struction Partners(ROAD) - 2026 Q1 - Quarterly Report

Financial Performance - For the three months ended December 31, 2025, revenues were $809.5 million, a 44% increase from $561.6 million in the same period of 2024 [145]. - Adjusted EBITDA for the same period was $112.2 million, representing an increase from $68.8 million year-over-year, with an adjusted EBITDA margin of 13.9% compared to 12.3% in 2024 [145]. - The company reported a net income of $17.2 million for the three months ended December 31, 2025, compared to a net loss of $3.1 million in the same period of 2024 [145]. - Adjusted net income for the three months ended December 31, 2025, was $26.4 million, up from $13.3 million in the same period of 2024 [145]. - Net income increased by $20.3 million, or 663.9%, to $17.2 million, primarily due to higher gross profit and reduced acquisition-related expenses [153]. Revenue and Profitability - Revenues for the three months ended December 31, 2025 increased by $247.9 million, or 44.1%, to $809.5 million from $561.6 million for the same period in 2024 [146]. - Gross profit for the same period increased by $44.9 million, or 58.7%, to $121.5 million, driven by higher revenues and improved gross profit margin [147]. Expenses and Costs - General and administrative expenses rose by $17.2 million, or 38.9%, to $61.5 million, attributed to expenses from acquired businesses and increased share-based compensation [148]. - Acquisition-related expenses decreased by $7.9 million to $11.6 million, reflecting lower transformative acquisition costs [149]. - Cost of revenues is influenced by fluctuations in commodity prices, particularly liquid asphalt and diesel fuel, with price adjustment provisions in place for public infrastructure contracts [138]. Acquisitions and Expansion - Recent acquisitions included the purchase of asphalt manufacturing and construction assets from Vulcan Materials Company, adding eight HMA plants in Texas, and the acquisition of P&S Paving, LLC, adding two HMA plants in Florida [134][135]. - The company also acquired GMJ Paving Company, LLC, adding an HMA plant in Baytown, Texas, further expanding operations in southeastern Texas [136]. Cash Flow and Capital Expenditures - Cash provided by operating activities, net of acquisitions, was $82.6 million, significantly up from $40.7 million in the same period of 2024 [156]. - Cash used in investing activities was $242.9 million, with $215.1 million related to acquisitions and $35.5 million for property, plant, and equipment [157]. - Capital expenditures for the three months ended December 31, 2025 were approximately $35.5 million, with expectations for total capital expenditures in fiscal 2026 to be between $165.0 million and $185.0 million [163]. Debt and Financing - As of December 31, 2025, the company has total debt obligations of $1.76 billion, with scheduled payments of $28.9 million in 2026 and $1.13 billion due thereafter [167]. - The company has $1.76 billion of variable rate debt, where a hypothetical 1% change in borrowing rates would result in a $17.6 million change in annual interest expense [171]. - The company’s interest payments on debt are projected to be $80.7 million in 2026, based on a weighted average SOFR-based floating rate of 6.16% [173]. - The company plans to utilize cash from operations and credit facilities to finance working capital and growth strategies [165]. Stock and Capital Management - The company has authorized a stock repurchase program of up to $40 million for Class A common stock, effective through March 5, 2026 [164]. - The company did not repurchase any Class A common stock during the three months ended December 31, 2024 [164]. Market and Economic Conditions - The company emphasizes a mix of federal, state, municipal, and private customers for its construction products and services, focusing on infrastructure projects [137]. - The company’s future cash flows are subject to variables such as inflation and supply chain constraints, impacting capital expenditures [166]. - The company’s ability to access outside capital sources is critical for future success and may be constrained by economic conditions [165]. - The company has $6.6 million in aggregate letters of credit and $3.6 million in minimum royalty payments related to aggregates facilities as of December 31, 2025 [169]. - The company has a conditional purchase agreement related to the Lone Star Acquisition for $30 million, which has expired as of December 31, 2025 [168].