is that uniformly good? Or are there some good states, some bad states? F. Smith: I would say of our 8 states, Adam, I wouldn't characterize any as bad. Clearly, each state has their own funding profile. I would say all of our states have indexed their gas taxes. They have healthy programs. But clearly, if you look at what Florida and Texas have done, those are clearly outsized programs that stand out. But all of our states have healthy programs, but they're all a little different. Adam Thalhimer: And then nobody touched on the M&A pipeline. Hoping you could comment on that. F. Smith: Yes. I would -- I'd say this often, but it's true. We're very busy right now. And we're in discussions with a lot of sellers. So it's very active. We're very encouraged by some of the opportunities we're looking at and talking about. And so I would expect it to be a quite busy fall. So, Ned, do you have any thoughts on that? Ned Fleming: Yes. I think, Adam, one of the things we just finished our quarterly Board meeting. And I think one of the things that comes out in those meetings is what a terrific job Jule and Greg and the team are doing. I think we're seeing a whole lot more things than we're actually acquiring. I think this is a company that, even more today than ever before, is becoming the acquirer of choice. We've become not only a bigger team, but more sophisticated. So that pipeline is, I would say, strong. It's well thought out. They have plans as we move forward. So we're excited about the future of the acquisition profile of this business. Adam Thalhimer: And is it still more on the tuck-in side? Or you also have some platform ideas? Ned Fleming: We're actually seeing both, and that has always been the case. Adam Thalhimer: And then last one for me. Greg, I wanted to ask you about -- and you touched on this. You basically gave a soft Q4 guide for free cash flow. But that looks like it's going to be your best quarter of the year for operating and free cash flow. Gregory Hoffman: Yes, absolutely. It's kind of funny in Q3, the last month of the year was -- last month of the quarter, sorry, June was great. It's a lot of billings. That comes on the heels of not a great month in May. So the cash is going to flow through in the fourth quarter. And so that's very exciting. We're pleased about that. Operator: We've reached the end of our question-and-answer session. I would now like to turn the floor back over to management for closing comments. F. Smith: We thank everyone for joining us today. We look forward to speaking again next quarter. Thank you. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Before you buy stock in Construction Partners, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Construction Partners wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,943!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,382,819!* Now, it’s worth noting Stock Advisor’s total average return is 983% — a market-crushing outperformance compared to 216% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 14, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Construction Partners. The Motley Fool has a disclosure policy. Construction Partners (ROAD) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. Construction Partners (ROAD) reported third quarter sales of US$999.42 million and net income of US$59.56 million, along with raised full year guidance that now points to higher expected revenue and net income ranges. See our latest analysis for Construction Partners. The earnings beat and raised guidance have arrived against a backdrop where Construction Partners’ share price has fallen 28.7% over the past 90 days and is down 10.7% year to date, while the 3 year total shareholder return is very high. This points to strong long term performance despite recent pressure. If this kind of post earnings volatility has your attention, it can be a useful moment to look at other opportunities in the market and see how they compare through a focused screener such as 36 power grid technology and infrastructure stocks Bulls will point to Construction Partners’ raised guidance and multi year shareholder returns, while bears may focus on the sharp recent pullback. Which side does the current valuation evidence line up with next? Compared with the latest close at $100.16, the most widely followed narrative for Construction Partners points to a fair value of $145, which implies a sizeable valuation gap that investors are watching closely. Read the complete narrative. Want to see what underpins that $145 figure? The narrative leans on a specific mix of revenue growth, margin expansion, and a future earnings multiple that is usually reserved for faster growing sectors. It examines how those ingredients are combined into a single fair value path for Construction Partners. Result: Fair Value of $145 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, Construction Partners’ reliance on public infrastructure funding and its focus on Southeast and Sunbelt markets could pressure revenue and margins if budgets or local conditions shift. Find out about the key risks to this Construction Partners narrative. With Construction Partners showing both long term strengths and fresh questions after earnings, it makes sense to review the data yourself and move quickly. To see what investors are flagging