NASDAQ:ROAD Construction Partners Q3 2025 Earnings Report $112.22 +7.63 (+7.30%) Closing price 04:00 PM EasternExtended Trading$113.91 +1.69 (+1.51%) As of 06:00 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast Construction Partners EPS ResultsActual EPS$0.81Consensus EPS $0.87Beat/MissMissed by -$0.06One Year Ago EPS$0.59Construction Partners Revenue ResultsActual Revenue$779.28 millionExpected Revenue$810.47 millionBeat/MissMissed by -$31.19 millionYoY Revenue Growth+50.50%Construction Partners Announcement DetailsQuarterQ3 2025Date8/7/2025TimeBefore Market OpensConference Call DateThursday, August 7, 2025Conference Call Time10:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Construction Partners Q3 2025 Earnings Call TranscriptProvided by QuartrAugust 7, 2025 ShareLink copied to clipboard.Key Takeaways Positive Sentiment: Achieved a record 16.9% adjusted EBITDA margin in Q3 despite weather-related delays, driven by operational excellence and the company’s three margin levers. Positive Sentiment: Backlog increased to $2.94 billion, covering 80–85% of the next twelve months of revenue, supported by strong public and private bidding across eight states. Positive Sentiment: Closed the strategic Durwood Green acquisition in Houston, adding three hot-mix asphalt plants and a rail-serviced aggregates terminal to the Lone Star Paving platform. Neutral Sentiment: Reported 51% year-over-year revenue growth to $779.3 million, with 5% organic growth and 46% from acquisitions, while reducing G&A to 6.6% of revenue. Neutral Sentiment: Ended Q3 with a leverage ratio of 3.17× EBITDA after amending the credit facility and plans to reduce to ~2.5× by late FY 2026 while funding growth investments. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallConstruction Partners Q3 202500:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipantsPresentationSkip to Participants Operator00:00:00Greetings, and welcome to the Construction Partners Third Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Rick Black, Investor Relations. Please go ahead. Rick BlackEVP at Dennard Lascar Investor Relations00:00:25Thank you, operator, and good morning, everyone. We appreciate you joining us for the Construction Partners conference call to review third quarter results for fiscal twenty twenty five. 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, 08/07/2025. Please be advised that any time sensitive information may no longer be accurate as of the date of any replay listening or transcript reading. Rick BlackEVP at Dennard Lascar Investor Relations00:00:59I would also like to remind you that statements made in today's discussion that are not historical facts, including statements of expectations or future events or future financial performance, are 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 and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Rick BlackEVP at Dennard Lascar Investor Relations00:01:43Management 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 our earnings release. Construction Partners assumes no obligation to publicly update or revise any forward looking statements. And with that, I would now like to turn the call over to Construction Partners CEO, Juul Smith. Juul? Jule SmithPresident & CEO at Construction Partners00:02:09Thank you, Rick, and good morning, everyone. We appreciate you all being on the call today. With me this morning are Greg Hoffman, our Chief Financial Officer and Ned Fleming, our Executive Chairman. I'd like to begin today by welcoming the 200 employees of Durwood Green Construction in the Houston area that joined our family of companies earlier this week. As a third generation family business that will continue to be led by Brad, Jonathan, and Daniel Green, the company has earned its reputation as a well respected market leader in Houston, the fifth largest and one of the fastest growing metro areas in the nation. Jule SmithPresident & CEO at Construction Partners00:02:47Led by an entire team of knowledgeable and inexperienced industry veterans, the company operates three hot mix asphalt plants and a rail serviced aggregates terminal. Durwood Green provides construction and paving services for a variety of public and private projects throughout the Houston Metro Area. We expect Durwood Green to continue its legacy of operational excellence and to benefit from vertical integration opportunities as a subsidiary to our Texas platform company, Lone Star Paving. In Texas, our first year has been exactly as we had hoped. And I want to thank the Lone Star team for their outstanding leadership and dedication as we begin expanding to new markets. Jule SmithPresident & CEO at Construction Partners00:03:34We continue to see strong economic growth, favorable demographic trends, and a well funded transportation program, as well as additional opportunities for acquisitive and organic growth. The Durwood Green acquisition is a great example of our continued execution of the CPI strategy of seeking out growing markets and partnering with an experienced and talented local management team. Turning now to the third quarter, our results demonstrate the strength of our people, where despite persistent weather related delays