Construction Partners Q1 2026 Construction Partners Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q1 2026 Construction Partners Inc Earnings Call
Speaker #1: Greetings, first quarter earnings conference call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad.
Speaker #1: As a
Speaker #1: Black, Investor Relations. Please go
Rick Black: Thank you, operator, and good morning, everyone. We appreciate you for joining us for the Construction Partners conference call to review Q1 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, 5 February 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 forward-looking statements made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.
[Company Representative] (Construction Partners): Thank you, operator, and good morning, everyone. We appreciate you for joining us for the Construction Partners conference call to review Q1 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, 5 February 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 forward-looking statements made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.
Speaker #2: you for joining us for the construction quarter fiscal 2026 And good morning, everyone. We appreciate 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
Speaker #2: partners' conference call to review first constructionpartners.net. Information recorded on this call speaks only as of today, February 5th, 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.
Speaker #2: I would also like to remind you that the statements made in today's discussion that are not historical events, or future financial performance are forward-looking expectations, or future provision of the Private Securities Litigation Reform Act of facts including statements of 1995.
Speaker #2: 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.
Rick Black: 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 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 and Adjusted EBITDA and Adjusted EBITDA margin. Reconciliation to the nearest GAAP measures can be found at the end of our earnings press release. Construction Partners assumes no obligation to publicly update or revise any forward-looking statements. And with that, I would now like to turn the call over to Construction Partners' CEO, Jule Smith. Jule?
[Company Representative] (Construction Partners): 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 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 and Adjusted EBITDA and Adjusted EBITDA margin. Reconciliation to the nearest GAAP measures can be found at the end of our earnings press release. Construction Partners assumes no obligation to publicly update or revise any forward-looking statements. And with that, I would now like to turn the call over to Construction Partners' CEO, Jule Smith. Jule?
Speaker #2: Please refer to our statements made pursuant to the Safe Harbor's earnings press release for 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 Commission.
Speaker #2: Management will also refer to non-GAAP measures including adjusted net income and adjusted EBITDA and adjusted EBITDA margin. Reconciliations to the nearest GAAP measures can be found at the end of our earnings press release.
Speaker #2: Construction Partners assumes no obligation for any forward-looking statements. And with that, I would now like to turn the call over to Construction Partners' CEO, Fred Smith, to publicly update or revise.
Speaker #2: Jewel?
Speaker #3: Thank you, Rick.
Jule 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 begin by thanking the approximately 7,000 employees across our family of companies for their hard work, expertise, and dedication to both safety and operational excellence. Our people are at the heart of everything we do. They are also the stewards of our unique and strong family of companies' culture, one of our key competitive advantages as we continue to grow throughout the Sun Belt. Thanks to their efforts, along with favorable weather during the quarter, we delivered a strong start to fiscal 2026, exceeding our expectations and prompting us to raise our outlook for the year.
Jule 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 begin by thanking the approximately 7,000 employees across our family of companies for their hard work, expertise, and dedication to both safety and operational excellence. Our people are at the heart of everything we do. They are also the stewards of our unique and strong family of companies' culture, one of our key competitive advantages as we continue to grow throughout the Sun Belt. Thanks to their efforts, along with favorable weather during the quarter, we delivered a strong start to fiscal 2026, exceeding our expectations and prompting us to raise our outlook for the year.
Speaker #3: Chairman. I'd like to begin by thanking the approximately 7,000 employees across our family of companies for their hard work, expertise, and dedication to both safety and operational excellence.
Speaker #3: Our people are at the heart of everything we do, and they are also the stewards of our unique and strong family of companies culture—one of our key competitive advantages as we continue to grow throughout the Sunbelt.
Speaker #3: Thanks to their efforts, along with favorable weather during the quarter, we delivered a strong start to fiscal 2026, exceeding our expectations and prompting us to raise our outlook for the year.
Speaker #3: First quarter revenue increased 44%, while adjusted EBITDA increased 63% compared to the prior year. Adjusted EBITDA margin reached 13.9%, the highest first quarter margin in our history.
Jule Smith: First quarter revenue increased 44%, while adjusted EBITDA increased 63% compared to the prior year. Adjusted EBITDA margin reached 13.9%, the highest first quarter margin in our history. We also closed the quarter with a project backlog of $3.09 billion, underscoring the robust demand across our markets. Project demand throughout our footprint remains strong. On the commercial side of the business, steady project bidding is supported by ongoing population migration to the Sun Belt, reshoring trends as more manufacturing and supply chain capacity move back to the United States, and the continued build-out of AI infrastructure. Our teams are actively bidding and building a wide range of commercial projects that reflect these macro trends.
Jule Smith: First quarter revenue increased 44%, while adjusted EBITDA increased 63% compared to the prior year. Adjusted EBITDA margin reached 13.9%, the highest first quarter margin in our history. We also closed the quarter with a project backlog of $3.09 billion, underscoring the robust demand across our markets. Project demand throughout our footprint remains strong. On the commercial side of the business, steady project bidding is supported by ongoing population migration to the Sun Belt, reshoring trends as more manufacturing and supply chain capacity move back to the United States, and the continued build-out of AI infrastructure. Our teams are actively bidding and building a wide range of commercial projects that reflect these macro trends.
Speaker #3: We also closed the quarter with a project backlog of $3.09 billion underscoring the robust demand across our markets. Project demand throughout our footprint remained strong.
Speaker #3: On the commercial side of the business, steady project bidding is supported by ongoing population migration to the Sunbelt. Reshoring trends as more to the United States and the continued build-out of AI infrastructure.
Speaker #3: Our teams are actively bidding and building a wide range of commercial projects to manufacturing and supply chain capacity move back trends. A few examples to highlight: in Southern Oklahoma, we are currently reflect these macro negotiating contracts to provide work for a large national retailer on a new distribution warehouse and a food manufacturing facility in Ardmore.
Jule Smith: A few examples to highlight: In southern Oklahoma, we are currently negotiating contracts to provide work for a large national retailer on a new distribution warehouse and a food manufacturing facility in Ardmore. In central Texas, north of Austin, we're currently working on a facility to provide power to data centers in the area for one of the Magnificent Seven. In Santa Rosa County, in the Panhandle of Florida, we have just completed work on a large distribution facility for a leading soft drink bottler. This new facility will bring in 350 to 400 new jobs to the area, fueling growth that will create more demand for our services. Finally, in York, South Carolina, we are currently working on a large site work contract for a new data center in the greater Charlotte metro area.
Jule Smith: A few examples to highlight: In southern Oklahoma, we are currently negotiating contracts to provide work for a large national retailer on a new distribution warehouse and a food manufacturing facility in Ardmore. In central Texas, north of Austin, we're currently working on a facility to provide power to data centers in the area for one of the Magnificent Seven. In Santa Rosa County, in the Panhandle of Florida, we have just completed work on a large distribution facility for a leading soft drink bottler. This new facility will bring in 350 to 400 new jobs to the area, fueling growth that will create more demand for our services. Finally, in York, South Carolina, we are currently working on a large site work contract for a new data center in the greater Charlotte metro area.
Speaker #3: In Central Texas, north of Austin, we're currently working on a facility to provide power to data centers in the area for one of the Magnificent Seven.
Speaker #3: In Santa Rosa County and the Panhandle of Florida, we have just completed work on a large distribution facility for a leading soft drink bottler.
Speaker #3: This new facility will bring in 350 to 400 new jobs to the area, fueling growth that will create more demand for our services. Finally, in York, South Carolina, we are currently working on a large new data center in the Greater Charlotte site work contract for a metro area.
Jule Smith: These are just a few examples of the approximately 1,000 commercial sector projects we will participate in building this year across our eight states and over 110 local markets. On the public side, both the federal and state governments are continuing their investment in infrastructure to keep up with the growing economies in the Sun Belt. In Q1, we have seen strong public contract bidding throughout our eight states and expect total federal, state, and local contract awards in FY 2026 to increase approximately 10 to 15% over FY 2025. This is particularly true for the small and medium-sized recurring maintenance projects for state DOTs, cities, and counties that represent a majority of our work. On Capitol Hill, both houses of Congress continue to work with Secretary Duffy on completing a five-year reauthorization of the Surface Transportation Program by September 30.
Jule Smith: These are just a few examples of the approximately 1,000 commercial sector projects we will participate in building this year across our eight states and over 110 local markets. On the public side, both the federal and state governments are continuing their investment in infrastructure to keep up with the growing economies in the Sun Belt. In Q1, we have seen strong public contract bidding throughout our eight states and expect total federal, state, and local contract awards in FY 2026 to increase approximately 10 to 15% over FY 2025. This is particularly true for the small and medium-sized recurring maintenance projects for state DOTs, cities, and counties that represent a majority of our work. On Capitol Hill, both houses of Congress continue to work with Secretary Duffy on completing a five-year reauthorization of the Surface Transportation Program by September 30.
Speaker #3: investment in infrastructure to keep up with the growing economies in the Sunbelt. In Q1, we have seen strong public expect total federal, state, and local contract awards in FY26 to contract bidding throughout our eight states and increase approximately 10 to 15% over FY25.