on both the risk and reward sides, take a closer look at the 4 key rewards and 1 important warning sign. If Construction Partners has sharpened your focus on valuation and quality, do not stop here. There are other stocks that may better fit your goals and risk comfort. Target dependable growth potential by reviewing companies highlighted in the screener containing 19 high quality undiscovered gems that combine strong fundamentals with less crowded investor attention. Strengthen portfolio resilience by checking businesses in the solid balance sheet and fundamentals stocks screener (49 results) that pair financial stability with measurable fundamentals. Reduce downside shocks by scanning stocks identified in the 78 resilient stocks with low risk scores that score well on financial health and volatility controls. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ROAD. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Revenue Up 28% Compared to Q3 FY25 Adjusted Net Income Up 34% Compared to Q3 FY25 Adjusted EBITDA Up 24% Compared to Q3 FY25 Record Backlog of $3.36 Billion Company Raises FY26 Outlook DOTHAN, Ala., Aug. 7, 2026 /PRNewswire/ -- Construction Partners, Inc. (NASDAQ: ROAD) ("CPI" or the "Company"), a vertically integrated civil infrastructure company specializing in the construction and maintenance of roadways in local markets throughout the Sunbelt, today reported financial and operating results for the fiscal third quarter ended June 30, 2026. Fred J. (Jule) Smith, III, the Company's President and Chief Executive Officer, said, "Our strong third quarter results reflect the continued execution of our operating strategy and the dedication of our teams throughout the CPI family of companies. During the quarter, we delivered revenue growth of 28% and Adjusted EBITDA growth of 24%, despite the impact of energy cost inflation and extremely wet weather in May across many of our markets. These results underscore the resilience of our decentralized operating model, the strength of our local market strategy, and our ability to consistently execute across diverse market conditions. Demand for both public infrastructure and commercial construction projects remained healthy throughout our markets, driving backlog to a record $3.36 billion and providing continued visibility into future growth." Revenues were $999.4 million in the third quarter of fiscal 2026, an increase of 28.2% compared to $779.3 million in the same quarter last year. Gross profit was $168.4 million in the third quarter of fiscal 2026, compared to $131.8 million in the same quarter last year. General and administrative expenses were $63.1 million in the third quarter of fiscal 2026, compared to $51.0 million in the same quarter last year, and as a percentage of total revenues, decreased 20 basis points to 6.3%, compared to 6.5% in the same quarter last year. Net income was $59.6 million in the third quarter of fiscal 2026, compared to net income of $44.0 million in the same quarter last year. Adjusted net income(1) was $60.6 million in the third quarter of fiscal 2026, compared to Adjusted net income of $45.2 million in the same quarter last year. Using Adjusted net income, diluted earnings per share would have been $1.08 for the third quarter of fiscal 2026, compared to $0.81 in the same quarter last year. Adjusted EBITDA(1) in the third quarter of fiscal 2026 was $163.0 million, an increase of 23.8% compared to $131.7 million in the same quarter last year. Project backlog was a record $3.36 billion at June 30, 2026, compared to $2.94 billion at June 30, 2025 and $3.14 billion at March 31, 2026. Smith added, "Earlier this month, we were pleased to expand our Oklahoma footprint through the acquisition of Ellsworth Construction, which further strengthens our presence into two of the fastest-growing markets in the Sunbelt. Ellsworth adds experienced employees, strategically located facilities, and a strong reputation for execution, enhancing our ability to serve the rapidly growing Tulsa and Oklahoma City metropolitan areas. The acquisition also expands our capabilities in the fast-growing data center construction market, where Ellsworth has established a strong presence that complements Overland's extensive data center portfolio in North Texas. Based on our strong third quarter performance and the expected contribution from Ellsworth, we are raising our fiscal 2026 guidance. We remain on track to deliver sustained revenue growth, expanding profitability, and continued progress toward achieving our ROAD 2030 objectives." Fiscal 2026 Outlook The Company is raising its outlook for fiscal year 2026 with regard to revenue, net income, Adjusted net income, Adjusted EBITDA and Adjusted EBITDA margin as follows: Revenue in the range of $3.640 billion to $3.680 billion Net income in the range of $165.0 million to $168.0 million Adjusted net income(1) in the range $177.6 million to $181.4 million Adjusted EBITDA(1) in the range of $559.0 million to $569.0 million Adjusted EBITDA margin(1) in the range of 15.36% to 15.46% Ned N. Fleming, III, the Company's Executive Chairman, stated, "CPI continues to create long-term shareholder value through the disciplined execution of our proven growth strategy, combining strong organic growth with strategic acquisitions that expand our platforms across the Sunbelt, increase