in the quarter, our teams executed with discipline and delivered robust operational results, driving a record adjusted EBITDA margin of 16.9%. In the Southeast alone, May marked the second wettest month on record, leading to project delays and impacting fixed asset cost recoveries. While we can't control the weather, our team's resilience and operational excellence enabled us to still gain margin on many of our projects, generate strong operational cash flow and build backlog to $2,940,000,000 Now let's take a closer look at the current market conditions that are driving our ability to build backlog even during our busy construction work season. Jule SmithPresident & CEO at Construction Partners00:04:59On the public side of our business, we see strong public contract bidding throughout our eight states and over 100 local markets. Supporting this strong environment are healthy state infrastructure budgets, including many supplementary state programs as well as local city and county infrastructure programs and the IIJA federal program funds that all add up to significant year over year increases in contract awards. As we begin looking to fiscal year twenty twenty six beginning October 1, public spending on roads and bridges, particularly for maintenance and lane expansions, is forecasted to once again grow substantially as state and local governments strive to build and maintain the infrastructure necessary to keep up with the migration of both residents and businesses to our Sunbelt footprint. On Capitol Hill, both houses of Congress continue to work with Secretary Duffy on the five year reauthorization of the IIJA and Surface Transportation Program, and this administration continues to prioritize hard infrastructure investments and decrease permitting delays necessary to support a growing economy. In the commercial markets, we continue to have a steady amount of bidding opportunities with developers and general contractors in our local markets. Jule SmithPresident & CEO at Construction Partners00:06:28The makeup of our backlog and percentage of public work continues to stay remarkably steady over the last several quarters, which indicates that our Sunbelt markets continue to have healthy private economic growth and activity. Our bidding activity remains focused on the non residential type projects such as warehouses, industrial parks, schools, and manufacturing facilities. We expect economic growth to continue in our current markets, by migration to the Sunbelt states by both families and businesses. Finally, we expect to benefit from significant new investments in American manufacturing in our business friendly states as new tariffs begin to incentivize and accelerate the reshoring trend to begin after the pandemic several years ago. Fiscal year 2025 has been a dynamic year of growth for CPI as we've increased the size of our business over 50% through both organic growth and acquisitions. Jule SmithPresident & CEO at Construction Partners00:07:36We understand the benefits of and remain laser focused on organic growth. We also continue to focus on the best strategic acquisitions in growing markets and we are having numerous conversations with potential sellers who would like for their employees to experience the culture and opportunities provided by joining the CPI family of companies. In closing, we are now in the heart of our busy work season and all of our local markets are at full capacity and utilization. Having a record backlog to build, adding the Durwood Green organization, and now knowing that our July volumes were strong gives us a confident confidence to maintain our FY '25 guidance. As we head toward a new fiscal year in the next sixty days, we're excited about the tailwinds at our back, including strong public funding, a growing private economy, and a long strategic growth runway ahead. Jule SmithPresident & CEO at Construction Partners00:08:36I'd now like to turn the call over to Greg. Greg? Greg HoffmanSVP & CFO at Construction Partners00:08:42Thank you, Jill, and good morning, everyone. I'll begin with a review of our key performance metrics for the 2025 compared to the third quarter a year ago. Revenue was $779,300,000 an increase of 51% compared to the same quarter a year ago. The mix of our total revenue growth for the quarter was 5% organic revenue and 46% from recent acquisitions. G and A expenses as a percentage of total revenue in the quarter were 6.6% compared to 7.3% in the third quarter last year. Greg HoffmanSVP & CFO at Construction Partners00:09:23As we continue to build scale, we are targeting G and A expenses for the fiscal year to be approximately 7.2% to 7.3% of revenue. As a reminder, FY24 G and A expenses were 8.3% of revenue. Net income for the quarter was $44,000,000 and adjusted net income was $45,200,000 and $0.81 per diluted share in Q3. Adjusted EBITDA was $131,700,000 an increase of 80% compared to Q3 last year. Our adjusted EBITDA margin was 16.9% for the quarter, up two eighty basis points over the same quarter last year. Greg HoffmanSVP & CFO at Construction Partners00:10:11In addition, as Jewel mentioned, we are reporting a project backlog of $2,940,000,000 at 06/30/2025. We have approximately 80% to 85% of