Speaker #3: This is particularly true for the small and medium-sized recurring DOTs cities and counties that maintenance projects for state work. On Capitol Hill, both houses of Congress continue to work with Secretary Duffy on completing a five-year reauthorization of the surface transportation program by September 30th.
Speaker #3: We expect the size and shape of this bill to be known this spring. From what we have heard so far, we expect the reauthorization to provide a significant increase in the annual funding amount going to the states by pro capita formula which is good news for CPI.
Jule Smith: We expect the size and shape of this bill to be known this spring. From what we have heard so far, we expect the reauthorization to provide a significant increase in the annual funding amount going to the states by per capita formula, which is good news for CPI. Both the administration and many members of the Congressional Transportation Committees have stated that they believe the formula method to the states is the best means to prioritize hard infrastructure investments needed to support a growing economy and to ensure timeliness in building these projects. Turning to our growth strategy, we began fiscal 2026 with two large and strategically important acquisitions that were completed in October in Houston and in Daytona Beach, Florida. Both businesses now have been fully integrated and are operating well. Earlier this week, we announced another acquisition in Houston.
Jule Smith: We expect the size and shape of this bill to be known this spring. From what we have heard so far, we expect the reauthorization to provide a significant increase in the annual funding amount going to the states by per capita formula, which is good news for CPI. Both the administration and many members of the Congressional Transportation Committees have stated that they believe the formula method to the states is the best means to prioritize hard infrastructure investments needed to support a growing economy and to ensure timeliness in building these projects. Turning to our growth strategy, we began fiscal 2026 with two large and strategically important acquisitions that were completed in October in Houston and in Daytona Beach, Florida. Both businesses now have been fully integrated and are operating well. Earlier this week, we announced another acquisition in Houston.
Speaker #3: Both the administration and many members of the congressional transportation committees have stated that they believe the formula method to the states is the best means to prioritize hard infrastructure investments needed to support a growing these projects.
Speaker #3: Turning to our growth strategy, we began fiscal 2026 with two large and strategically important acquisitions that were completed in October in Houston and in Daytona Beach, Florida.
Speaker #3: Both businesses now have been fully integrated and are operating well. Earlier this week, we announced another acquisition in Houston: GMJ Paving Company, a leading asphalt paving contractor focused on public infrastructure projects across the Greater Houston metro area.
Jule Smith: GMJ Paving Company, a leading asphalt paving contractor focused on public infrastructure projects across the Greater Houston metro area. GMJ's hot mix asphalt plant, located in Baytown on the east side of Houston, expands our coverage of this major metropolitan market and complements our existing Houston assets exceptionally well. This acquisition represents our 12th hot mix plant in the Houston market, further strengthening our geographic footprint and providing incremental throughput opportunities at our nearby liquid asphalt terminal at the Houston Port. Last August, we made our first entry into the Houston market with our acquisition of Durwood Greene Construction, and then we significantly expanded operations in October through the acquisition of Vulcan's Asphalt Construction assets in Houston. With the addition of GMJ, we are further strengthening our market position and expanding our team with highly skilled, experienced operators who bring deep local market knowledge and strong customer relationships.
Jule Smith: GMJ Paving Company, a leading asphalt paving contractor focused on public infrastructure projects across the Greater Houston metro area. GMJ's hot mix asphalt plant, located in Baytown on the east side of Houston, expands our coverage of this major metropolitan market and complements our existing Houston assets exceptionally well. This acquisition represents our 12th hot mix plant in the Houston market, further strengthening our geographic footprint and providing incremental throughput opportunities at our nearby liquid asphalt terminal at the Houston Port. Last August, we made our first entry into the Houston market with our acquisition of Durwood Greene Construction, and then we significantly expanded operations in October through the acquisition of Vulcan's Asphalt Construction assets in Houston. With the addition of GMJ, we are further strengthening our market position and expanding our team with highly skilled, experienced operators who bring deep local market knowledge and strong customer relationships.
Speaker #3: GMJ's Hot Mix Asphalt Plant, located in Baytown on the east side of Houston, expands our coverage of this major metropolitan market and complements our existing Houston assets exceptionally well.
Speaker #3: This acquisition represents our 12th Hot Mix Plant in the Houston market, further strengthening our geographic footprint and providing incremental throughput opportunities at our nearby liquid asphalt terminal at the Houston port.
Speaker #3: Last August, we made our first entry into the Houston market with our acquisition of Durwood Green Construction, and then we significantly expanded our operations in October through the acquisition of Vulcan's Asphalt Construction assets in Houston.
Speaker #3: With the addition strengthening our market position and expanding our team with highly skilled, experienced operators who bring deep local market relationships. This positions knowledge and strong customer us well to serve one of the most dynamic and rapidly growing country.
Jule Smith: This positions us well to serve one of the most dynamic and rapidly growing markets in the country. Expanding our footprints into new markets while gaining market share exemplifies our model and underscores a core element of our growth strategy, entering the right markets with the right partners. Currently, we see a very robust pipeline of acquisition opportunities across our existing footprint and surrounding states, and we continue to have dialogue with a number of sellers as they determine the best future for their businesses and their valuable workforce. We believe our model as a family of companies with a strong organizational culture, makes us the acquirer of choice in our industry. We also remain focused on organic growth as a strong driver of building shareholder value. This quarter, we will bring online an HMA greenfield in Georgia.
Jule Smith: This positions us well to serve one of the most dynamic and rapidly growing markets in the country. Expanding our footprints into new markets while gaining market share exemplifies our model and underscores a core element of our growth strategy, entering the right markets with the right partners. Currently, we see a very robust pipeline of acquisition opportunities across our existing footprint and surrounding states, and we continue to have dialogue with a number of sellers as they determine the best future for their businesses and their valuable workforce. We believe our model as a family of companies with a strong organizational culture, makes us the acquirer of choice in our industry. We also remain focused on organic growth as a strong driver of building shareholder value. This quarter, we will bring online an HMA greenfield in Georgia.
Speaker #3: Expanding our footprints into new markets in the markets while gaining market model and underscores a core element of share exemplifies our our growth strategy.
Speaker #3: Entering the right markets with the right partners. Currently, we see a very robust pipeline of acquisition opportunities across our existing footprint and surrounding states, and we continue to have dialogue with a number of sellers as they determine the best future for their businesses and their valuable workforce.
Speaker #3: We believe our model as a family of companies with a strong organizational culture makes us the acquirer of choice in our industry. We also remain focused on organic growth as a strong driver of building shareholder value.
Speaker #3: This quarter, we will bring online an HMA Greenfield in Georgia. This new facility will serve the dynamic Brunswick, Georgia market with its port facility and migration to the Golden Isles regions of South Georgia.
Jule Smith: This new facility will serve the dynamic Brunswick, Georgia market with its port facility and migration to the Golden Isles regions of South Georgia. As a key part of our organic growth, there are several more greenfield facilities that we plan to bring online later this year and early next year. Before turning the call over to Greg, I wanna reiterate the vision we shared last October through our Road 2030 growth plan. This plan outlines our path to again, double the size of the company to revenue of more than $6 billion by 2030, utilizing the same strategy we have successfully executed for over two decades. The plan also targets EBITDA margin growth to approximately 17% and is expected to generate more than $1 billion EBITDA dollars annually.
Jule Smith: This new facility will serve the dynamic Brunswick, Georgia market with its port facility and migration to the Golden Isles regions of South Georgia. As a key part of our organic growth, there are several more greenfield facilities that we plan to bring online later this year and early next year. Before turning the call over to Greg, I wanna reiterate the vision we shared last October through our Road 2030 growth plan. This plan outlines our path to again, double the size of the company to revenue of more than $6 billion by 2030, utilizing the same strategy we have successfully executed for over two decades. The plan also targets EBITDA margin growth to approximately 17% and is expected to generate more than $1 billion EBITDA dollars annually.
Speaker #3: As a key part of our organic growth, there are several more Greenfield facilities that later this year and early next year. Before turning the call over to Greg, I want to reiterate the vision we shared last October through our Road 2030 growth plan.
Speaker #3: This plan outlines our path to again double the size of the company to revenue of more than $6 billion by 2030, utilizing the same strategy we have successfully executed for over two decades.
Speaker #3: The plan also targets EBITDA margin growth to approximately 17% and is expected to generate more than $1 billion EBITDA annually. And finally, we're excited about the start of this fiscal year as we prepare for a busy work season building on a record backlog.
Jule Smith: Finally, we're excited about the start of this fiscal year as we prepare for a busy work season building on a record backlog. I'd like now to turn the call over to Greg.
Jule Smith: Finally, we're excited about the start of this fiscal year as we prepare for a busy work season building on a record backlog. I'd like now to turn the call over to Greg.
Speaker #3: I'd like now to turn the call over to Greg.