scale, and enhance operating efficiencies. Supported by a strong balance sheet, experienced leadership team, and healthy customer funding for both public and private construction projects, we believe CPI is well positioned to continue growing and compounding value. The Board and I remain highly confident in CPI's long-term strategy, competitive position, and our ability to capitalize on the significant opportunities ahead." Conference Call The Company will conduct a conference call today at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) to discuss financial and operating results for the fiscal quarter ended June 30, 2026. To access the call live by phone, dial (412) 902-0003 and ask for the Construction Partners call at least 10 minutes prior to the start time. A webcast of the call will also be available live and for later replay on the Company's Investor Relations website at www.constructionpartners.net. About Construction Partners, Inc. Construction Partners, Inc. is a vertically integrated civil infrastructure company operating in local markets throughout the Sunbelt in Alabama, Florida, Georgia, North Carolina, Oklahoma, South Carolina, Tennessee and Texas. Supported by its hot-mix asphalt plants, aggregate facilities and liquid asphalt terminals, the Company focuses on the construction, repair and maintenance of surface infrastructure. Publicly funded projects make up the majority of its business and include local and state roadways, interstate highways, airport runways and bridges. The company also performs private sector projects that include paving and sitework for office and industrial parks, shopping centers, local businesses and residential developments. To learn more, visit www.constructionpartners.net. Cautionary Note Regarding Forward-Looking Statements Certain statements contained herein that are not statements of historical or current fact constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934. These statements may be identified by the use of words such as "may," "will," "expect," "should," "anticipate," "intend," "project," "outlook," "believe" and "plan." The forward-looking statements contained in this press release include, without limitation, statements related to financial projections, future events, business strategy, future performance, future operations, backlog, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management. These and other forward-looking statements are based on management's current views and assumptions and involve risks and uncertainties that could significantly affect expected results. Important factors could cause actual results to differ materially from those expressed in the forward-looking statements, including, among others: our ability to successfully manage and integrate acquisitions; failure to realize the expected economic benefits of acquisitions, including future levels of revenues being lower than expected and costs being higher than expected; failure or inability to implement growth strategies in a timely manner; declines in public infrastructure construction and reductions in government funding, including the funding by transportation authorities and other state and local agencies; risks related to our operating strategy; competition for projects in our local markets; risks associated with our capital-intensive business; government requirements and initiatives, including those related to funding for public or infrastructure construction, land usage and environmental, health and safety matters; unfavorable economic conditions and restrictive financing markets; our ability to obtain sufficient bonding capacity to undertake certain projects; our ability to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us; the cancellation of a significant number of contracts or our disqualification from bidding for new contracts; risks related to adverse weather conditions; our substantial indebtedness and the restrictions imposed on us by the terms thereof; our ability to maintain favorable relationships with third parties that supply us with equipment and essential supplies; our ability to retain key personnel and maintain satisfactory labor relations; property damage, results of litigation and other claims and insurance coverage issues; risks related to our information technology systems and infrastructure; our ability to maintain effective internal control over financial reporting; and the risks, uncertainties and factors set forth under "Risk Factors" in the Company's most recent Annual Report on Form 10-K and its subsequently filed Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date they are made. The Company assumes no obligation to update forward-looking statements to reflect actual results, subsequent events, or circumstances or other changes affecting such statements except to the extent required by applicable law. Contact: Rick BlackInvestor [email protected] (713) 529-6600 - Financial Statements Follow - Reconciliation of Non-GAAP Financial Measures Adjusted EBITDA represents net income before, as applicable from time to time, (i) interest expense, net, (ii) provision (benefit) for income taxes, (iii) depreciation, depletion, accretion and amortization, (iv) share-based compensation expense, (v) loss on the extinguishment of debt, and (vi) nonrecurring expenses related to transformative acquisitions, which management considers to include transactions of a size that would require clearance under federal antitrust laws. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of revenues for each period. Adjusted net income represents net income before (i) nonrecurring expenses related to transformative acquisitions, which management considers to include transactions of a size that would require clearance under federal antitrust laws, and (ii) nonrecurring fees associated with financing arrangements incurred in connection with transformative acquisitions. These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP. These measures have limitations as analytical tools and should not be considered in isolation or as an alternative to net income or any other performance measure derived in accordance with GAAP as an indicator of our operating performance. We present Adjusted EBITDA, Adjusted EBITDA margin and Adjusted net income because management uses these measures as key performance indicators, and we believe that securities analysts, investors and others use these measures to evaluate companies in our industry. Our calculation of Adjusted EBITDA, Adjusted EBITDA margin and Adjusted net income may not be comparable to similarly named measures reported by other companies. Potential differences may include differences in capital structures, tax positions and the age and book depreciation of intangible and tangible assets. The following tables present a reconciliation of net income, the most directly comparable measure calculated in accordance with GAAP, to (i) Adjusted net income and (ii) Adjusted EBITDA (with the resulting calculation of Adjusted EBITDA margin) for the applicable periods. View original content:https://www.prnewswire.com/news-releases/construction-partners-inc-announces-fiscal-2026-third-quarter-results-302845513.html

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by a robust cost pass-through model that successfully mitigated energy cost inflation and unusually wet weather in May. The company's culture of a 'family of companies' serves as a competitive advantage, positioning it as the acquirer of choice for generational transitions in the industry. Strategic positioning in the Sunbelt is capturing significant tailwinds from AI data center construction, with 70% to 75% of new national projects expected in CPI's existing states. Growth is balanced between an 8.9% organic increase and a 19.3% acquisitive contribution, reflecting disciplined execution across 115 local markets. Vertical integration through asphalt terminals and manufacturing facilities continues to enhance margin capture and operational resilience. Management attributes sustained success to the '20-mile march' philosophy, focusing on consistent, controlled, and profitable growth rather than volatile expansion. Fiscal 2026 guidance was raised to reflect over 30% growth in both revenue and bottom-line margins, supported by the Ellsworth Construction acquisition. Management anticipates strong organic growth for fiscal 2027, already securing approximately $140 million in acquisitive revenue carryover. The company expects to convert 75% to 85% of EBITDA to cash flow from operations in fiscal 2026, with a target leverage ratio reduction to 2.5x. Guidance assumes no disruption from federal funding cycles, as a potential continuing resolution would maintain funding at record fiscal 2026 levels. Several greenfield facilities are expected to come online later this year to extend reach into underserved, high-growth markets. The BUILD America 250 Act represents a potential 7.2% funding increase over the IIJA, specifically targeting hard infrastructure projects. Approximately 45% of IIJA funding remains undeployed, providing a significant multi-year buffer against legislative delays. Energy cost inflation, particularly in liquid asphalt and diesel, is being actively managed through index-based pricing and terminal hedging. The acquisition of Ellsworth Construction significantly expands the company's footprint in the Tulsa and Oklahoma City metropolitan areas. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that during previous 4.5-year periods of continuing resolutions, the industry saw no disruptions and actually experienced strong growth. States often respond to federal uncertainty by creating their own capital for projects and shifting focus toward shorter-term maintenance and resurfacing work. CPI is not changing its model for data centers but is allocating resources to these high-margin opportunities within its existing local geographies. The pipeline for data center work currently exceeds $100 million in Texas and $130 million in Oklahoma. The pipeline remains robust with active discussions involving both small tuck-ins and larger platform opportunities. Management expects a 'quite busy fall' for acquisitions as they continue to see more opportunities than they ultimately choose to acquire.