the next twelve months revenue covered in backlog. Turning now to the balance sheet, we had $114,300,000 of cash and cash equivalents and $493,500,000 available under our credit facility at quarter end, net of reduction for outstanding letters of credit. On June 30, we amended our credit agreement by providing for a total facility size of $1,100,000,000 consisting of a term loan in the amount of $600,000,000 and a revolving credit facility in the amount of $500,000,000 We utilized the proceeds from the increased term loan to pay down the outstanding balance on the revolving credit facility, realizing the full availability on the facility, net of a reduction for outstanding letters of credit. In addition, the amendment extends the facility maturity date to June 2030. Greg HoffmanSVP & CFO at Construction Partners00:11:23As of the end of the quarter, our debt to trailing twelve months EBITDA ratio was 3.17 times. We remain on pace with our strategy of reducing the leverage ratio to approximately 2.5 times by late fiscal twenty twenty six to support sustained profitable growth. Cash provided by operating activities was $83,000,000 compared to $35,000,000 in the same quarter a year ago. We remain on pace to convert 80% to 85% of EBITDA to cash flow from operations in FY twenty five. Capital expenditures for the quarter were $36,700,000 We continue to expect total capital expenditures for fiscal twenty twenty five to be in the range of $130,000,000 to $140,000,000 This includes maintenance CapEx of approximately 3.25% of revenue, with the remaining amount invested in new growth initiatives. Greg HoffmanSVP & CFO at Construction Partners00:12:26And finally, we are maintaining our prior outlook with revenue in the range of 2,770,000,000.00 to $2,830,000,000 In regard to our overall revenue mix for the year, we continue to expect organic revenue to be in the range of 8% to 10%. Net income in the range of $106,000,000 to $117,000,000 adjusted net income in the range of $124,000,000 to $135,000,000 adjusted EBITDA in the range of $410,000,000 to $430,000,000 and adjusted EBITDA margin in the range of 14.8% to 15.2%. And with that, we will open the call to questions. Operator? Operator00:13:15Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. Operator00:13:31For participants using Your first question comes from Tyler Brown with Raymond James. Please go ahead. Tyler BrownAVP at Raymond James Financial00:13:42Hey, good morning, guys. Jule SmithPresident & CEO at Construction Partners00:13:44Good morning, Tyler. Tyler BrownAVP at Raymond James Financial00:13:46Hey, Joel. So obviously, very solid quarter in the face of what was very challenging weather. I think you talked a little bit about the fixed cost deleveraging, but it doesn't really seem that you guys missed a beat. I mean, gross margins were maybe the best they've been in 20 quarters on my math. Can you just kind of talk about how you navigated weather so well? Tyler BrownAVP at Raymond James Financial00:14:07I mean, how do you flex costs when you have that lack of paving days? Jule SmithPresident & CEO at Construction Partners00:14:12Yeah, Tyler, we were very pleased with how the quarter, how the margins came through this quarter. I mean, there's no question when you have a quarter with that weather, it's an impact and we play an outdoor game and weather can impact us negatively or if it's really dry can impact us positively. But I would say we just really, our business is clicking on all cylinders. We talk about the three margin levers of building better markets, vertical integration and scale. And all of those really are kicking in at the same time, which we expected. Jule SmithPresident & CEO at Construction Partners00:14:52So even though we had a wet quarter, it didn't really stop those from coming through. It affected the top line, it affected some fixed asset recovery, but those three margin levers are starting to work really well together and we're expecting that to continue in the fourth quarter. Tyler BrownAVP at Raymond James Financial00:15:12Okay. That's great. Curious about your comments. I think in the prepared remarks right at the end, you mentioned that you were roughly at full utilization. So how do we read that? Tyler BrownAVP at Raymond James Financial00:15:25Will that be a bit of a hindrance to organic growth next year? Or are you going to need to step up CapEx to support that growth? Just any color there. Jule SmithPresident & CEO at Construction Partners00:15:35Yes. No, I wasn't trying to signal any capacity constraints. I just was basically saying we have a full backlog and we're on full cylinders. And our CapEx program supports our organic growth that we expect. As you know, Greg runs a pretty robust program to look for the best organic growth opportunities and that's where the CapEx dollars flow. Jule SmithPresident & CEO at Construction Partners00:16:00So I wasn't trying to communicate any capacity constraints just that as normal we are at full utilization and building that record backlog. Tyler BrownAVP at Raymond James Financial00:16:10Okay. Okay. I just wanted to make sure I had that. And then just a quick modeling question, Greg. Just on the M and A contribution, what