Greg Hoffman: Thank you, Jule. Good morning, everyone. As Jule mentioned, we had a strong start to our fiscal year, which I will review in more detail before discussing our raised outlook ranges, and then we will open the call to questions. I'll start with a review of our key performance metrics for Q1 of fiscal 2026. Revenue was $809.5 million, an increase of 44% compared to last year. The breakdown of this revenue growth was 3.5% organic growth and 40.6% acquisitive. Gross profit in the first quarter was $121.5 million, an increase of approximately 58% compared to last year. As a percentage of total revenues, gross profit was 15% compared to 13.6% last year.
Greg Hoffman: Thank you, Jule. Good morning, everyone. As Jule mentioned, we had a strong start to our fiscal year, which I will review in more detail before discussing our raised outlook ranges, and then we will open the call to questions. I'll start with a review of our key performance metrics for Q1 of fiscal 2026. Revenue was $809.5 million, an increase of 44% compared to last year. The breakdown of this revenue growth was 3.5% organic growth and 40.6% acquisitive. Gross profit in the first quarter was $121.5 million, an increase of approximately 58% compared to last year. As a percentage of total revenues, gross profit was 15% compared to 13.6% last year.
Speaker #2: everyone. As Jewel mentioned, we had a strong start to our fiscal year which I will review in more detail before discussing our raised outlook ranges and then we will open the call to questions.
Speaker #2: I'll start with a review of our key performance metrics for the first quarter of fiscal 2026. Revenue was $809.5 million and increased of 44% compared to last year.
Speaker #2: The breakdown of this revenue growth was growth and 40.6% acquisitive. Gross profit in the first quarter was $121.5 million. An increase of approximately 58% compared to last year.
Speaker #2: As a percentage of total revenues, gross profit was 15% compared to 13.6% last year. General and administrative expenses as a percentage of total revenue in the first quarter decreased to 7.7% compared to 7.9% last year.
Greg Hoffman: General and administrative expenses as a percentage of total revenue in Q1 decreased to 7.7%, compared to 7.9% last year. Net income was $17.2 million, and adjusted net income was $26.4 million. Earnings per diluted share for adjusted net income was $0.47. Adjusted EBITDA was $112.2 million, an increase of 63% compared to last year. Adjusted EBITDA margin was 13.9%, compared to 12.2% last year. You can find GAAP to non-GAAP reconciliations of net income and adjusted EBITDA financial measures at the end of today's earnings release.... Turning now to the balance sheet.
Greg Hoffman: General and administrative expenses as a percentage of total revenue in Q1 decreased to 7.7%, compared to 7.9% last year. Net income was $17.2 million, and adjusted net income was $26.4 million. Earnings per diluted share for adjusted net income was $0.47. Adjusted EBITDA was $112.2 million, an increase of 63% compared to last year. Adjusted EBITDA margin was 13.9%, compared to 12.2% last year. You can find GAAP to non-GAAP reconciliations of net income and adjusted EBITDA financial measures at the end of today's earnings release.... Turning now to the balance sheet.
Speaker #2: Net income was $17.2 million, and adjusted net income was $26.4 million. Earnings per diluted share for adjusted net income were $0.47. Adjusted EBITDA was $112.2 million, an increase of 63% compared to last year.
Speaker #2: Adjusted EBITDA margin was 13.9% compared to 12.2% last year. You can find gap to non-gap reconciliations of net income and adjusted EBITDA financial measures at the end of today's earnings release.
Speaker #2: Turning now to the balance sheet, we had $163 million available under our credit facility at December 31st net of a reduction for outstanding letters of credit.
Greg Hoffman: We had $104 million of cash and cash equivalents, and $163 million available under our credit facility at 31 December, net of reduction for outstanding letters of credit. As of the end of the quarter, our debt to trailing twelve-month EBITDA ratio was 3.18 times. We remain on pace with our strategy of reducing the leverage ratio to approximately 2.5 times by late 2026, to support sustained profitable growth. To that end, we anticipate cash flow generated to effectively fund this week's GMJ Paving acquisition without the need for additional long-term debt, demonstrating the strength of cash flow from our operating model. In the first quarter of fiscal 2026, cash flow from operations was $82.6 million, up from $40.7 million in Q1 of fiscal 2025.
Greg Hoffman: We had $104 million of cash and cash equivalents, and $163 million available under our credit facility at 31 December, net of reduction for outstanding letters of credit. As of the end of the quarter, our debt to trailing twelve-month EBITDA ratio was 3.18 times. We remain on pace with our strategy of reducing the leverage ratio to approximately 2.5 times by late 2026, to support sustained profitable growth. To that end, we anticipate cash flow generated to effectively fund this week's GMJ Paving acquisition without the need for additional long-term debt, demonstrating the strength of cash flow from our operating model. In the first quarter of fiscal 2026, cash flow from operations was $82.6 million, up from $40.7 million in Q1 of fiscal 2025.
Speaker #2: As of the end of the quarter, our debt to trailing 12-month EBITDA ratio was remain on pace with our strategy of reducing the leverage ratio to approximately 2.5 times by late 2026 to support sustained profitable growth.
Speaker #2: To that end, flow generated to effectively fund this week's GMG paving acquisition without the need for additional long-term 3.18 times. debt. Demonstrating the strength of cash flow from our operating model.
Speaker #2: fiscal In the first quarter of 2026, cash flow from operations was $82.6 We million. Up from $40.7 million in Q1 of fiscal 2025. We expect to convert $75 to $85% of EBITDA to cash flow from operations in fiscal year '26.
Greg Hoffman: We expect to convert 75 to 85% of EBITDA to cash flow from operations in fiscal year 2026. Turning now to our outlook. We have raised all of our ranges for fiscal year 2026. Revenue in the range of $3.48 to 3.56 billion, net income in the range of $154 to 158 million, adjusted net income in the range of $163.5 to 168.7 million, adjusted EBITDA in the range of $534 to 550 million, and adjusted EBITDA margin in the range of 15.34 to 15.45%. Our revenue outlook for fiscal 2026 continues to anticipate organic growth of approximately 7 to 8%.
Greg Hoffman: We expect to convert 75 to 85% of EBITDA to cash flow from operations in fiscal year 2026. Turning now to our outlook. We have raised all of our ranges for fiscal year 2026. Revenue in the range of $3.48 to 3.56 billion, net income in the range of $154 to 158 million, adjusted net income in the range of $163.5 to 168.7 million, adjusted EBITDA in the range of $534 to 550 million, and adjusted EBITDA margin in the range of 15.34 to 15.45%. Our revenue outlook for fiscal 2026 continues to anticipate organic growth of approximately 7 to 8%.
Speaker #2: Turning now to our outlook. We have raised all of our ranges for fiscal year 2026: revenue in the range of $3.48 to $3.56 billion; net income in the range of $154 to $158 million; adjusted net income in the range of $163.5 to $168.7 million.
Speaker #2: Adjusted EBITDA in the range of $534 to $550 million, with an adjusted EBITDA margin in the range of 15.34% to 15.45%. Our revenue outlook for fiscal 2026 continues to anticipate organic growth of approximately 7% to 8%.
Speaker #2: Consistent with historical seasonality, we anticipate the first half of the fiscal year to contribute approximately 42% of the annual revenue and approximately 34% of the adjusted EBITDA.
Greg Hoffman: Consistent with historical seasonality, we anticipate the first half of the fiscal year to contribute approximately 42% of the annual revenue and approximately 34% of the Adjusted EBITDA. In the second half of the year, during our peak construction season, we expect to deliver the remaining 58% of revenue and approximately 66% of Adjusted EBITDA. Lastly, as Jewel mentioned, we had a project backlog of $3.09 billion at 31 December 2025. We have approximately 80 to 85% of the next twelve months' contract revenue covered in backlog. And with that, we'll open the call to questions. Operator?
Greg Hoffman: Consistent with historical seasonality, we anticipate the first half of the fiscal year to contribute approximately 42% of the annual revenue and approximately 34% of the Adjusted EBITDA. In the second half of the year, during our peak construction season, we expect to deliver the remaining 58% of revenue and approximately 66% of Adjusted EBITDA. Lastly, as Jewel mentioned, we had a project backlog of $3.09 billion at 31 December 2025. We have approximately 80 to 85% of the next twelve months' contract revenue covered in backlog. And with that, we'll open the call to questions. Operator?
Speaker #2: In the second half of the year during our peak construction season, we expect to deliver the remaining 58% of of adjusted EBITDA. Lastly, as Jewel mentioned, we had a revenue and approximately 66% project backlog of $3.09 billion at December 31st, 2025.
Speaker #2: of the next 12 months contract revenue covered in backlog. And with that, we will open the call to questions.
Speaker #2: Operator? Thank you.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Your first question comes from Adam Thalhimer with Thompson Davis & Co. Please go ahead.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Your first question comes from Adam Thalhimer with Thompson Davis & Co. Please go ahead.
Speaker #3: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad.
Speaker #3: A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
Speaker #3: Your first question: comes from Adam Selheimer with Thomson Davidson Company. Please go
Speaker #4: Hey, good morning, guys. Great
Adam Thalhimer: Hey, good morning, guys. Great quarter.
Adam Thalhimer: Hey, good morning, guys. Great quarter.