Construction Partners Inc. (NASDAQ:ROAD) delivered better-than-expected third-quarter results on Friday, with earnings and revenue both exceeding Wall Street forecasts as strong infrastructure demand supported growth. The company also increased its full-year guidance, sending shares higher in pre-market trading. The stock gained nearly 5% following the announcement. Construction Partners reported adjusted earnings of $1.06 per share for the third quarter, edging past analysts’ consensus estimate of $1.05. Revenue climbed 28% year over year to $999.4 million, comfortably ahead of the expected $958.8 million, driven by continued strength in public infrastructure spending and commercial construction activity. Adjusted net income rose 34% to $60.6 million from $45.2 million a year earlier. Adjusted EBITDA increased 24% to $163.0 million, compared with $131.7 million in the third quarter of fiscal 2025. Following the strong quarterly performance, Construction Partners lifted its fiscal 2026 revenue outlook to between $3.64 billion and $3.68 billion. The midpoint of the new forecast, $3.66 billion, is above analysts’ consensus estimate of $3.61 billion. The company also increased its adjusted EBITDA guidance to a range of $559.0 million to $569.0 million, implying an adjusted EBITDA margin of between 15.36% and 15.46%. Adjusted net income for the full year is now expected to reach between $177.6 million and $181.4 million. President and Chief Executive Officer Fred J. Smith, III said, “Our strong third quarter results reflect the continued execution of our operating strategy and the dedication of our teams throughout the CPI family of companies.” He added, “During the quarter, we delivered revenue growth of 28% and Adjusted EBITDA growth of 24%, despite the impact of energy cost inflation and extremely wet weather in May across many of our markets.” Construction Partners ended the quarter with a record backlog of $3.36 billion, up from $2.94 billion a year earlier, providing strong visibility into future revenue. Gross profit also improved significantly, increasing to $168.4 million from $131.8 million in the prior-year quarter. The company continues to benefit from healthy demand across both public infrastructure and commercial construction markets. Despite higher energy costs and weather-related disruptions during the quarter, Construction Partners maintained strong operational execution, supporting higher profitability and reinforcing confidence in its upgraded full-year outlook. Construction Partners stock price

This article first appeared on GuruFocus. Revenue: $999.4 million, up 28.2% year-over-year (8.9% organic, 19.3% acquisitive). Gross Profit: $168.4 million, up ~28% year-over-year; margin 16.8% vs. 16.9% in Q3 2025. Net Income: $59.6 million; adjusted net income $60.6 million. Adjusted EPS: $1.08 per diluted share. Adjusted EBITDA: $163 million, up 24% year-over-year; margin 16.3%. Cash Flow from Operations: $93.1 million, up from $83 million in Q3 2025. Backlog: Record $3.36 billion at June 30, 2026; ~80%-85% of next 12 months contract revenue covered. G&A Expenses: 6.3% of revenue, down from 6.5% in Q3 2025. Balance Sheet: $95 million cash; $599 million available under credit facility; debt-to-EBITDA ratio 3.17x. Fiscal 2026 Outlook (raised): Revenue $3.64B-$3.68B; net income $165M-$168M; adjusted net income $177.6M-$181.4M; adjusted EBITDA $559M-$569M; adjusted EBITDA margin 15.35%-15.46%. Warning! GuruFocus has detected 5 Warning Signs with ROAD. Is ROAD fairly valued? Test your thesis with our free DCF calculator. Release Date: August 07, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Construction Partners Inc (NASDAQ:ROAD) delivered a strong third quarter with revenue up 28.2% year-over-year, driven by 8.9% organic growth and 19.3% acquisitive growth. The company raised its fiscal 2026 guidance, now expecting revenue between $3.64 billion and $3.68 billion and adjusted EBITDA between $559 million and $569 million, reflecting over 30% growth. Record project backlog of $3.36 billion at June 30, 2026, with 80-85% of next 12 months' contract revenue covered. Completed strategic acquisition of Ellsworth Construction in Oklahoma, expanding footprint in high-growth data center markets and adding approximately $140 million in acquisitive revenue for fiscal 2027. Strong balance sheet with $95 million cash and $599 million available under credit facility, and debt-to-EBITDA ratio reduced to 3.17x. Robust demand in AI data center construction, with 70-75% of new data center projects expected in existing states, and active projects in Texas and Oklahoma. Continued strong public sector demand with recent wins including $80 million in Florida DOT contracts and airfield reconstruction at Pensacola International Airport. Management expressed confidence in federal funding reauthorization, noting bipartisan support and no expected disruption to fiscal 2026 or 2027 projects. Active M&A pipeline with both tuck-in and platform opportunities, positioning the company for continued growth. Cash flow from operations improved to $93.1 million in Q3, up from $83 million in the prior year. Revenue growth was impacted by continued energy cost inflation, particularly in liquid asphalt and diesel, which pressured margins. Unusually wet weather in May across many markets negatively affected operations and required catch-up work. Adjusted EBITDA margin declined slightly to 16.3% in Q3 from 16.9% in the prior year, reflecting cost pressures. Gross profit margin remained flat at 16.8% year-over-year, indicating limited margin expansion despite revenue growth. Uncertainty around the federal surface transportation bill reauthorization, with potential for a continuing