will the contribution be here in 'twenty five that's expected in the guidance? Tyler BrownAVP at Raymond James Financial00:16:24And then again, kind of based on what we know today with deals that have closed, how much rollover benefit should we see in fiscal 'twenty six already? Greg HoffmanSVP & CFO at Construction Partners00:16:32Yeah. So Tyler, the Q4 acquisition revenue impact is gonna be somewhere in the $270,000,000 to $280,000,000 range. And then carrying over into 2026, we should see somewhere in the neighborhood of $240,000,000 to $250,000,000 Tyler BrownAVP at Raymond James Financial00:16:53Okay. So a good kick start into '26. Okay. My last one. Yeah. Tyler BrownAVP at Raymond James Financial00:16:59So I think you guys are gonna do something, call it, like, 2,800,000,000.0 in revenue, 420,000,000 or so of EBITDA. Those numbers are actually right at or above the targets that you set out less than two years ago, and you're achieving them two years early. So just I know the complexion of the business has obviously changed a lot, but does it make sense to maybe reset those targets maybe here in the next couple of months? Appreciate it. Jule SmithPresident & CEO at Construction Partners00:17:27Tal, I do think that the Lone Star acquisition was a transformative acquisition as we said last October. PRI that joined us in May has had a great two months. The Durwood Green acquisition is going to be very additive. So yes, I mean we need to update and communicate what our business looks like moving forward now after those transformative acquisitions. I'm going to throw it to Ned who's got some big picture thoughts. Jule SmithPresident & CEO at Construction Partners00:18:01I think that's a good time to let him weigh in on this. Ned FlemingExecutive Chairman of the Board at Construction Partners00:18:04Tyler, you're a great straight man. I appreciate it. Thank you, sir. But the honest truth is we're trying to make great long term decisions. We don't run this business on a ninety day increments. Ned FlemingExecutive Chairman of the Board at Construction Partners00:18:15We're trying to make great decisions that continue to compound wealth. A good example of that is Houston. We probably see every transaction that you can see in this space. And we made a decision to invest in Houston. Houston has 7,200,000 people. Ned FlemingExecutive Chairman of the Board at Construction Partners00:18:31It was the fastest more people moved there last year than any metropolitan area in the country except for Dallas and Dallas beat it by 16,000 people, I believe. And it looks like it's going to continue to grow. That's more people than a lot of states in the country with that kind of growth. And so the first step is we've got great people there. We've got great growth. Ned FlemingExecutive Chairman of the Board at Construction Partners00:18:52You're going to see more things happen in growing areas. So we're trying and we'll continue as we have from the very start to make great long term decisions that continue to compound wealth, not just for one or two quarters, but for the next five to ten years. So the answer is yes, you will just, I would say stay tuned. We will have a little bit of a reset here over the next few months as to what we think we're going to do since we hit the projection so quickly. But make no mistake The about board is paying attention to where we invest it. Ned FlemingExecutive Chairman of the Board at Construction Partners00:19:27Several members of the board met the team in Houston. We're paying attention to who we're in business with. That's our first step. Where we're placing capital, we're going to continue to allocate capital that can compound wealth from the next five to ten years. Tyler BrownAVP at Raymond James Financial00:19:43Yep. Perfect. Excellent. Thank you guys so very much. Jule SmithPresident & CEO at Construction Partners00:19:47Thanks, Tyler. Operator00:19:50Next question, Michael Feniger with Bank of America. Please go ahead. Michael FenigerMD - Equity Research at Bank of America Merrill Lynch00:19:54Great. Thanks, guys. Thanks for taking my my questions. Just I'm curious, Joseph, you you made a comment earlier about public spending for maintenance and lane expansion is forecasted to grow substantially in in 2026. Is this is this based on conversations with customers, or is this based on your understanding of of where budgets are looking as we fast forward to next year? Michael FenigerMD - Equity Research at Bank of America Merrill Lynch00:20:18I'm just looking to get a sense if you kind of flesh out your confidence around that comment. Jule SmithPresident & CEO at Construction Partners00:20:25Yeah, Michael, know, and you and I've discussed when we're talking about public funding, there's several different ways to measure it and it can get a little confusing. So we're talking about contract awards when you add the state programs which include federal money, local and county programs because that's all part of our backlog and our bidding. We feel like even though nationally the numbers move around our states this year in FY '25 contract awards are up about 14%. And so when we look at those programs, the budgets that they have, they're