Speaker #4: quarter.
Greg Hoffman: Morning, Adam.
Greg Hoffman: Morning, Adam.
Speaker #6: Hey, Adam. Good morning, Adam.
Ned Fleming: Hey, Adam.
Ned Fleming: Hey, Adam.
Speaker #5: Hey, Jewel.
Adam Thalhimer: Hey, Jule, can you give some more color on the acquisition pipeline? You said it was robust. I'm just curious what the mix there is between potential platform deals and potential tuck-ins.
Adam Thalhimer: Hey, Jule, can you give some more color on the acquisition pipeline? You said it was robust. I'm just curious what the mix there is between potential platform deals and potential tuck-ins.
Speaker #5: Can you give some more color on the acquisition pipeline? You said it was robust. I'm just curious, what the mix there is between potential platform deals and potential tuck-ins?
Speaker #5: Yeah, know, we talked to a lot of folks all the time, and we look at a lot of things. And I would say we're continuing to be busy with Adam.
Greg Hoffman: Yeah, Adam, as you know, we talk to a lot of folks all the time, and we look at a lot of things. And I would say we're continuing to be busy with that. We did 3 platform acquisitions last year, and so that's created a lot of new opportunities in Texas, Oklahoma, and Tennessee, now that we have a great management team in each state. So we're busy, but at the same time, we pass on a lot of things that aren't a good strategic, cultural fit. So, you're gonna see us continue to make acquisitions that we think are just compelling and great strategic fits. Adam, why don't I let Ned weigh in on the big picture, you know, as we look toward our strategic growth model?
Jule Smith: Yeah, Adam, as you know, we talk to a lot of folks all the time, and we look at a lot of things. And I would say we're continuing to be busy with that. We did 3 platform acquisitions last year, and so that's created a lot of new opportunities in Texas, Oklahoma, and Tennessee, now that we have a great management team in each state. So we're busy, but at the same time, we pass on a lot of things that aren't a good strategic, cultural fit. So, you're gonna see us continue to make acquisitions that we think are just compelling and great strategic fits. Adam, why don't I let Ned weigh in on the big picture, you know, as we look toward our strategic growth model?
Speaker #5: As you compelling and great strategic fits. Adam, why don't I let Ned weigh in on the big picture? As we look toward our
Speaker #5: that. We did three platform acquisitions last year. And so that's created a lot of new opportunities in Texas, Oklahoma, and Tennessee. Now that we have a great management team in each state.
Speaker #5: So we're busy. But at the same time, we pass on a lot of things that aren't a good strategic cultural fit. So you're going to see us continue to make acquisitions.
Speaker #5: strategic growth model. Adam,
Ned Fleming: You know, Adam, I would say over the last 25 years, it's as active now as it's ever been. I think what you're really starting to see, both on the platform side as well as the tuck-ins, I mean, obviously, when you do three platforms in a year, it gives you a lot of opportunities for organic growth as well as tuck-in acquisitions. But the generational transfer continues to give us opportunities to do acquisitions both, what I would call tuck-ins as well as platforms. But obviously, given last year with the three platforms, we've got a lot of tuck-in acquisitions as in those states, as well as a lot of organic growth opportunities in those states. So I would say it's as robust as it's been in 25 years.
Ned Fleming: You know, Adam, I would say over the last 25 years, it's as active now as it's ever been. I think what you're really starting to see, both on the platform side as well as the tuck-ins, I mean, obviously, when you do three platforms in a year, it gives you a lot of opportunities for organic growth as well as tuck-in acquisitions. But the generational transfer continues to give us opportunities to do acquisitions both, what I would call tuck-ins as well as platforms. But obviously, given last year with the three platforms, we've got a lot of tuck-in acquisitions as in those states, as well as a lot of organic growth opportunities in those states. So I would say it's as robust as it's been in 25 years.Maybe, even to some extent, because we did three platforms in one year, and see, we've got more opportunities.
Speaker #6: I would say over the last 25 years, it's as active now as it's ever been. You're really starting to see, both on the, I think, what, platform side as well as the tuck-ins.
Speaker #6: I mean, obviously, when you do three platforms in a year, it gives you a lot of opportunities for organic growth as well as tuck-in acquisitions.
Speaker #6: But the generational transfer continues to give us opportunities to do acquisitions both, what I would call, tuck-ins as well as platforms. But obviously, given last year with the three platforms, we've got a lot of tuck-in acquisitions, and those states as well as a lot of organic growth opportunities in those states.
Speaker #6: So I would say it's as robust as it's been in 25 years. Maybe even to some extent because we did three platforms in one year.
Ned Fleming: Maybe, even to some extent, because we did three platforms in one year, and see, we've got more opportunities.
Speaker #6: opportunities. See, we've got more
Speaker #5: Awesome. Thanks for that. And then, Jewel, I wanted to ask you, you said in your prepared remarks, I think you mentioned this a site prep job for data centers.
Adam Thalhimer: Awesome. Thanks for that. And then, Jule, I wanted to ask you, you said in your prepared remarks, I think you mentioned this, a site prep job for data centers. Just wondering... I haven't heard that before. Just wondering if you could expand on the size of that project and what your scope might be.
Adam Thalhimer: Awesome. Thanks for that. And then, Jule, I wanted to ask you, you said in your prepared remarks, I think you mentioned this, a site prep job for data centers. Just wondering... I haven't heard that before. Just wondering if you could expand on the size of that project and what your scope might be.
Speaker #5: Just wondering, I haven't heard that before. Just wondering if you could expand on the size of that project and what your scope might be.
Speaker #6: Yeah, Adam. just a few of the commercial projects we were We wanted to highlight doing currently because we talked about that there are several macro trends that are driving the commercial markets now.
Greg Hoffman: Yeah, Adam, you know, we wanted to highlight just a few of the commercial projects we were doing currently, because we talked about that there are several macro trends that are driving the commercial markets now. Migration to the Sun Belt, but also the reshoring, which is creating a lot of manufacturing facilities.
Jule Smith: Yeah, Adam, you know, we wanted to highlight just a few of the commercial projects we were doing currently, because we talked about that there are several macro trends that are driving the commercial markets now. Migration to the Sun Belt, but also the reshoring, which is creating a lot of manufacturing facilities moving back to America and people wanting to build in America. And so I just thought, let's give a few highlights of these. And there were—there's a long list to choose from, but data centers are part of that, and we're building more data centers than I had the time to list in the remarks, but it's one part of what we do. Factories, distribution centers, there's a pretty strong demand for those things in our southern and southeastern markets.
Speaker #6: Migration to the Sunbelt, but also the reshoring, which is creating a lot of manufacturing facilities moving back to America, and people wanting to build in America.
Jule Smith: ... moving back to America and people wanting to build in America. And so I just thought, let's give a few highlights of these. And there were—there's a long list to choose from, but data centers are part of that, and we're building more data centers than I had the time to list in the remarks, but it's one part of what we do. Factories, distribution centers, there's a pretty strong demand for those things in our southern and southeastern markets. So we don't travel around and specialize in data centers, but they're a big part of what we do. And sometimes, like in South Carolina, we're participating more in the site work, and it's a larger contract, and sometimes we're doing the paving for a data center, just like we would do for an Amazon warehouse or a school project.
Speaker #6: And so I just thought, let's give a few highlights of these. And there was a long list to choose from. But data centers are part of that.
Speaker #6: And we're building more data centers than I had the time to list in the remarks. But it's one part of what we do. Factories, distribution centers, there's a pretty strong demand for those things in our southern and southeastern markets.
Speaker #6: So we don't travel around and specialize in data centers, but they're a big part of what we do. And sometimes, like in South Carolina, we're participating more in the site work, and it's a larger contract.
Jule Smith: So we don't travel around and specialize in data centers, but they're a big part of what we do. And sometimes, like in South Carolina, we're participating more in the site work, and it's a larger contract, and sometimes we're doing the paving for a data center, just like we would do for an Amazon warehouse or a school project. So we did want to highlight just some of the commercial projects that are getting bid and built now.
Speaker #6: And sometimes we're doing the paving. For a data center, just like we would do for an a school project. Amazon warehouse or So we did want to highlight just some of the commercial projects
Jule Smith: So we did want to highlight just some of the commercial projects that are getting bid and built now.
Speaker #6: that are getting bid and built now. Yeah, thank you
Adam Thalhimer: Yeah, thank you for detailing that, and I will turn it over. Thanks.
Adam Thalhimer: Yeah, thank you for detailing that, and I will turn it over. Thanks.
Speaker #5: for detailing that. And I will turn it over.
Speaker #5: Thanks. All right.
Speaker #6: Thanks, Adam.
Jule Smith: All right. Thanks, Adam.
Jule Smith: All right. Thanks, Adam.
Speaker #3: Next question, Kathryn Thompson with Thomson Research Group. Please go ahead.
Operator: Next question, Kathryn Thompson with Thompson Research Group. Please go ahead.
Operator: Next question, Kathryn Thompson with Thompson Research Group. Please go ahead.