resolution that could shift project mix toward shorter-term work. The company's leverage ratio, while improved, remains at 3.17x, above the target of 2.5x, indicating ongoing debt reduction needs. Weather-related disruptions could continue to impact quarterly performance, as seen in Q3. The company's reliance on acquisitions for growth (19.3% of revenue growth) may pose integration risks. Data center projects, while attractive, are subject to cyclicality and competitive bidding, which could affect margins. The company did not provide specific guidance for fiscal 2027, creating uncertainty for investors. Q: Can you size the asphalt pass-through revenue impact to growth, the expected total M&A contribution in the '26 guidance, and confirm the $140 million rolling into next year?A: CFO Greg Hoffman noted an additional $8 million to $10 million of revenue for the quarter from liquid AC indexing, spread across both acquisitive and organic sides. CEO Jule Smith confirmed that at the midpoint of guidance, overall growth is around 30%, with 8% organic and about 22% acquisitive, translating to roughly $780 million to $790 million in acquisitive revenue. He also confirmed that approximately $140 million of that acquisitive revenue carries over into fiscal 2027. Q: How should we understand the operational flexibility and navigation of weather impacts, given the unusually wet May?A: CEO Jule Smith explained that while rain halts work, the hot work season dries things out quickly. Missed days are often made up on weekends to meet customer deadlines. He emphasized that weather almost always evens out over the year, noting that while it can be part of the quarterly narrative, it rarely affects the annual story. Q: In times of federal funding uncertainty, could there be a shift towards smaller resurfacing projects versus larger multiyear projects at the state DOT level?A: Executive Chairman Ned Fleming provided historical perspective, noting that during the Obama administration's 4.5 years of continuing resolutions, there were no disruptions. He observed that states and local governments stepped up with their own funding, and there was a shift towards more maintenance and short-term projects while waiting for longer-term funding decisions. He noted those years were actually some of the best in the company's history. Q: What is driving the implied margin step-up in the fourth quarter, and are there other inflationary or deflationary factors in the cost structure besides the crude complex?A: CEO Jule Smith attributed the Q4 margin improvement to the full integration of recent acquisitions like Ellsworth and the seasonal cost leverage as fixed costs are absorbed. Regarding inflation, he stated there is nothing out of the ordinary; labor and concrete pipe costs are experiencing normal adjustments, and the pass-through model with contingency factors in bids handles input costs effectively. Q: How much of the overall margin improvement and earnings growth momentum is attributable to companies acquired within the past 6 to 12 months?A: CEO Jule Smith highlighted that the 2025 acquisition of Lone Star Pavan was transformational, lifting EBITDA margins from 12% to 15%. He noted that newer acquisitions like Dirtwork Green, GMG, F-Star Pavan in Tennessee, and Ellsworth are all well-run companies with good margins in their backlogs, contributing to the company's increasing profitability. Q: What are other state DOTs telling you about their planning around the federal highway bill reauthorization and potential continuing resolutions?A: CEO Jule Smith indicated that other states largely echo the optimistic sentiment from TxDOT. They do not expect interruptions in their planning. While DOTs may focus on more short-term projects initially, once the five-year bill passes, likely late this fall, they will resume planning longer-term projects without disruption to their programs. Q: Is there anything different about how you are tackling the AI data center opportunity, and are there other ways ROAD can deploy its team on these projects?A: CEO Jule Smith clarified that the company's model hasn't changed; local market teams pursue projects in their geography, and data centers are now part of that ecosystem. With 70% to 75% of new data center construction in their eight states, these projects are a growing part of the business. He noted project sizes vary from a couple of million dollars in paving to $30 million or $40 million, and they fit the overall business model like any normal commercial project. Q: Are you seeing cost inflation reflected in bidding, and how does this inform views on 2027, particularly regarding storage capabilities and terminals?A: CEO Jule Smith stated that cost inflation hasn't affected their outlook, as they pass through costs. He expressed a preference for being in the terminal business as part of their vertical integration strategy and will look for expansion opportunities. CFO Greg Hoffman added that short-term protections include hedging, terminals, and indexes, but the pass-through model kicks in over six to nine months, with new pricing mechanisms already being incorporated into bids. Q: Can you discuss which markets are performing better and which may be underutilizing?A: CEO Jule Smith declined to provide specifics on individual markets but stated that almost all of the 115 local markets are doing really well. He pointed to the company's guidance as evidence that markets are growing and becoming more profitable, with expectations for this to continue into 2027. Q: Is the state DOT budget environment uniformly good, and can you comment on the M&A pipeline?A: CEO Jule Smith stated that none of their states are "bad," though each has its own funding profile. Florida and Texas stand out with outsized programs, but all states have healthy programs. On M&A, he noted the pipeline is very active with discussions with many sellers, expecting a busy fall. Executive Chairman Ned Fleming added that the company is becoming the acquirer of choice, seeing both tuck-in and platform opportunities. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Construction Partners (ROAD) came out with quarterly earnings of $1.08 per share, beating the Zacks Consensus Estimate of $1.06 per share. This compares to earnings of $0.81 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +1.89%. A quarter ago, it was expected that this road and highway construction company would post a loss of $0.05 per share when it actually produced earnings of $0.18, delivering a surprise of +460%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Construction Partners, which belongs to the Zacks Building Products - Miscellaneous industry, posted revenues of $999.42 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 4.60%. This compares to year-ago revenues of $779.28 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Construction Partners shares have lost about 7.7% since the beginning of the year versus the S&P 500's gain of 12.6%. While Construction Partners has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Construction Partners was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.36 on $1.08 billion in revenues for the coming quarter and $2.91 on $3.6 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Building Products - Miscellaneous is currently in the bottom 37% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Quanex Building Products (NX), has yet to report results for the quarter ended July 2026. This housing materials maker is expected to post quarterly earnings of $0.68 per share in its upcoming report, which represents a year-over-year change of -1.5%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Quanex Building Products' revenues are expected to be $498 million, up 0.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Construction Partners, Inc. (ROAD) : Free Stock Analysis Report Quanex Building Products Corporation (NX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Interested in Construction Partners, Inc.? Here are five stocks we like better. Strong Q3 performance: Construction Partners reported 28.2% revenue growth to $999.4 million, with adjusted EBITDA up 24% to $163 million. Growth was driven by 8.9% organic expansion, acquisitions and resilient execution despite wet weather and higher energy costs. Full-year outlook raised: Management increased fiscal 2026 guidance to $3.64 billion–$3.68 billion in revenue and $559 million–$569 million in adjusted EBITDA. Record backlog reached $3.36 billion, covering roughly 80%–85% of expected revenue over the next 12 months. Growth pipeline remains favorable: Management cited constructive infrastructure funding prospects, expanding data-center opportunities in existing markets and the Ellsworth acquisition. The company also maintained its expectation for strong fiscal 2027 organic growth while targeting leverage reduction to approximately 2.5 times EBITDA. Construction Partners (NASDAQ:ROAD) reported third-quarter fiscal 2026 revenue growth of 28.2% and raised its full-year outlook, citing organic expansion, acquisitions, record backlog and continued demand for public infrastructure and commercial projects. Revenue for the quarter ended June 30 was $999.4 million, up from the prior year, including 8.9% organic growth and 19.3% acquisitive growth, Chief Financial Officer Greg Hoffman said. Gross profit increased about 28% to $168.4 million, while gross margin was 16.8%, compared with 16.9% a year earlier. General and administrative expenses declined as a percentage of revenue to 6.3% from 6.5%. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth Net income was $59.6 million and adjusted net income was $60.6 million, or $1.08 per diluted share. Adjusted EBITDA rose 24% to $163 million, producing an adjusted EBITDA margin of 16.3%. CEO Jule Smith said the company maintained strong execution despite energy-cost inflation and unusually wet weather across many markets during May. Construction Partners’ cost pass-through model and local operating teams helped offset those pressures, he said. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High Construction Partners raised its fiscal 2026 outlook to include third-quarter outperformance and the contribution from its acquisition of Ellsworth Construction. The company now expects: Revenue of $3.64 billion to $3.68 billion; Net income of $165 million to $168 million; Adjusted net income of $177.6 million to $181.4 million; Adjusted EBITDA of $559 million to $569 million; and Adjusted EBITDA margin of 15.35% to 15.46%. The company ended the quarter with a record project backlog of $3.36 billion and said backlog covers approximately 80% to 85% of expected contract revenue over the next 12 months. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Smith said the updated outlook reflects more than 30% growth in both revenue and bottom-line margins for the year. He also said Construction Partners expects strong organic growth in fiscal 2027, which begins Oct. 1, and has about $140 million of acquisition-related revenue expected to carry into that year. In response to an analyst question, Hoffman said higher liquid asphalt costs contributed roughly $8 million to $10 million of revenue during the third quarter. The impact was distributed across both acquired and organic operations. Smith said acquisition-related growth at the midpoint of full-year guidance was expected to total roughly $780 million to $790 million. Management addressed investor questions surrounding the federal surface transportation funding reauthorization process. Smith said the company expects Congress ultimately to approve a new multiyear transportation bill with higher funding levels, although the timing of final passage remains uncertain. The BUILD America 250 Act, which advanced from a House committee with bipartisan support, would provide approximately 7.2% more funding over its life than highway and public transportation funding under the Infrastructure Investment and Jobs Act, according to Smith. He added that funds targeted specifically to hard-infrastructure projects would see a greater increase than the overall comparison suggests. Smith said Construction Partners does not expect disruption to federal funding or project activity in fiscal 2026 or fiscal 2027, even if Congress initially operates under a continuing resolution. A continuing resolution would extend federal highway funding at fiscal 2026 levels, which management described as the highest annual program funding levels in history. Executive Chairman Ned Fleming said prior periods under continuing resolutions did not disrupt company operations. Such periods can lead to more maintenance and short-term projects while agencies await long-term funding decisions, he said, but state and local governments have historically stepped up funding efforts. Smith said state transportation departments across the company’s eight-state footprint continue to have healthy programs, with Florida and Texas representing particularly large programs. The company continues to see healthy project lettings and contract awards, supported by the fact that management estimates about 45% of IIJA funding has yet to be deployed. Construction Partners said AI data-center construction is becoming a growing part of its commercial opportunity set, although Smith said the company’s operating model has not changed. Its local teams pursue projects within their existing geographies and allocate employees and equipment toward higher-margin opportunities. Management estimates that 70% to 75% of new U.S. data-center construction is expected to occur in the company’s existing states. In Central Texas, Lone Star Paving is working on a portfolio of data-center projects and has an opportunity pipeline exceeding $100 million in contract value. In Oklahoma, the company is building AI data-center projects totaling about $100 million and has a pipeline exceeding $130 million. During the quarter, Construction Partners completed the acquisition of Ellsworth Construction, an Oklahoma asphalt manufacturing and construction company. The deal expands the company’s presence in the Tulsa and Oklahoma City metropolitan areas through its Overland Construction platform and adds capabilities in the data-center market, Smith said. Management said recent acquisitions, including Lone Star Paving, Durwood Greene, GMJ, Four Star Paving and Ellsworth, have supported profitability because they brought well-run operations and backlogs with favorable margins. The company also expects to open several greenfield facilities later this year to expand capacity and reach underserved high-growth markets. On the balance sheet, Construction Partners had $95 million in cash and cash equivalents and $599 million available under its credit facility at June 30. The company expanded its revolving credit facility to $700 million and refinanced its Term Loan B while adding $300 million of incremental term loans. Debt to trailing 12-month EBITDA declined to 3.17 times, and management reiterated its goal of reducing leverage to about 2.5 times. Cash flow from operations rose to $93.1 million from $83 million a year earlier. Construction Partners, Inc (NASDAQ: ROAD) is a specialty contractor and infrastructure solutions provider focused on road building, paving, site development and aggregate production. The company delivers a comprehensive suite of civil construction services, including roadway paving and milling, site grading and preparation, stormwater and utility installation, and full-scale asphalt plant operations. By integrating materials production with contracting capabilities, the firm aims to streamline project delivery and maintain quality control across its contracting and materials businesses. At the heart of Construction Partners' operations are its network of asphalt plants, quarries and aggregate production facilities. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Construction Partners Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.