going in FY '26, we think it's going to be up a similar amount. And so that's what I was speaking to is really the contract awards as we look at the budgets and programs in place on the public funding side. Michael FenigerMD - Equity Research at Bank of America Merrill Lynch00:21:23Perfect. And when we think of 2026, I know you're not guiding Jules and Greg. Just kind of following up on on on Tyler's question about the m and a. Just any other puts and takes we should think about for next year? I mean, obviously, if if weather normalizes, you know, a positive there, anything on costs that you're seeing on the liquid side, pricing in the backlog, just kind of thinking the puts and takes as we kind of start looking at the building blocks for 2026? Jule SmithPresident & CEO at Construction Partners00:21:56Yeah, well, Mike, it's getting about that time. So, I'll talk to the backlog and then let Greg speak to the costs that he's seeing. As we look forward into 2026, obviously as Greg just said, we've got a lot of acquisitive revenue rolling over into '26. We expect organically to be up high single digits like we expect to be this year. We don't really see any change in that. Jule SmithPresident & CEO at Construction Partners00:22:24So from a growth standpoint, 2026 is looking like a typical CPI year being up 15 to 20% if not a little more. So that's good on the top line side. Greg, you wanna speak to what you see on the margin and cost side? Greg HoffmanSVP & CFO at Construction Partners00:22:43Sure. I said in the remarks that our backlog covers the next 80 to 85% of our twelve month revenue and the cost is built in there for the appropriate margin as we think about 40 to 50 basis point improvement in margin. So those costs are set and built in. Certainly, there's some energy pricing that could impact that. We do talk about a slight headwind if energy prices go up and the reverse is true if they go down. Greg HoffmanSVP & CFO at Construction Partners00:23:20And so currently right now where we see is liquid AC being very stable. Diesel has been very stable. Natural gas is up a little bit, but we do do enough hedging to make that a minimal impact on us. So feel pretty good about cost in the future. Michael FenigerMD - Equity Research at Bank of America Merrill Lynch00:23:38Great. I'll just sneak one more in there. Just the the free cash flow was was really strong in the quarter. Just when we look at that and we think about your leverage, any update on the timeline where you 've when you do you get inside your your range? And, Jules, do you feel okay still doing some acquisitions while also trying to deleverage, or are they mutually kind of exclusive as as we kind of turn the page and go through, one more quarter and go into 2026? Jule SmithPresident & CEO at Construction Partners00:24:09Yeah, Michael, good question. It's something we think about a lot. We're committed to, getting back into the target range on our leverage, But at the same time, we want to continue to run our business. As Ned said, we're making decisions for five, ten, fifteen years. And so as we look at the acquisitive opportunities, we're passing on some. Jule SmithPresident & CEO at Construction Partners00:24:35We're working with sellers to accommodate our timing as much as we can. But at the same time, there are several as we've made this year, there's several key strategic acquisitions that we think are crucial and important to the long term health of our business. And so we're gonna deliver and at the same time, we're gonna continue to make good strategic decisions for the business. Greg HoffmanSVP & CFO at Construction Partners00:25:03And so in terms of our what I mentioned in my remarks, Mike, ratio is 3.17. We're expecting based on normal cash generation through to the 2026 to be near that 2.5 times leverage ratio. So yeah, to your point, we're going to generate 80% to 85% cash flow from operations, 80% to 85%, I'm sorry, 80% to 85% of our EBITDA into cash flow for operations. And the trailing twelve months right now is almost there, 79%. So we'll continue to do what we've done, deleverage over time. Operator00:25:55Next question, Andy Wittmann with Robert W. Baird. Please proceed. Andrew WittmannSenior Research Analyst at Baird00:26:01Great. Good morning. Thanks for taking my question. All the good demand for your services in your markets driving good growth, I was just wondering how this is affecting the competitive environment as it relates to your competitors, maybe maybe also realizing that the the services are scarce and they might have some pricing power. Obviously, Jewel, this has been a really important part of your strategy to build these better markets. Andrew WittmannSenior Research Analyst at Baird00:26:27Now was just wondering if you could assess for us what you're seeing in your markets to the extent that you've been able to or see the building of those markets being better and what you're seeing in the marketplace today. Jule SmithPresident & CEO at Construction Partners00:26:40Yeah, Andy, you're right. One of our three margin levers is building better markets and we see that the demand side is helping us with that. When there's a good bidding environment, as you would