Construction Partners, Inc.

Greetings and welcome to Construction Partners' second quarter earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Investor Relations with Rick Black. Thank you. You may now proceed.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the construction partners conference call to review second quarter results for fiscal 2025. This call is also being webcast and can be accessed through the audio link on the events and presentations page of the investor relations section of constructionpartners.net. Information recorded on this call speaks only as of today, May 9th, 2025. Please be advised that any time sensitive information may no longer be accurate as of the date of any replay listening or transcript reading. I would also like to remind you that the statements made in today's discussion that are not historical facts, including statements of expectations or future events or future financial performance, are considered forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. We will be making forward-looking statements as part of today's call, that by their nature are uncertain and outside of the company's control. Actual results may differ materially. Please refer to our earnings press release from this morning for our disclosure on forward-looking statements. These factors, as well as other risks and uncertainties, are described in detail in the company's filings with the Securities and Exchange Commission. Management will also refer to non-GAAP measures, including adjusted net income, adjusted EBITDA, and adjusted EBITDA margin. Reconciliations to the nearest GAAP measures can be found at the end of the earnings press release. Construction Partners assumes no obligation to publicly update or revise any forward-looking statements. And now, I would like to turn the call over to Construction Partners CEO, Jule Smith.

Jule? Thank you, Rick, and good morning, everyone. We appreciate you joining us on the call today. With me this morning are Greg Hoffman, our Chief Financial Officer, and Ned Fleming, our executive chairman. I want to begin today's call by focusing on our organizational model and how important people are to our strategy at CPI, as we surpassed 6,000 employees this month. The core of our business happens in our local markets, now numbering approximately 100 distinct market areas in eight states. In each of these, our local management team and workforce perform higher margin, lower risk projects, and generate recurring revenue for repeat customers each year. Our people are the crucial element as we seek to take great care of our valuable customers and operate profitably. This local market model also provides a stable and predictable environment for our teams to bid, win, and build work in their communities. In our family of companies structure, nowhere are character, experience, and talents more important than in the management teams at our platform companies. In each state, these management teams steward our company culture, drive operational excellence, and cultivate both organic and acquisitive growth opportunities. This is why last week we were so excited to have PRI join us as our platform company in Tennessee. PRI instantly expands our coverage the full length of the state and will include our pre-existing operations in the Nashville metro area. A key strategic criterion in our platform acquisitions is an established and deeply experienced leadership team that fits our culture, our focus on safety, and our relative market share of growth strategy for further expansion. Under the leadership of John Hargett, Greg Elshie, and PRI's entire management team, Our new platform company will benefit from decades of collective experience and the technical expertise of seasoned industry veterans. Tennessee is growing, and we see excellent organic and acquisitive growth opportunities within the state, driven by strong economic expansion, favorable demographic trends, and a healthy transportation funding program. Turning now to the quarter. Outstanding operational performance led to Q2 year-over-year revenue growth of 54% and adjusted EBITDA growth of 135%. In addition, this marked our highest Q2 adjusted EBITDA margin in CPI's history at 12.1%. This strong margin expansion during the winter quarter was driven by great project and plant performance. The company's vertical integration assets and aggregates, services, and AC terminals performed well. We continue to focus on building a great organization, and as we build scale, the benefits contribute to higher margins. For CPI, tariffs have not and are not expected to be a significant issue for the business, as most of our supply chain and raw material inputs are sourced domestically. Our Sunbelt states continue to benefit from healthy federal and state project funding, in addition to a population migration that is driving steady workflow of commercial projects. We are not currently seeing any sign of degradation to these fundamental factors that have been supporting healthy and growing markets through our footprint for years. Our backlog is evidence of this continued steady demand for our services as it grew to a record $2.84 billion. Heading into the heavy work season of our fiscal year, we are raising our outlook ranges, which Greg will discuss in his remarks. Taking a closer look at market conditions in our Sunbelt states, local markets are growing, and states remain focused on maintaining and improving the quality of their roads, as well as increasing capacity to handle the significant migration to their states. For CPI customers in our public markets, The IIJA and state funding will continue to provide healthy bidding environments. The IIJA provides for significant funds that have not yet been deployed, and Congress is focused on the next five-year reauthorization of the surface transportation bill now. Secretary Duffy's comments in the past few weeks were positive on a reauthorization that continues to focus spending on hard infrastructure, which is a positive for CPI. For commercial and private customers, we continue to experience steady bidding availability. Manufacturing moving back to the United States, and specifically the Sunbelt, is also a positive for CPI. Turning now to our strategic growth model, we remain focused on both organic and acquisitive growth. Organic growth and our revised guidance envisions a strong second half of the year, and we continue to have an extremely active acquisition pipeline. Our southeastern states have great opportunities, and as we enter new states in the southwest, the map expands, and even more opportunities present themselves. In the past year, we have entered into two new states, Texas and Oklahoma, with platform acquisitions, And through PRI, we now have a platform company in Tennessee. As with our existing platforms, these new companies serve as growth engines for CPI to both expand into new areas through bolt-on acquisitions and to increase market share organically. In both cases, we're able to grow revenues and, more importantly, expand margins in what remains an extremely fragmented industry. Moving forward, we continue to focus daily on our CPI strategy and delivering on our roadmap 2027 goals of top-line growth of 15% to 20% annually and EBITDA expansion of 50 basis points per year through our three margin levers, building better markets, vertical integration, and scale. In closing, we are very pleased with the second quarter results, and we're excited and ready for the busy spring and summer work season ahead. I'd now like to turn the call over to Greg.