Construction Partners, Inc. (ROAD)·Q4 2025 Earnings Summary

Executive Summary

• Fiscal Q4 2025 results and the 8‑K 2.02 press release/transcript were scheduled for Nov. 20 but were not yet posted to the company’s IR site or our filings corpus at the time of this analysis; Wall Street consensus for Q4 is $899.65M revenue and $1.08 EPS (5 estimates). These values are from S&P Global estimates data.*
• Preliminary FY25 update (Oct. 21) flagged record revenue ($2.80–$2.82B) and stronger EBITDA/margins vs prior guidance, but lower GAAP net income vs August’s range; record year-end profitability cited by management.
• Q3 (June quarter) showed strong execution: revenue $779.3M (+51% Y/Y), adjusted EBITDA $131.7M (+80% Y/Y), margin 16.9%, and record backlog $2.94B, despite heavy rain; July volumes tracked strong into Q4.
• Stock reaction catalysts: magnitude of Q4 revenue/EPS vs high expectations, any FY26 outlook updates beyond the Oct. 21 preliminary (revenue $3.4–$3.5B; adj. EBITDA $520–$540M), backlog trajectory, and deleveraging cadence from 3.17x TTM in Q3.

What Went Well and What Went Wrong

• What Went Well

  • Margin outperformance and operating discipline: “driving a record adjusted EBITDA margin of 16.9%” in Q3 despite persistent weather headwinds.
  • Backlog strength and visibility: record $2.94B backlog at 6/30/25; management said 80–85% of next 12-month revenue covered by backlog.
  • Strategic expansion: Houston build‑out (Durwood Greene plus 8 HMA plants) and Florida East Coast (P&S Paving) broaden scale/vertical integration in high‑growth markets.

• What Went Wrong

  • Weather delays impacted fixed-asset recovery in Q3; management highlighted “record or near‑record rainfall” in many Sunbelt markets.
  • Higher interest burden and leverage from transformative M&A: Q3 interest expense $25.2M; leverage at 3.17x TTM EBITDA with a plan to ~2.5x by late FY26.
  • Preliminary FY25 GAAP net income range ($101.0–$101.8M) below prior (106–117M), even as EBITDA/margin rose—implying mix/interest costs and non‑GAAP adjustments matter to bridge.

Financial Results

Note: Q4 FY25 actual results were not posted at analysis time. We show last reported quarters and Q4 consensus.

* Values retrieved from S&P Global.

KPIs and balance sheet highlights:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Our teams executed with discipline and delivered robust operational results, driving a record adjusted EBITDA margin of 16.9%… while also building a record project backlog of $2.94 billion.” — Jule Smith, CEO, Q3 call
• “We have approximately 80% to 85% of the next twelve months revenue covered in backlog… amended credit agreement to $1.1B; maturity to June 2030.” — Greg Hoffman, CFO, Q3 call
• “Preliminary fiscal 2025… strong fourth quarter operational performance… led to record year‑end results for revenue and profitability.” — Jule Smith, Oct. 21 press release
• “We continue to see strong economic growth, favorable demographic trends, well‑funded transportation programs, and additional opportunities for acquisitive and organic growth.” — Jule Smith, Q3 call

Q&A Highlights

• Margin drivers despite weather: leverage of “building better markets, vertical integration and scale” sustained margin expansion; capacity “full utilization” but no constraints signaled.
• Acquisition contributions and FY26 roll‑over: ~$270–$280M Q4 acquisition revenue, with $240–$250M carryover into FY26.
• Cost outlook: AC/diesel stable; NG slightly higher but hedged; backlog built with appropriate margins; planning 40–50 bps margin improvement.
• Cash flow and leverage: 80–85% EBITDA to CFO conversion; path from 3.17x to ~2.5x leverage by late FY26 while still pursuing strategic M&A.
• Demand backdrop: state contract awards up mid‑teens; healthy commercial pipeline; strong Houston/Texas growth and Florida expansion.

Estimates Context

• Q4 FY25 consensus: Revenue $899.65M; EPS $1.076; 5 estimates for each metric (S&P Global). Results pending release at analysis time.*
• Implications: Given preliminary FY25 ranges (higher EBITDA/margin, lower GAAP net income), Street may refine interest expense and non‑GAAP adjustments; sustained margin outperformance and FY26 outlook could prompt upward revisions to EBITDA while GAAP EPS hinges on financing costs.

* Values retrieved from S&P Global.

Key Takeaways for Investors

• Near‑term trade: The print vs a high bar ($900M/$1.08) will drive first‑day move; watch commentary on August/September weather catch‑up and whether July strength extended through quarter.
• Margin sustainability: Q3’s 16.9% adjusted EBITDA margin and preliminary FY25 margin uplift suggest structural gains from integration/scale; confirmation in Q4 could support estimate revisions and multiple resilience.
• FY26 trajectory: Preliminary outlook ($3.4–$3.5B revenue; $520–$540M adj. EBITDA; 15.3–15.4% margin) implies continued growth; any Q4 updates/raises would be a positive catalyst.
• Deleveraging watch: From 3.17x TTM to ~2.5x by late FY26 with 80–85% EBITDA→CFO conversion—key for equity re‑rating amid acquisition cadence.
• Backlog quality/coverage: With 80–85% NTM revenue covered and state awards up, CPI retains strong visibility; any step‑up in backlog at FY‑end would be bullish.
• Texas/Florida integration: Houston capacity additions (8 plants) and Daytona/I‑95 entry position ROAD for outsized growth; watch commentary on synergy capture and pricing.
• Risks: Adverse weather, interest costs, integration execution, and energy price swings; hedging and backlog pricing mitigate but do not eliminate volatility.

Sources

• Q4 FY25 earnings release/conference call schedule (Nov. 6)
• Preliminary FY25 results and FY26 outlook (Oct. 21)
• Q3 FY25 press release and 8‑K (Aug. 7)
• Q3 FY25 earnings call transcript (Aug. 7)
• Q2 FY25 press release and earnings call (May 9)
• Texas/Florida acquisitions (Oct. 6 & Oct. 20)
• Q4 FY25 consensus estimates (S&P Global)* [Q4 2025: EPS $1.076; Revenue $899.65M; 5 ests each]

* Values retrieved from S&P Global.