Construction Partners, Inc.

Greetings and welcome to the Construction Partners Third 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, Rick Black with Investor Relations. Please go ahead, sir.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Construction Partners conference call to review third quarter fiscal 2026 results. 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, which is August 7th, 2026. 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 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 gap measures can be found at the end of today's 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, Jewel Smith. Jewel?

Thank you, Rick, and good morning, everyone. We appreciate you joining us for today's call. With me this morning are Greg Hoffman, our Chief Financial Officer, and Ned Fleming, our Executive Chairman. I'd like to start today's call by addressing the approximately 7,200 employees of the CPI family of companies. Thank you all for daily bringing excellence to our operations. Your hard work, talent, and unwavering commitment to work safely drove another outstanding quarter, building a record backlog, and once again allowing us to raise our fiscal 2026 outlook. Simply put, CPI success begins with our people and the culture of a close-knit family of companies that we cultivate and maintain daily. Our core values, family, opportunity, respect, and excellence are more than words. They guide how we operate every day. We are a family of companies, but more importantly, a company of family. We create opportunities for our employees to build better lives. We treat one another, our customers, and our communities with respect. Finally, we strive daily to do ordinary things extraordinarily well for all of the communities that we serve. Our culture has become a meaningful competitive advantage. It enables us to attract, develop, and retain exceptional people across our more than one and more. In the third quarter, we delivered another period of strong execution, growing revenue, net income, adjusted EBITDA and backlog consistent with the momentum we built throughout fiscal 2026. During the quarter, Our business remained resilient despite continued energy cost inflation and unusually wet weather across many of our markets in May. Our cost pass-through model and strong local market operating teams, together with our disciplined operating strategy, enabled us to execute at a high level and deliver another quarter of profitable growth. Before turning to the current demand environment, I'd like to briefly address federal transportation funding, a topic that has understandably raised questions among investors. As many of you know, a five-year federal surface transportation funding bill is moving through the congressional authorization process. Let me begin with three key points. First, we believe that Congress will ultimately approve and increase the funding level of a new multi-year surface transportation bill that continues to support much needed long-term investment in our nation's roads and bridges. Second, while the timing of final passage remains uncertain, the possibility of operating under a continuing resolution is neither new nor concerning for our industry. Finally, based upon what we know today, we do not expect any disruption to federal funding or project activity in either fiscal 2026 or fiscal 2027. Now, let's discuss where things stand today. Earlier this year, the Build America 250 Act was introduced in the House of Representatives and subsequently advanced out of committee with an overwhelming bipartisan support of a 62 to 2 vote, positioning the legislation for consideration by the full House. While the bill must still pass both chambers of Congress and be signed by the president before becoming law, the House bill represents an important milestone in the reauthorization process. As currently drafted, Build America 250 Act provides approximately 7.2% more funding over the life of the bill than the highway and public transportation funding included in the IIJA. And when you dig into the details of the actual programs funded and compare where the money will be spent, the dollars targeted to hard infrastructure projects will have an even greater increase than the past five years. It's also worth noting that for two decades, in each of the last three surface transportation reauthorizations, including IIJA, the FAST Act, and MAP 21, The final enacted legislation ultimately provided higher funding levels than the initial House proposal. Given the longstanding bipartisan support for investing in America's transportation infrastructure, we are confident that Congress will ultimately approve a new bill. That said, the legislative calendar continues to tighten as the midterm elections approach, increasing the likelihood of a continuing resolution, or CR, to temporarily extend current funding. Should that occur, federal highway funding would remain at fiscal 2026 levels, the highest annual funding levels in the program's history. Importantly, we do not believe a CR would have a meaningful impact on our business or industry activity in fiscal 2027. Approximately 45% of IIJA funding has yet to be deployed, and we continue to see very healthy bid activity project lettings, and contract awards across our markets as reflected in our record backlog. Turning now to the demand for commercial development, as it relates to one of today's fastest growing in markets, AI data centers, we have been serving data center projects across our footprint for many years. While activity in this segment has accelerated meaningfully, our strategy remains unchanged. We will continue to pursue attractive