ROAD - Construction Partners, Inc.

Construction Partners, Inc. (ROAD) provides hot-mix asphalt paving, highway and road construction, and civil infrastructure services across the southeastern United States. The company operates under a project-based government contracting model, winning competitively bid contracts from state departments of transportation, counties, municipalities, and federal highway programs. Revenue is approximately $1.8B annually, concentrated in Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The business is vertically integrated, owning asphalt plants and quarry operations that supply materials to its own construction crews.

Past Year Trends

• Construction Partners completed the $950 million acquisition of Lone Star Paving in November 2024, adding ~$530M in annualized revenue and expanding into Texas and Oklahoma, which drove total FY2025 revenue to $2.81 billion (+54% YoY) versus $1.82 billion in FY2024. (Bullish)
• Adjusted EBITDA margin expanded from 12.1% in FY2024 to 15.1% in FY2025, hitting the company's ROAD-Map 2027 margin target three years ahead of schedule, driven by operational leverage from the Lone Star Paving integration and organic efficiency gains. (Bullish)
• Backlog surged to $3.09 billion as of December 31, 2025, up from $1.96 billion at September 30, 2024, reflecting strong public infrastructure contract awards across the company's seven-state footprint. (Bullish)

Next Year Trends

• Leverage of 3.18x debt-to-EBITDA following the $950M Lone Star Paving acquisition creates a near-term deleveraging constraint; management targets 2.5x by late 2026, which limits the pace and size of further acquisitions and increases exposure to any revenue shortfall. (Bearish)
• Management guidance calls for FY2026 federal, state, and local public contract awards to grow 10–15%, underpinned by IIJA (Infrastructure Investment and Jobs Act) funding flowing to ROAD's Southeast and Texas markets, supporting the raised revenue guidance midpoint of $3.52 billion. (Bullish)
• The greenfield hot-mix asphalt facility in Brunswick, Georgia, launching Q1 2026, will add production capacity in a new metro market but carries execution risk during ramp-up, with startup costs expected to pressure margins modestly before reaching steady-state utilization. (Neutral)

Red Flags

No severe red flags identified as of August 2025.