Nandita Nayar

Nandita Nayar questioned Construction Partners' confidence in achieving its deleveraging target of approximately 2.5 times by calendar year-end from the current 3.18 times, and whether future M&A would primarily be funded by cash from operations. She also asked for the latest insights regarding the Surface Transportation Program reauthorization bill, particularly concerning potential Continuing Resolutions (CRs).

Answer

CFO Greg Hoffman expressed strong confidence in hitting the 2.5x leverage target, citing historical cash generation and the strategy of funding acquisitions like GMJ Paving with cash flow. CEO Jule Smith reiterated the commitment to pursuing compelling acquisitions, increasingly using cash, and expecting leverage to decrease as EBITDA grows. Regarding the reauthorization bill, Jule Smith stated positive expectations for its completion by September 30, focusing on hard infrastructure and increased state funding via formula, based on historical patterns of reauthorization at higher levels, despite past CRs.

Nandita Nayar from Bank of America questioned Construction Partners' confidence in achieving its leverage target of approximately 2.5 times by the end of the calendar year and whether future M&A would primarily be funded by cash from operations. She also sought the latest information regarding the Surface Transportation Program reauthorization bill.

Answer

CFO Greg Hoffman affirmed confidence in reaching the 2.5x leverage target, citing strong cash flow generation and the ability to fund recent acquisitions like GMJ with cash. CEO Jule Smith reiterated the commitment to strategic acquisitions, increasingly funded by cash, which will help reduce the leverage ratio as EBITDA grows. Regarding the reauthorization bill, CEO Jule Smith expressed optimism for its completion by September 30, anticipating increased funding for states focused on hard infrastructure, consistent with historical trends.

Nandita Nayar of Bank of America Merrill Lynch questioned whether the double-digit growth in the advisory business is driven by the overall market or by AECOM capturing more share, and asked about the balance between investing in the business and expanding margins.

Answer

President Lara Poloni attributed the advisory growth to capturing an earlier segment of the project lifecycle and growing wallet share with existing clients. Chairman & CEO Troy Rudd emphasized that margin improvement has been driven by making high-return investments, not by cutting costs, and stated the company remains optimistic about future margin expansion through continued investment.

Nandita Nayar, on for Mike Feniger, asked for an update on real estate transaction activity and whether the company is seeing any 'green shoots' given the rate easing cycle.

Answer

Executive Alexander Hockman stated that with the easing of interest rates, NV5 'absolutely anticipates' continued growth in its real estate transaction business. Executive Chairman Dickerson Wright added that he has anecdotally seen 'very strong results' and a 'quite an improvement' from the company's real estate transactional groups, encouraging him about the market's direction.