John Felicis

John Felicis inquired about potential revenue-raising initiatives or ballot measures for infrastructure funding in Construction Partners' core markets, and the current and expected hot-mix asphalt prices for fiscal 2026.

Answer

Ned Fleming (Executive Chairman) highlighted that all eight states have had multiple ballot initiatives to fund infrastructure in the last year, citing Tennessee's Transportation Modernization Act as an example of states taking supplemental measures to get ahead of growth. Jule Smith (CEO) and Greg Hoffman (CFO) explained that hot-mix asphalt prices are adjusted with input cost increases, with liquid AC often indexed to the bid date for cost stability, and costs escalated as needed for project duration.

John Felicis asked about any potential revenue-raising initiatives or ballot measures, such as gas or sales taxes, that Construction Partners is monitoring across its core markets to fund infrastructure. He also inquired about current hot-mix asphalt prices, expectations for fiscal year 2026, and whether these expectations are incorporated into the company's guidance.

Answer

Executive Chairman Ned Fleming stated that all eight of Construction Partners' states have had multiple ballot initiatives to fund infrastructure in the last year, citing Tennessee's Transportation Modernization Act and a one-time $1 billion transfer, as well as a tax on new and used tires. He noted that states are proactively taking supplemental measures to fund infrastructure beyond gas taxes and federal programs. CEO Jule Smith explained that hot-mix asphalt prices are adjusted based on higher input costs, which are then passed through in projects. CFO Greg Hoffman added that most states have a liquid AC index pegged to the bid date, providing cost stability, and costs are escalated as needed based on job extent and duration to ensure coverage in bids and third-party sales.