ROAD

Construction Partners is a Sunbelt civil-infrastructure company — asphalt (HMA) plants, aggregates and paving across eight states — riding strong public-infrastructure demand. FY2025 was explosive: revenue grew 54.2% to $2.81B, operating income more than doubled (+102.1%) to $225M, and net income rose 47.6% to $102M ($1.84 diluted EPS, +40.5%). The demand backdrop is durable — management notes public transportation projects 'historically have been a relatively stable portion of state and federal budgets,' funded via the Highway Trust Fund — and the company entered the year with a $3.0B contract backlog, providing strong revenue visibility.

The critical context is that much of the growth is acquired, not organic. Management completed five acquisitions across four states in FY2025 for 'approximately $1.5 billion,' adding 27 asphalt plants, and financed the cash with an $850M Term Loan B plus expanded Term Loan A and revolver facilities. The result: long-term debt ballooned 223.1% to $1.57B, total liabilities rose 140.3%, and leverage climbed to 2.55x liabilities/equity. Margins remain thin (15.6% gross, 8.0% operating, 3.6% net) — normal for heavy construction but leaving little error margin. Operating cash flow of $291M was largely consumed by $138M of capex and the acquisition program.