Speaker #7: Hi. Thank you for taking my questions today. Just first, I want to focus on organic growth, just reconfirm that you little bit of a single around 3.5% had kind of a organic growth in the quarter.
Kathryn Thompson: Hi, thank you for taking my questions today. Just first want to focus on organic growth. Just to reconfirm that you had kind of low to mid single, around 3.5% organic growth in the quarter, but you also gave guidance for a 7% to 8% organic growth range for the full year. Could you help us bridge what you're seeing today and also how much adverse weather in Q1 may impact or may have impacted the quarter? Thank you.
Kathryn Thompson: Hi, thank you for taking my questions today. Just first want to focus on organic growth. Just to reconfirm that you had kind of low to mid single, around 3.5% organic growth in the quarter, but you also gave guidance for a 7% to 8% organic growth range for the full year. Could you help us bridge what you're seeing today and also how much adverse weather in Q1 may impact or may have impacted the quarter? Thank you.
Speaker #7: But you also gave guidance for a 7 to 8% organic growth range for the full year. Could you help us bridge what you're seeing today and also how much adverse weather in Q1 may impact or may have impacted the quarter?
Speaker #7: Thank
Speaker #7: you. Yeah, Kathryn, good
Jule Smith: Yeah, Kathryn, good question. Our organic growth expectations for the fiscal year are still 7% to 8%, just as we normally do. In Q1, the difference between our organic growth and what sort of that 7% to 8% range was about $19 million. And when you looked at that, there were two factors that really created that. The first is in North Carolina, we had about three projects that we expected to do in Q1 that got a late start, just due to the customer not being ready for us, and those are now underway. The second thing, as you can imagine, we, in 110 local markets, we have competitive dynamics across the board. Some markets are healthy, some markets are more competitive. We had one market where irrational competition, we said: You know what?
Jule Smith: Yeah, Kathryn, good question. Our organic growth expectations for the fiscal year are still 7% to 8%, just as we normally do. In Q1, the difference between our organic growth and what sort of that 7% to 8% range was about $19 million. And when you looked at that, there were two factors that really created that. The first is in North Carolina, we had about three projects that we expected to do in Q1 that got a late start, just due to the customer not being ready for us, and those are now underway. The second thing, as you can imagine, we, in 110 local markets, we have competitive dynamics across the board. Some markets are healthy, some markets are more competitive. We had one market where irrational competition, we said: You know what?
Speaker #6: question. Our organic growth expectations for the fiscal year are still 7 to 8%, just as we Q1, the difference between our organic growth and what sort of that 7 to 8% range was, was about 19 million dollars.
Speaker #6: And when you looked at that, there were two factors. It really created that. is in North Carolina, we had about The first three projects that we expected to do in Q1 that got a late start just due to the customer not being ready for us.
Speaker #6: And those are now underway. The second thing is you can imagine in 110 local markets, we have competitive dynamics across the board. Some markets are healthy, some markets are more competitive.
Speaker #6: market where We had one irrational competition, we said, "You know what? Let's move equipment and do work at higher margins in some adjacent markets." We just so happened where that equipment moved was acquisitions we made in the last 12 months.
Jule Smith: Let's move equipment and do work at higher margins in some adjacent markets. It just so happened where that equipment moved was acquisitions we've made in the last 12 months, so that revenue was counted as acquisitive growth. So that happens from time to time, but we still anticipate our organic growth being in that normal range for the year.
Jule Smith: Let's move equipment and do work at higher margins in some adjacent markets. It just so happened where that equipment moved was acquisitions we've made in the last 12 months, so that revenue was counted as acquisitive growth. So that happens from time to time, but we still anticipate our organic growth being in that normal range for the year.
Speaker #6: that revenue was counted as acquisitive So growth. So that happens from anticipate our organic growth being in that normal range for the
Speaker #6: year. Okay,
Kathryn Thompson: Okay, great. Thank you for that. And as you... Maybe you have different color about, you know, obviously very active M&A in calendar 2025 and into early 2026. Could you give just maybe a little bit more color in terms of your strategy and thoughts in terms of integration and how that has progressed over the past 12 to 15 months? Thank you.
Kathryn Thompson: Okay, great. Thank you for that. And as you... Maybe you have different color about, you know, obviously very active M&A in calendar 2025 and into early 2026. Could you give just maybe a little bit more color in terms of your strategy and thoughts in terms of integration and how that has progressed over the past 12 to 15 months? Thank you.
Speaker #7: And as you—maybe you have different color, great. Thank you for that. About, obviously, very active M&A and calendar 2025 and into early '26.
Speaker #7: Could you give just maybe a little bit more color in terms of your strategy and thoughts in terms of integration and how that has progressed over the
Speaker #6: Yeah.
Jule Smith: Yeah. Kathryn, you know, we've done seven acquisitions since the Lone Star acquisition last fall, and integration is a big part of what we do. Ned has said on these calls before, it's a core competency that CPI has developed over two decades. And so we have to be good at integrating these companies. I would say, for example, in Houston, Durwood Greene has done a great job of integrating with Lone Star, our platform company, since August. But then those guys have done a great job of integrating the Vulcan assets in October, and they just had a great day one earlier this week with GMJ. And so as we can integrate these companies in, we start to create organic growth opportunities in the future.
Jule Smith: Yeah. Kathryn, you know, we've done seven acquisitions since the Lone Star acquisition last fall, and integration is a big part of what we do. Ned has said on these calls before, it's a core competency that CPI has developed over two decades. And so we have to be good at integrating these companies. I would say, for example, in Houston, Durwood Greene has done a great job of integrating with Lone Star, our platform company, since August. But then those guys have done a great job of integrating the Vulcan assets in October, and they just had a great day one earlier this week with GMJ. And so as we can integrate these companies in, we start to create organic growth opportunities in the future.
Speaker #6: Kathryn, we've done seven acquisitions you. since the Lone Star. Acquisition last fall and integration
Speaker #6: is a big part of what we do past 12 to 15 months?
Speaker #6: is Ned has said on these Thank calls before, it's a core competency. That CPI has developed over two And so we have to be good at integrating these companies.
Speaker #6: I would say, for example, in Lone Star, our platform of integrating with Houston, Derwood Green has done a great job have done a great job of integrating the Vulcan assets in October, and they just had a great day one earlier this week with GMJ.
Speaker #6: And so as we can integrate these companies in, we start to create organic growth opportunities in the future. And when you have a great management team in that market and you can continue to add, that's where we start to compound both the top line and the bottom line and start to make one plus one equal two and a half.
Jule Smith: When you have a great management team in that market, and you can continue to add, that's where we start to compound both the top line and the bottom line and start to make 1 + 1 equal 2.5. That's part of our strategy, and I would say it's gone well.
Jule Smith: When you have a great management team in that market, and you can continue to add, that's where we start to compound both the top line and the bottom line and start to make 1 + 1 equal 2.5. That's part of our strategy, and I would say it's gone well.
Speaker #6: And that's part of our strategy and I would say it's gone well.
Speaker #7: Okay, great. Thanks very much, and I'll hop back into Q.
Kathryn Thompson: Okay, great. Thanks very much, and I'll hop back in the queue.
Kathryn Thompson: Okay, great. Thanks very much, and I'll hop back in the queue.
Jule Smith: All right. Thank you, Kathryn.
Jule Smith: All right. Thank you, Kathryn.
Speaker #6: Kathryn. All right. Thank you,
Operator: Next question, Andrew Wittmann with Baird. Please go ahead.
Operator: Next question, Andrew Wittmann with Baird. Please go ahead.
Speaker #3: question, Andrew Whitman with Farad. Please go ahead.
Speaker #5: Yeah, great. Thanks for taking my questions. I guess maybe for Greg, I wanted to ask about the seasonality of the business. We heard your comments here about the first half, second half revenue, and EBITDA splits here.
Andrew Wittmann: Yeah, great, thanks for taking my questions. I guess, maybe for Greg, I wanted to ask about the seasonality of the business. We heard your comments here about the first half, second half revenue and EBITDA splits here, and obviously, the Q1 came in very strong and ahead of at least the street's expectations. But the ramification of that means that the Q2 guidance actually looks a little bit light. And so I was just wondering if there's something we need to understand there. Certainly, the weather here in the last couple of weeks in the South has been particularly notable. I'm wondering if that's a factor or if there's something else that explains the Q2 implied guidance there.
Andrew J. Wittmann: Yeah, great, thanks for taking my questions. I guess, maybe for Greg, I wanted to ask about the seasonality of the business. We heard your comments here about the first half, second half revenue and EBITDA splits here, and obviously, the Q1 came in very strong and ahead of at least the street's expectations. But the ramification of that means that the Q2 guidance actually looks a little bit light. And so I was just wondering if there's something we need to understand there. Certainly, the weather here in the last couple of weeks in the South has been particularly notable. I'm wondering if that's a factor or if there's something else that explains the Q2 implied guidance there.
Speaker #5: And obviously, the first quarter came in very strong and ahead of at least the ramification of that means that the second streets expectations. But the quarter guidance actually looks a little bit light.