opportunities in the local markets and states where we already operate. With an estimated 70 to 75 percent of new data center construction nationally expected to occur in our existing states, we believe CPI is well positioned to participate in this growth through disciplined bidding, established relationships with general contractors, and a focus on projects that meet our commercial margin objectives. Today, our teams are actively bidding and building data center projects, including several notable examples. In Texas, Lone Star Paving is actively working on a portfolio of data center projects in central Texas and has a pipeline of opportunities exceeding $100 million in contract value. In Oklahoma, where we recently expanded our Oberlin platform to the addition of Ellsworth, We're building AI data center projects totaling approximately $100 million with a current pipeline of opportunities exceeding $130 million. Other newly won commercial projects range from construction for national retailers to hospitals to corporate campuses and manufacturing facilities. These examples represent only a portion of the more than 1,000 commercial sector projects We expect to build this year across our eight states over 115 local markets. On the public side, federal and state governments continue to invest in infrastructure to support the growing economies across the Sun Belt. From large market-specific projects to recurring repair and maintenance work for state DOTs, cities and counties, as well as lane widenings and road expansion projects, publicly funded work remains robust. As examples of some of our recent public wins in just one of our states, Florida, we want to contract to reconstruct the existing airfield pavement apron at the main passenger terminal of Pensacola International Airport, involving demolition of existing pavements, new storm drainage, and installation of subgrade and base courses, a multifaceted project that will begin in September and run through the fall of 2027. For the Florida DOT, we recently were awarded two contracts totaling over $80 million to build new rest stop areas along the I-4 corridor. These projects also strengthen our presence with a key transportation client while showcasing our ability to efficiently deliver large, complex infrastructure projects. In addition to these projects, we continue to win project awards across our eight states for resurfacing and repair projects. This is our typical and sustainable work that drives our company forward quarter after quarter and year after year. Overall, at the state funding level, we continue to see increased budgets and healthy project-leading activity across our states. Turning to our growth strategy, last month we completed another strategic acquisition with a purchase of Ellsworth Construction, a leading asphalt manufacturing and construction company in Oklahoma. I'd like to welcome Nathan Ellsworth and his group of talented construction professionals to the CPI family of companies. Under our Oklahoma platform company, Overland Construction, Ellsworth expands our footprint in the state and significantly strengthens our presence in the rapidly growing Tulsa and Oklahoma City metropolitan areas. The acquisition adds experienced employees strategically located facilities, and a strong reputation for execution, while further expanding our capabilities in the fast-growing data center construction market. Ellsworth's established position in Oklahoma complements Oberlin's extensive data center portfolio in North Texas, creating additional opportunities to service this attractive and expanding end market. We continue to benefit from the ongoing generational transition occurring across our industry and maintain a robust pipeline of high-quality acquisition opportunities throughout our existing footprint and adjacent Sunbelt states. We remain actively engaged in discussions with prospective sellers and encouraged by the opportunities ahead. Organic growth remains an equally important component of our long-term strategy is evidenced by our strong organic growth both in this quarter and for our entire fiscal year 2026. We continue to invest in our existing business by increasing capacity, broadening our geographic reach, and enhancing our vertical integration network. As part of these efforts, we expect to bring several greenfield facilities online later this year, extending our reach into attractive high-growth markets that are currently underserved. Finally, I'd like to say that we're excited not only for the results of this quarter and expected for this fiscal year, but also for the outlook ahead for fiscal year 2027 that begins October 1st. At CPI, our leadership team annually reads a book together. And several of these books we've studied are by the renowned business author, Jim Collins. An important concept that we learned from Collins is the idea of the 20 mile march. having the discipline and planning to make consistent and steady progress toward your goal. Our Road 2030 five-year plan outlines our strategy to each year have a consistent march of controlled profitable growth as we execute on our strategy. Today, we are raising our fiscal 2026 guidance to reflect over 30% growth on both top line revenue and bottom line margins. And looking forward to fiscal year 2027, We anticipate strong organic growth again, and we already have approximately $140 million of acquisitive revenue carrying over from this year. So another typical CPI year of growth is developing, and we will continue to march forward with discipline to deliver long-term strategic value for our shareholders. And with that, I'd like now to turn the call over to Greg.