expect margins stay healthy. And I think you saw that rolling through this quarter is even though our crews and our teams really did a great job growing margin on projects, which we expect and they had a great quarter doing that. It's really nice to start off with healthy margins, at the beginning. Jule SmithPresident & CEO at Construction Partners00:27:14And so the demand environment on the public side and the private side gives us the opportunity to be patient at the bid table to add projects in our backlog at good margins. And so I think we continue to see that it's been something that's been pretty steady for several years now and we're busy and able to stay patient at the bid table and our competitors are also. Ned FlemingExecutive Chairman of the Board at Construction Partners00:27:42Andy strategically Jewel and the team have done a great job of picking markets that are healthy. That's an important part of it growing healthy markets. Houston is a great example. Andrew WittmannSenior Research Analyst at Baird00:27:56Yeah. And you just heard that in Jules response previously. There are some key markets that you guys want to be in. Sounds like you've identified the next ones that are the the good markets that you wanna be in as well. Right, Joel? Jule SmithPresident & CEO at Construction Partners00:28:08Yes. Andy, you know, as Ned said, Houston was is a great example. You know, we you say metro area and you think they're all pretty much the same. Houston, I mean, it's just incredible the amount of people there and the rate of growth when you look at how fast that metro area is growing on an annual basis. So not all states are equal, not all metro areas are equal. Jule SmithPresident & CEO at Construction Partners00:28:30And so for us to generate organic growth, which is a big part of our story we need to be in places that are growing and so as we look to allocate capital, Ned and I talk a lot about where do we want to be in The United States? Where do we want to direct our growth? We've got a lot of opportunities. We can't do them all. And so we just try to make the best decisions on where we can be that allows our business to grow and have healthy margins. Andrew WittmannSenior Research Analyst at Baird00:29:02Yep. Okay. Greg, a follow-up one for you. The One Big Beautiful allows a 100% bonus depreciation. Jule SmithPresident & CEO at Construction Partners00:29:10Mhmm. Andrew WittmannSenior Research Analyst at Baird00:29:10And so we're seeing a lot of companies that buy things, equipment like you do, increasing their cash flow guidance as a result of that. I was wondering if you could help us understand what the benefit is to your cash flow from this year, or maybe on an ongoing basis, at least while this law is in effect, from that bonus depreciation. And maybe refresh my memory, I don't know that you updated your cash flow guidance for this. So maybe you did, maybe you didn't, but could you just clarify if there's any change to your cash flow guidance as a result of the OBVA? Greg HoffmanSVP & CFO at Construction Partners00:29:42Yeah, I think the guide we've been saying is, like I said earlier, 80% to 85% converting that EBITDA to cash flow. So I think we still fall within that range, Andy. How it specifically impacts us? Yes, we do take bonus depreciation. Greg HoffmanSVP & CFO at Construction Partners00:30:02This year it is down to 60%. So that was certainly reflected in what we originally talked about in our guide. When asked about what that what our cash taxes would be, I've said in the $15,000,000 range now that this bill has passed. Interestingly, it's acquisitions for us and or equipment purchases that have occurred after 01/15/2025. So unfortunately, we don't get to pull Lone Star in that. Greg HoffmanSVP & CFO at Construction Partners00:30:37So it's still at 60%, but other acquisitions post onefifteentwenty five as well as those equipment purchases will be at 100% bonus depreciation. So that 15 goes down dramatically, probably 10 or 12 or 13. Mean, obviously, we're still going to pay state. It doesn't impact the state. So yeah, a nice lift. Andrew WittmannSenior Research Analyst at Baird00:31:01Yeah. So you're you're down from 15, down 12. So you're repaying just a few million dollars in federal taxes, is what you're saying? Greg HoffmanSVP & CFO at Construction Partners00:31:08That's right. Yep. Andrew WittmannSenior Research Analyst at Baird00:31:10Okay. Great. Thanks. Jule SmithPresident & CEO at Construction Partners00:31:13Yep. Thank you, Andy. Operator00:31:16Next question, Brian Bureaus with Thompson Research Group. Brian BirosSenior Analyst at Thompson Research Group00:31:21Hey. Good morning. This is Brian on for Katherine Thompson. Thanks for taking my questions today. Jule SmithPresident & CEO at Construction Partners00:31:25Good morning, Brian. Brian BirosSenior Analyst at Thompson Research Group00:31:26Had some Good morning. You two obviously had some tough weather. You guys put up a great result though. But curious to hear about trends in July so far. We've heard that July was a great quarter for many in the industry. Brian BirosSenior Analyst at Thompson Research Group00:31:38I'm seeing volumes up double digits. I was