Speaker #5: And so I was just wondering, if there's something we need to understand there, certainly the weather here in the last couple of weeks in the south has been particularly notable.
Speaker #5: I'm wondering if that's a factor, if there's something else that explains the second quarter implied guidance
Speaker #5: there. Yeah.
Jule Smith: Yeah. No, no, Andy, I think that, you know, our-- what we say a lot is that our-
Greg Hoffman: Yeah. No, no, Andy, I think that, you know, our-- what we say a lot is that our the first half of the year and the second half of the year are very similar year over year. And our weather within each half of that year balances out. You have some good weather, and you have some bad weather. You know, I think that we're essentially reiterating what we said from the beginning, that, you know, it's gonna be a standard year with the expectations that we gave to the market. So I don't think there's any negative connotation. I think it's, you know, just reiterating what we said at the beginning of the year.
Speaker #6: No, Andy, I think that what we say a lot is that our year—and our weather within each half of that year—balances out.
Greg Hoffman: ... the first half of the year and the second half of the year are very similar year over year. And our weather within each half of that year balances out. You have some good weather, and you have some bad weather. You know, I think that we're essentially reiterating what we said from the beginning, that, you know, it's gonna be a standard year with the expectations that we gave to the market. So I don't think there's any negative connotation. I think it's, you know, just reiterating what we said at the beginning of the year.
Speaker #6: You have some good weather and you have some bad weather. I think that we're essentially reiterating are very similar, year over what we said from the first half of the year and second half of the year beginning, that it's going to be a standard year with the expectations that we gave to the market.
Speaker #6: So I don't think there's any negative connotation. at the beginning of the I think it's just reiterating what we said
Speaker #5: Okay. Got it. Sorry. Did you want to add to that, Joel?
Andrew Wittmann: Okay.
Andrew J. Wittmann: Okay.
Jule Smith: Yeah.
Jule Smith: Yeah.
Andrew Wittmann: Got it. Sorry, did you want to add, Jule?
Andrew J. Wittmann: Got it. Sorry, did you want to add, Jule?
Speaker #1: Yeah. I just want to overthink things like that. Yes, weather was good in the quarter, we don't know what the second quarter will be.
Jule Smith: Yeah, I just wanna say, you know, we don't try to overthink things like that. You know, yes, weather was good in Q1. We don't know what Q2 will be. You know, certainly the last two weeks throughout the Southeast and Texas, we've had some ice and snow, and so you think, "Well, that should affect January." But when you look, the first two weeks of January were really good, so we're right on kind of plan. And we expect winter weather in January. If you remember last January, we had a lot of snow. We even had snow on the beaches in Pensacola. But by the end of the quarter, you know, it turned out to be a really good quarter. So, I would just say we don't really try to overthink it.
Jule Smith: Yeah, I just wanna say, you know, we don't try to overthink things like that. You know, yes, weather was good in Q1. We don't know what Q2 will be. You know, certainly the last two weeks throughout the Southeast and Texas, we've had some ice and snow, and so you think, "Well, that should affect January." But when you look, the first two weeks of January were really good, so we're right on kind of plan. And we expect winter weather in January. If you remember last January, we had a lot of snow. We even had snow on the beaches in Pensacola. But by the end of the quarter, you know, it turned out to be a really good quarter. So, I would just say we don't really try to overthink it.
Speaker #1: Certainly, the last two weeks throughout the southeast and Texas, we've had some ice and snow. And so you think, well, that should affect January.
Speaker #1: But when you look, the first two weeks of January were really good. So plan. And we expect winter we're right on kind of weather in January.
Speaker #1: If you remember last January, we had a lot of snow. We even had snow on the beaches in Pensacola. But by the end of the quarter, it turned out to be a really good quarter.
Speaker #1: So I would just say we don't really try to overthink it. We're not in any way trying to sort of trying to say that's our normal revenue and EBITDA split in the course of a normal year.
Jule Smith: We're not in any way trying to communicate something about the Q2. We're just sort of trying to say that's our normal revenue and EBITDA split in the course of a normal year.
Jule Smith: We're not in any way trying to communicate something about the Q2. We're just sort of trying to say that's our normal revenue and EBITDA split in the course of a normal year.
Andrew Wittmann: Okay, that makes sense. I appreciate that. And then, I guess you had a comment on, your, your view on the public sector bidding. I think you said that you expected, the awards to be up 10 to 15%. I don't know if you had a similar comment on commercial. Certainly sounded like, you know, the projects that you're doing are, are keeping you positive there as well. But did, did you have a view on where the awards or, could be, or the increase in backlog could be on the commercial side? Is it, is it the same level of strength? Is, is the public stronger? Just maybe some context around how you're seeing that developing as the year plays out.
Andrew J. Wittmann: Okay, that makes sense. I appreciate that. And then, I guess you had a comment on, your, your view on the public sector bidding. I think you said that you expected, the awards to be up 10 to 15%. I don't know if you had a similar comment on commercial. Certainly sounded like, you know, the projects that you're doing are, are keeping you positive there as well. But did, did you have a view on where the awards or, could be, or the increase in backlog could be on the commercial side? Is it, is it the same level of strength? Is, is the public stronger? Just maybe some context around how you're seeing that developing as the year plays out.
Speaker #5: appreciate that. And then I guess you had a comment on your view on the public sector bidding that you said that you expected the awards to be up 10 to 15%.
Speaker #5: I don't know that you had a similar comment on commercial. Certainly sounded are keeping you positive there as well. But did you have a view on where the awards or could be or the increase in backlog could be on the commercial side?
Speaker #5: Like the projects that you're doing, is it the same level of strength? Is the public stronger? Just maybe some context around how you're seeing that developing as the year goes on.
Speaker #5: out. Yeah.
Jule Smith: Yeah, Andy, I would say the commercial market; we've continued to use the word steady. I would say, if anything, we feel like this spring and summer could be stronger on the commercial market. But the reality is, when we look at our backlog, it's stayed pretty steady. If anything, it's gone up, Greg.
Jule Smith: Yeah, Andy, I would say the commercial market; we've continued to use the word steady. I would say, if anything, we feel like this spring and summer could be stronger on the commercial market. But the reality is, when we look at our backlog, it's stayed pretty steady. If anything, it's gone up, Greg.
Speaker #6: Andy, I would say the commercial market, we've continued to use the word steady. I would say if anything, we feel like this spring and summer could be stronger on the commercial market.
Speaker #6: But the reality is when we look at our backlog, it stayed pretty steady. If anything, it's gone up, Greg. I think a couple percent to public.
Greg Hoffman: Yeah.
Greg Hoffman: Yeah.
Jule Smith: I think a couple percent to public.
Jule Smith: I think a couple percent to public.
Greg Hoffman: Yeah.
Greg Hoffman: Yeah.
Jule Smith: But the reality is that could be just that the acquisitions we made last spring and summer with Overland and PRI focus a little more on the public side of things. What we do have is good data on the public awards from ARTBA, which says, look, the state, local, and federal, when you look at the overall contract awards, it's gonna be up 10 to 15% this year, and that's, that's the data we really go by and what we see.
Speaker #6: But the reality is that could be just that the acquisitions we made last spring and summer with Overland and PRI focus a little more on the public side of things.
Jule Smith: But the reality is that could be just that the acquisitions we made last spring and summer with Overland and PRI focus a little more on the public side of things. What we do have is good data on the public awards from ARTBA, which says, look, the state, local, and federal, when you look at the overall contract awards, it's gonna be up 10 to 15% this year, and that's, that's the data we really go by and what we see.
Speaker #6: What we do have is good data. On the public awards, from ARPDA, which says, look, the state local and contract awards, it's going to be up 10 to 15% this year.
Speaker #6: that's the data we really federal, when you look at the overall And go by and what we see.
Speaker #5: I see. Just I didn't know if you could quantify how much of that final cleanup question for me. that competitive market where you moved Greg, the crews out to the acquired market.
Andrew Wittmann: I see. Just final cleanup question for me. Greg, I didn't know if you could quantify how much of that revenue got switched between in that competitive market, where you moved the crews out to the acquired market. Is that a quantifiable amount of revenue? I'm just kind of curious to help inform the-
Andrew J. Wittmann: I see. Just final cleanup question for me. Greg, I didn't know if you could quantify how much of that revenue got switched between in that competitive market, where you moved the crews out to the acquired market. Is that a quantifiable amount of revenue? I'm just kind of curious to help inform the-
Speaker #5: amount of revenue? I'm just kind of curious to Is that a quantifiable help inform the understanding of the quarter a little bit better.
Greg Hoffman: Yeah
Andrew Wittmann: understanding of the quarter a little bit better.
Greg Hoffman: Yeah
Andrew J. Wittmann: understanding of the quarter a little bit better.
Speaker #1: Yeah, Joel, when he addressed that earlier, talked about $19 million maybe moved and/or addressed in different markets. Now, I'd say that's about half, and—
Greg Hoffman: Yeah, Jule, when he addressed that earlier, talked about $19 million of maybe moved into or, you know, addressed in different markets. Now, I'd say it's about half and half.
