Construction Partners (ROAD) Q2 2025 Earnings Call May 09, 2025 10:00 AM ET Company Participants Rick Black - Investor RelationsFred Smith - President & CEOGreg Hoffman - SVP & CFOKathryn Thompson - Founding Partner & CEONed Fleming - Executive ChairmanTyler Brown - Financial AdvisorAdam Thalhimer - Director of ResearchMichael Feniger - MD - Equity Research Conference Call Participants Andrew Wittmann - Senior Research AnalystBrent Thielman - MD & Senior Research Analyst Operator Greetings, and welcome to C ...

Financial Data and Key Metrics Changes - Revenue for Q2 fiscal 2025 was $571.7 million, representing a 54% increase year-over-year [14] - Adjusted EBITDA grew by 135% to $69.3 million, with an adjusted EBITDA margin of 12.1%, up from 7.9% in the same quarter last year [17] - Net income was $4.2 million, compared to a net loss of $1.1 million in the same quarter last year [16] - General and administrative (G&A) expenses as a percentage of total revenue decreased to 8.2% from 9.7% year-over-year [15] Business Line Data and Key Metrics Changes - The revenue mix for the quarter included 7% organic revenue growth and 47% from recent acquisitions [15] - The company reported a project backlog of $2.84 billion, indicating strong demand for services [18] Market Data and Key Metrics Changes - The company continues to benefit from healthy federal and state project funding in the Sunbelt states, with no signs of degradation in market conditions [9] - The IIJA (Infrastructure Investment and Jobs Act) is expected to provide significant funds that have not yet been deployed, supporting a healthy bidding environment [10] Company Strategy and Development Direction - The company is focused on both organic and acquisitive growth, with a target of 15% to 20% annual top-line growth and 50 basis points EBITDA expansion per year through margin levers [12] - Recent acquisitions, including PRI in Tennessee, are expected to enhance the company's market share and operational capabilities [6][7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing operational performance and the ability to maintain a healthy bidding environment despite broader macroeconomic uncertainties [22][23] - The company is optimistic about the growth opportunities in Tennessee and other Southeastern states, driven by favorable economic conditions [7][11] Other Important Information - Capital expenditures for Q2 were $41.4 million, with total expected capital expenditures for fiscal 2025 in the range of $130 million to $140 million [20] - The company aims to reduce its debt to trailing twelve months EBITDA ratio to approximately 2.5 times in the next four quarters [19] Q&A Session Summary Question: Are there any project delays or cancellations due to macroeconomic uncertainty? - Management reported no significant delays, stating that business is operating as usual with a healthy bid sheet in commercial markets [22][23] Question: What are the margin differentials in recent acquisitions? - The management highlighted that the recent acquisitions, including PRI, have higher margin profiles and emphasized the importance of strong management teams for future growth [24][25] Question: How is capital allocation prioritized in 2025? - The company plans to pay down debt while also pursuing smart acquisitions, maintaining a focus on growth [32] Question: What is the outlook for organic growth and market conditions? - Management indicated that organic growth is expected to be strong, supported by ongoing bidding activity and market conditions [58][60] Question: Are there any inflation-related impacts from tariffs? - Management stated that tariffs have not significantly impacted the supply chain or costs, as most materials are sourced domestically [52] Question: How does the backlog compare to recognized profit margins? - Management noted that backlog margins remain healthy and that crews often find ways to grow margins during project execution [74] Question: What is the company's strategy for vertical integration? - The company continues to pursue vertical integration through both acquisitions and organic growth, focusing on services and infrastructure [77][78]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38479 Construction Partners, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 26-0758017 (S ...

Construction Partners (ROAD) came out with quarterly earnings of $0.08 per share, beating the Zacks Consensus Estimate of a loss of $0.04 per share. This compares to loss of $0.02 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 300%. A quarter ago, it was expected that this road and highway construction company would post earnings of $0.14 per share when it actually produced earnings of $0.25, delivering a surprise of 78.57%.O ...

Exhibit 99.1 NEWS RELEASE Construction Partners, Inc. Announces Fiscal 2025 Second Quarter Results Fred J. (Jule) Smith, III, the Company's President and Chief Executive Officer, said, "We are pleased to report a strong second quarter marked by significant year-over-year growth in revenues, net income and Adjusted EBITDA, leading to an Adjusted EBITDA margin of 12.1%, up more than 400 basis points from the same quarter last year. Continuing the substantial momentum established in the first quarter of our fi ...

