struction Partners(US:ROAD)2025-11-20 16:02Financial Data and Key Metrics Changes - The company reported a revenue of $2.812 billion for fiscal 2025, representing a 54% increase year-over-year, with 8.4% from organic growth and 45.6% from acquisitions [16][17] - Adjusted EBITDA for fiscal 2025 was $423.7 million, a 92% increase compared to the previous year, with an adjusted EBITDA margin of 15% [17][19] - Net income reached $101.8 million, up 48% from last year, while adjusted net income increased by 73% to $122 million [17][19] - The company ended fiscal 2025 with a record project backlog of $3 billion [5][21] Business Line Data and Key Metrics Changes - The fourth quarter revenue was $900 million, a 67% increase year-over-year, with 10.4% attributed to organic growth [16] - General and administrative expenses as a percentage of total revenue decreased to 7.1% from 8.1% in the previous year [17] Market Data and Key Metrics Changes - The company noted strong public contract bidding across its eight states, expecting contract awards in FY 2026 to increase approximately 15% over FY 2025 [12][14] - The company highlighted the ongoing migration to the Sunbelt, which is driving demand for private construction projects [11][12] Company Strategy and Development Direction - The company has initiated a five-year strategic plan called Road 2030, aiming to double revenue to over $6 billion by 2030 and expand EBITDA margins to 17% [10] - The strategy includes focusing on acquisitions in the right markets with the right partners, particularly in the fragmented local market [26][58] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth driven by macro trends such as migration to the Sunbelt, reshoring of manufacturing, and increased infrastructure funding [11][12] - The company anticipates a strong construction season in the second half of FY 2026, contributing 58%-60% of annual revenue [21] Other Important Information - The company expects to convert 75%-85% of EBITDA to cash flow from operations in FY 2026 [19] - Capital expenditures for FY 2026 are projected to be in the range of $165 million-$185 million, with a focus on high-return growth initiatives [19] Q&A Session Summary Question: Integration of recent acquisitions - Management discussed the smooth integration of acquisitions, emphasizing the importance of cultural fit and involving employees in the process [26][28] Question: Impact of government shutdown - Management confirmed that the government shutdown did not significantly impact revenue or bidding due to the funding structure through the Highway Trust Fund [32] Question: Confidence in reauthorization bill - Management indicated that there is momentum for the reauthorization bill, with expectations for a vote by spring [40][42] Question: M&A strategy for 2026 - Management clarified that 2026 will focus on bolt-on acquisitions while also aiming to reduce leverage to approximately 2.5x by late 2026 [58] Question: Pricing and cost inflation - Management noted that inflation in 2025 was benign, with stable construction material costs and labor costs increasing at a typical rate of 3%-4% [61][63] Question: Private construction demand - Management reported consistent demand in private construction, particularly in the Sunbelt region, with a healthy backlog split between public and private projects [72]