Greg Hoffman: Yeah, Jule, when he addressed that earlier, talked about $19 million of maybe moved into or, you know, addressed in different markets. Now, I'd say it's about half and half.
Speaker #1: half. Thank you. Thanks,
Speaker #5: Okay.
Andrew Wittmann: Okay. Okay, great. That's all, that's all I wanted to know. Thank you so much.
Andrew J. Wittmann: Okay. Okay, great. That's all, that's all I wanted to know. Thank you so much.
Speaker #5: know. Thank you so much.
Jule Smith: Thank you.
Jule Smith: Thank you.
Greg Hoffman: Thanks, Andy.
Greg Hoffman: Thanks, Andy.
Speaker #1: Andy.
Operator: Next question, Ethan Schellinger with Raymond James. Please proceed.
Operator: Next question, Ethan Schellinger with Raymond James. Please proceed.
Speaker #3: with Raymond James. Please Next question, Ethan Trollinger proceed.
Ethan Schellinger: Hey, good morning, guys. This is Ethan on for Tyler.
[Analyst] (Raymond James): Hey, good morning, guys. This is Ethan on for Tyler.
Speaker #2: This is Ethan on for Tyler. Hey, good morning, guys.
Speaker #1: morning, Ethan.
Jule Smith: Good morning, Ethan.
Jule Smith: Good morning, Ethan.
Speaker #2: Thanks. All right. Yeah. So Greg, I know not a ton has changed on the M&A front, but just from a modeling
Greg Hoffman: Hey, Ethan.
Greg Hoffman: Hey, Ethan.
Ethan Schellinger: Thanks. Yeah, so Greg, I know not a ton has changed on the M&A front, but just from a modeling perspective, could you update us on what the M&A rollover impact to revenue is in fiscal 2026 based on the guidance?
[Analyst] (Raymond James): Thanks. Yeah, so Greg, I know not a ton has changed on the M&A front, but just from a modeling perspective, could you update us on what the M&A rollover impact to revenue is in fiscal 2026 based on the guidance?
Speaker #2: Revenue is in fiscal '26 based on the
Speaker #6: Yeah, absolutely. Good Ethan, about 260 to
Greg Hoffman: Yeah, absolutely, Ethan. About $260 to 280 million, and the remaining three quarters are gonna be from acquisitions.
Greg Hoffman: Yeah, absolutely, Ethan. About $260 to 280 million, and the remaining three quarters are gonna be from acquisitions.
Speaker #6: 280 million in the be from
Speaker #2: Okay.
Ethan Schellinger: Okay, great. And then Jule, just to-
[Analyst] (Raymond James): Okay, great. And then Jule, just to-
Speaker #2: Great. And then, Joel, the remaining three-quarters are going to acquisitions.
Speaker #2: just a— Ethan, I'm sorry.
Greg Hoffman: Sorry, Ethan, I'm sorry. That does include GMJ, the acquisition we just made recently.
Greg Hoffman: Sorry, Ethan, I'm sorry. That does include GMJ, the acquisition we just made recently.
Speaker #1: That does perspective, could you update us on made recently.
Speaker #2: Okay. Very helpful. And then Joel, just a bigger picture question, but you guys closed the GMJ acquisition in Houston earlier this week. Which I think is Houston, say, the last six months.
Ethan Schellinger: Okay, very helpful. And then, Jule, just a bigger picture question, but you guys closed the GMJ acquisition in Houston earlier this week, which I think is maybe the third acquisition in Houston, say, the last six months. I was hoping to get a little more color on the evolution of that market. Could you maybe talk about how the margin profile in Houston has changed or is expected to change versus maybe the Durwood baseline? And do you guys see even more M&A opportunity in that market longer term?
[Analyst] (Raymond James): Okay, very helpful. And then, Jule, just a bigger picture question, but you guys closed the GMJ acquisition in Houston earlier this week, which I think is maybe the third acquisition in Houston, say, the last six months. I was hoping to get a little more color on the evolution of that market. Could you maybe talk about how the margin profile in Houston has changed or is expected to change versus maybe the Durwood baseline? And do you guys see even more M&A opportunity in that market longer term?
Speaker #2: I was hoping to get a little more color guidance? on the evolution of that market. Could you maybe talk about how the margin profile in Houston has changed or is expected to change versus maybe the Derwood baseline?
Speaker #2: And do you guys see even more M&A opportunity in that market longer term?
Speaker #2: term? Yeah.
Jule Smith: Yeah, Ethan, love to talk about Houston. Houston, we're very pleased with how Brad Green and his management team, Jonathan, Daniel Green, those guys are third-generation Houston contractors. And so that management team, combined with the Lone Star management team, Houston has started off great. They've made a meaningful contribution to this quarter. Those guys did a great job of integrating the Vulcan workforce into their operation. And then with GMJ, the acquisition we made this week, that's an example of where not only is their asphalt plant geographically helps us more on the east side of Houston, but Lupe Munoz and his family and his business, they really have a strong niche in the public infrastructure paving.
Jule Smith: Yeah, Ethan, love to talk about Houston. Houston, we're very pleased with how Brad Green and his management team, Jonathan, Daniel Green, those guys are third-generation Houston contractors. And so that management team, combined with the Lone Star management team, Houston has started off great. They've made a meaningful contribution to this quarter. Those guys did a great job of integrating the Vulcan workforce into their operation. And then with GMJ, the acquisition we made this week, that's an example of where not only is their asphalt plant geographically helps us more on the east side of Houston, but Lupe Munoz and his family and his business, they really have a strong niche in the public infrastructure paving.
Speaker #1: Ethan, love to talk Houston, we're very pleased with how Brad Green and his management team, Jonathan, Daniel Green, those about Houston. guys are third-generation Houston contractors.
Speaker #1: And so that Star management team—Houston has started off great. They've made a meaningful contribution to this quarter. Those guys did a great job of integrating the Vulcan workforce into their operation.
Speaker #1: And then with Week, that's an example of where, not only geographically, it helps us more on the east side of Houston with their asphalt plant, but Loopy Munoz and his family and his business really have a strong niche in the public infrastructure paving.
Speaker #1: They have great relationships with public grading contractors that do work in Texas, and so that's really very complementary to what Derwood Green has historically done.
Jule Smith: They have great relationships with public grading contractors that do work in Texas, and so that's really very complementary to what Durwood Greene has historically done. And so this is an example of just adding not only management team and workforce, but it's also adding market share in Houston.
Jule Smith: They have great relationships with public grading contractors that do work in Texas, and so that's really very complementary to what Durwood Greene has historically done. And so this is an example of just adding not only management team and workforce, but it's also adding market share in Houston.
Speaker #1: And so this is an example of just adding not only management team and market share in Houston.
Ethan Schellinger: Okay, that's great color. And then just one last one. Obviously, you know, Houston's uniquely big compared to some of your other markets, but are there other big metros that you aren't in today that could come together like Houston? Or did just the stars kind of align there? Could you maybe talk a little bit more about that?
[Analyst] (Raymond James): Okay, that's great color. And then just one last one. Obviously, you know, Houston's uniquely big compared to some of your other markets, but are there other big metros that you aren't in today that could come together like Houston? Or did just the stars kind of align there? Could you maybe talk a little bit more about that?
Jule Smith: Well, I mean, I think it's this is Ned, by the way. It's as a board and as a company, strategically, we're always looking for metropolitan areas like Houston. You know, we've historically, for the last 25 years, invested capital in growth areas. Houston is maybe the second fastest growing city in the country. So yeah, there are other metropolitan areas that are like that, that we've identified, that we'll continue to look for the right companies, particularly on the platform side, to be able to invest in those areas. So I think one of the things historically we've done a really good job of is being in the areas where the demographic growth drives organic growth for the country.
Ned Fleming: Well, I mean, I think it's this is Ned, by the way. It's as a board and as a company, strategically, we're always looking for metropolitan areas like Houston. You know, we've historically, for the last 25 years, invested capital in growth areas. Houston is maybe the second fastest growing city in the country. So yeah, there are other metropolitan areas that are like that, that we've identified, that we'll continue to look for the right companies, particularly on the platform side, to be able to invest in those areas. So I think one of the things historically we've done a really good job of is being in the areas where the demographic growth drives organic growth for the country.
Speaker #1: it's—this is Ned. country. So yeah, there are other metropolitan areas that are like that that we've identified that we're continuing By the to look for the right areas.
Speaker #1: it's—this is Ned. country. So yeah, there are other metropolitan areas that are like that that we've identified that we're continuing By the to look for the right able to invest in those historically we've done a really good the areas where the demographic growth drives organic growth for the country.
Speaker #1: way, it's as a board and as a company, strategically, we're always looking for metropolitan areas like Houston. historically, for the last 25 years, We've invested capital in growth areas.
Speaker #1: So, I think one of the things Houston is, maybe—the... Could you just talk a bit more? But just—and you'll see—as that, America.
Speaker #1: job of is being in
Speaker #2: Awesome. Thanks, guys. Really appreciate the time.