Core Viewpoint - Construction Partners (ROAD) is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ended March 2025, which could significantly influence its stock price depending on the actual results compared to estimates [1][2]. Financial Performance Expectations - The earnings report is scheduled for release on May 9, 2025, with expectations of a quarterly loss of $0.04 per share, indicating a year-over-year change of -100%. Revenues are projected to be $540 million, reflecting a 45.4% increase from the previous year [3][2]. - The consensus EPS estimate has been revised down by 5.49% over the last 30 days, indicating a bearish sentiment among analysts regarding the company's earnings prospects [4][10]. Earnings Surprise Prediction - The Zacks Earnings ESP model shows a negative Earnings ESP of -150% for Construction Partners, suggesting that the Most Accurate Estimate is lower than the Zacks Consensus Estimate, complicating predictions of an earnings beat [11][10]. - Despite the negative Earnings ESP, the company holds a Zacks Rank of 3, which indicates a hold position, making it challenging to predict a positive earnings surprise [11][10]. Historical Performance - In the last reported quarter, Construction Partners exceeded the consensus EPS estimate of $0.14 by delivering earnings of $0.25, resulting in a surprise of +78.57%. Over the past four quarters, the company has consistently beaten consensus EPS estimates [12][13]. Industry Comparison - Another company in the Zacks Building Products - Miscellaneous industry, Installed Building Products (IBP), is expected to report earnings of $2.18 per share for the same quarter, reflecting a year-over-year decline of -11.7%. Its revenues are projected to be $673.24 million, down 2.8% from the previous year [17]. - Installed Building Products has an unchanged consensus EPS estimate over the last 30 days, but it also has a negative Earnings ESP of -1.53% and a Zacks Rank of 4, indicating a sell position, which complicates predictions of an earnings beat [18].

Investors interested in Building Products - Miscellaneous stocks are likely familiar with Quanex Building Products (NX) and Construction Partners (ROAD) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate re ...

Group 1 - Investors are considering Quanex Building Products (NX) and Construction Partners (ROAD) as potential undervalued stocks in the Building Products - Miscellaneous sector [1] - NX has a Zacks Rank of 1 (Strong Buy), indicating a stronger improvement in earnings outlook compared to ROAD, which has a Zacks Rank of 3 (Hold) [3] - Value investors utilize various traditional metrics to identify undervalued companies, including P/E ratio, P/S ratio, earnings yield, and cash flow per share [4] Group 2 - NX has a forward P/E ratio of 6.52, significantly lower than ROAD's forward P/E of 36.45, indicating better valuation [5] - NX's PEG ratio is 0.47, while ROAD's PEG ratio is 0.92, suggesting NX is expected to grow earnings at a more favorable rate relative to its price [5] - NX has a P/B ratio of 0.81, compared to ROAD's P/B of 4.91, further highlighting NX's undervaluation [6] Group 3 - Based on the valuation metrics, NX holds a Value grade of B, while ROAD has a Value grade of C, making NX a more attractive option for value investors [6]

Core Insights - Investors are evaluating the value opportunities between Quanex Building Products (NX) and Construction Partners (ROAD) in the Building Products - Miscellaneous sector [1] Valuation Metrics - NX has a forward P/E ratio of 7.78, significantly lower than ROAD's forward P/E of 37.71 [5] - NX's PEG ratio is 0.56, while ROAD's PEG ratio is 0.95, indicating NX's better valuation relative to its expected earnings growth [5] - NX's P/B ratio stands at 0.96, compared to ROAD's P/B of 5.08, suggesting NX is more undervalued based on market value versus book value [6] Zacks Rank and Value Grades - NX holds a Zacks Rank of 1 (Strong Buy), indicating a positive earnings outlook, while ROAD has a Zacks Rank of 3 (Hold) [3] - NX has a Value grade of B, whereas ROAD has a Value grade of C, further supporting NX as the more attractive option for value investors [6]

Growth stocks are attractive to many investors, as above-average financial growth helps these stocks easily grab the market's attention and produce exceptional returns. But finding a great growth stock is not easy at all.By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the tr ...