Ethan Schellinger: Awesome. Thanks, guys. Really appreciate the time.
[Analyst] (Raymond James): Awesome. Thanks, guys. Really appreciate the time.
Greg Hoffman: All right. Thanks, Ethan.
Greg Hoffman: All right. Thanks, Ethan.
Operator: Next question, Nandita Nayyar with Bank of America.
Operator: Next question, Nandita Nayyar with Bank of America.
Speaker #3: Hey, everyone.
Nandita Nayyar: Hey, everyone, this is Nandita Nayyar on for Mike Feniger. Thanks for taking my question.
Nandita Nayar: Hey, everyone, this is Nandita Nayyar on for Mike Feniger. Thanks for taking my question.
Speaker #3: This is Nandita Nayar Gotcha. Nandita.
Speaker #3: on for Mike Feniger. Nandita Nayar with Bank of questions. You mentioned—hey. So you mentioned leverage is currently around 3.20 times. And you plan to de-lever to around 2.5-ish by the end of the year.
Greg Hoffman: Hey, Nandita.
Greg Hoffman: Hey, Nandita.
Nandita Nayyar: Hey! So you mentioned, you know, leverage is currently around, you know, 3.20x, and, you know, you plan to delever to around 2.5x-ish by the end of the year. Could you just talk a bit more about your, you know, confidence in hitting that target? And also just, you know, could we see you guys doing, you know, more M&A this year? And, I mean, I think the answer to that would probably be yes, just given the strong pipeline. But just curious, would those also mostly be funded by cash from ops, just like GMJ?
Nandita Nayar: Hey! So you mentioned, you know, leverage is currently around, you know, 3.20x, and, you know, you plan to delever to around 2.5x-ish by the end of the year. Could you just talk a bit more about your, you know, confidence in hitting that target? And also just, you know, could we see you guys doing, you know, more M&A this year? And, I mean, I think the answer to that would probably be yes, just given the strong pipeline. But just curious, would those also mostly be funded by cash from ops, just like GMJ?
Speaker #3: target? And also just could we see you guys doing more M&A about your confidence in hitting that this year? And I mean, I think the answers that I've probably be yes, just given the strong pipeline.
Speaker #3: curious with those also mostly be funded by cash from ops, just like GMJ?
Greg Hoffman: Yeah, sure, Nandita. That's right. Yeah, 3.18 is where we are currently. We're still very positive about hitting that guidance of getting closer to 2.5 times by the end of the calendar year. And, you know, I think that what will continue, what you'll see continuing is what you'll see in our cash flow, is that we've, you know, had $250 million worth of purchase price and only borrowed $140 million. And, like you said, GMJ, the expectation is that that purchase price will be covered in cash as well. So you know, we keep doing that.
Greg Hoffman: Yeah, sure, Nandita. That's right. Yeah, 3.18 is where we are currently. We're still very positive about hitting that guidance of getting closer to 2.5 times by the end of the calendar year. And, you know, I think that what will continue, what you'll see continuing is what you'll see in our cash flow, is that we've, you know, had $250 million worth of purchase price and only borrowed $140 million. And, like you said, GMJ, the expectation is that that purchase price will be covered in cash as well. So you know, we keep doing that.The business keeps generating cash like it has historically, and what it does or what it has done throughout the beginning of this year, we should be good with that guidance.
Speaker #1: Yeah. 3.18 is where
Speaker #1: positive about hitting we are currently. We're still very that guidance of getting closer to 2.5 times by the end of the calendar year. Yeah.
Speaker #1: see continuing is what you'll see in our cash flow is that we've had 215 million dollars' worth of purchase price and only borrowed 140.
Speaker #1: And like you That's super helpful.
Speaker #1: said, GMJ, the expectation is covered in cash as well. So we keep doing that. The business keeps generating cash like it has historically that that purchase price will be and why and what it does or what it has done throughout the beginning of this year we should be good with that guidance.
Greg Hoffman: The business keeps generating cash like it has historically, and what it does or what it has done throughout the beginning of this year, we should be good with that guidance.
Speaker #2: Yeah. Nandita, I would just reiterate we're going to continue to look at opportunities. We're going to pass on strategically opportunities that aren't compelling. But we're not going to—GMJ is a great great opportunity." And so we're going to continue to make acquisitions.
Jule Smith: Yeah, Nandita, I would just reiterate, we're gonna continue to look at opportunities. We're gonna pass on opportunities that aren't strategically compelling, but we're not gonna... GMJ is a great example of one where we said, "Look, this is a great opportunity." And so we're gonna continue to make acquisitions. We're gonna continue to use cash more and more to pay for those. And you'll see as that EBITDA rolls through, the leverage ratio will come down.
Jule Smith: Yeah, Nandita, I would just reiterate, we're gonna continue to look at opportunities. We're gonna pass on opportunities that aren't strategically compelling, but we're not gonna... GMJ is a great example of one where we said, "Look, this is a great opportunity." And so we're gonna continue to make acquisitions. We're gonna continue to use cash more and more to pay for those. And you'll see as that EBITDA rolls through, the leverage ratio will come down.
Speaker #2: We're going to continue to
Speaker #2: use cash more and more to pay for down. those.
Nandita Nayyar: Gotcha. That's super helpful. And, just another one, guys. You know, we've been hearing a slight change in the tone regarding the reauthorization bill with, you know, some conversations around CR potentially entering the discussion. Just curious what you've... You know, what's the latest on the ground that you guys have been hearing regarding the reauthorization?
Nandita Nayar: Gotcha. That's super helpful. And, just another one, guys. You know, we've been hearing a slight change in the tone regarding the reauthorization bill with, you know, some conversations around CR potentially entering the discussion. Just curious what you've... You know, what's the latest on the ground that you guys have been hearing regarding the reauthorization?
Speaker #3: And just another one, guys. We've been hearing a slight change That's right.
Speaker #3: in the tone regarding the reauthorization bill with some conversations around CR potentially entering the
Speaker #3: Discussion. Just curious—what's the latest on the ground that you guys have been hearing regarding the
Speaker #3: reauthorization? What
Jule Smith: Well, as I said in the prepared remarks, we feel really good about both houses of Congress, both committees on transportation are working on the reauthorization, and the expectation is they'll get that done by 30 September. We like what we're hearing about the size and the scope of it, and the fact that it's gonna be focused more on hard infrastructure, the funds coming to the states through the formula method. So, but, you know, we've had CRs in the past, and that's really just a continuation of where we are. But if you look back, what we expect is guided by history over the last two decades. And when you look at it, they've always reauthorized the five-year plan, and they've always reauthorized it for higher than the previous bill.
Jule Smith: Well, as I said in the prepared remarks, we feel really good about both houses of Congress, both committees on transportation are working on the reauthorization, and the expectation is they'll get that done by 30 September. We like what we're hearing about the size and the scope of it, and the fact that it's gonna be focused more on hard infrastructure, the funds coming to the states through the formula method. So, but, you know, we've had CRs in the past, and that's really just a continuation of where we are. But if you look back, what we expect is guided by history over the last two decades. And when you look at it, they've always reauthorized the five-year plan, and they've always reauthorized it for higher than the previous bill.
Speaker #1: is that said in the prepared remarks? We feel really good about both houses of Congress, both committees on transportation, are working on the reauthorization.
Speaker #1: that done by September 30th. We like what we're hearing about the size And the expectation is they'll get and the scope of it and the fact that it's going to be focused more on hard infrastructure coming—the funds coming to the states through the formula method.
Speaker #1: So but we've had CRs in the past, and that's really just a continuation of where we are. But if you look back, what we expect is guided by history over the last two decades.
Speaker #1: And when you look at it, they've always reauthorized the five-year plan, and they've always reauthorized it for higher than the previous bill. So we fully expect that history will continue to repeat and that we'll get a new surface transportation bill at a higher level for the next five years.
Jule Smith: So we fully expect that, history will continue to repeat, and that we'll get a new surface transportation bill at a higher level, for the next five years.
Jule Smith: So we fully expect that, history will continue to repeat, and that we'll get a new surface transportation bill at a higher level, for the next five years.
Speaker #3: Gotcha. That's super helpful. Thank you, guys. We'll pass it along. Thank you. I would like to turn the floor over to management for
Nandita Nayyar: Gotcha. That's super helpful. Thank you, guys, for passing along. Thank you.
Nandita Nayar: Gotcha. That's super helpful. Thank you, guys, for passing along. Thank you.
Operator: I would like to turn the floor over to management for closing remarks.
Operator: I would like to turn the floor over to management for closing remarks.
Speaker #3: closing remarks. All
Speaker #1: right. We want to thank everyone for being with us today. We look forward to speaking again in the
Jule Smith: All right. We want to thank everyone for being with us today. We look forward to speaking again in the future.
Jule Smith: All right. We want to thank everyone for being with us today. We look forward to speaking again in the future.
Speaker #1: future.
Operator: This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.
Operator: This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.
Speaker #3: This concludes today's teleconference. You may disconnect your lines at this