just curious if you could touch on how July trended for you. Jule SmithPresident & CEO at Construction Partners00:31:45Yeah, Brian. So as I said in my prepared remarks, July had really good volumes and it started, out the first week, in North Carolina and Texas, it was wet. But the last three weeks, and especially the last two weeks were really good volume, months. You know, as we looked at how to guide for the fourth quarter, we obviously don't know the weather in August and September. Our guide normally just we assume normal weather. Jule SmithPresident & CEO at Construction Partners00:32:16Right? But we know July we had really good volumes and so we felt like it was important to communicate that. So we saw what as you said some of the other folks in our industry have seen is it after a very wet spring quarter, it was nice to for July to be to to have some weather that we could get out and work. Brian BirosSenior Analyst at Thompson Research Group00:32:41Got it. And then so q two record margins, I think, up two eighty basis points again in a tough weather quarter. I mean, there a way to frame how much they would have been without weather? I know you mentioned the three levers that are really kind of just driving the performance, not irregardless of weather, but taking the weather impact to be not as great. But just trying to think through the exercise of if you had normal weather in Q2, what kind of numbers could we have seen? Brian BirosSenior Analyst at Thompson Research Group00:33:10Trying to think then for Q3 and even just for next year. Jule SmithPresident & CEO at Construction Partners00:33:14Yeah, that's a good question, Brian. And it's not an exact science. Greg and I could sit here and argue for an hour about exactly what may have happened had we had normal weather. But there's no question, our quarter would have been better. We would have had more revenue and in the summer where we over recover on our fixed assets, it would have been higher. Jule SmithPresident & CEO at Construction Partners00:33:38And so that's what we're looking forward to happening in the fourth quarter. Brian BirosSenior Analyst at Thompson Research Group00:33:44Got it. And then last one for me, maybe on the Houston market, you've touched a bit on the call so far, massive market. Can just maybe touch on how you plan that market now, kind of like what services you offer and kind of what adjacent services are still out there for bolt ons? I guess really just the opportunity set there and maybe how that market looks between public and private trends. Thank you. Jule SmithPresident & CEO at Construction Partners00:34:08Yeah. So Brian, as we start in Houston here this week really is our first week with the Durwood Green organization. They look a lot like our typical CPI company. They do paving services. They do some other concrete paving services which is know characteristically Houston market. Jule SmithPresident & CEO at Construction Partners00:34:32And they run three asphalt plants do a lot of FOB sales so very much like a typical CPI company. As we've said as we get going in that market, today's acquisitions drive tomorrow's organic growth. So we were gonna look for organic growth opportunities in the Houston market just like we do everywhere else. Brian BirosSenior Analyst at Thompson Research Group00:34:55Good here. Thanks. I'll pass it along. Operator00:34:59Next question, Brent Thielman with D. A. Davidson. Please go ahead. Brent ThielmanMD & Senior Research Analyst at D.A. Davidson00:35:04Hey. Thanks, all. Hey. Congrats working some tough conditions here. Good show in here. Brent ThielmanMD & Senior Research Analyst at D.A. Davidson00:35:11Jewel, wanted to maybe ask a different way around the weather in that, I'm trying to think about the markets that were less impacted for you through the quarter. And really, is kind of in context of kind of the bigger organic growth outlook for the year. But I mean, do you could you give any context on markets that are just really hitting on all cylinders right now, maybe potentially beyond kind of this 8% to 10% organic growth rate you've talked about for the year? Just trying to think through where are you really seeing some great momentum in the business. Jule SmithPresident & CEO at Construction Partners00:35:48Yeah. Brent, you know, we've got a 100 different markets. And so I'm trying to think of which ones I would call out because there's a lot of them doing really well. Clearly Florida and Texas are great growth states, but so is South Carolina, North Carolina, Tennessee. There's a lot of them, you know, I would say clearly, the Lone Star markets of Austin and San Antonio and Temple Killeen are big growth areas, Panhandle Of Florida, the Research Triangle here in North Carolina. Jule SmithPresident & CEO at Construction Partners00:36:25But we see a lot of growth in all of our markets. They're not all equal but it's to call out just a few. The Southeast as a whole just the region as I said in the prepared remarks, just continues to see a lot of migration. The states are trying to keep up with the growth and that's what you see coming through on the public side in the funding. And then as I said, I think with the tariffs incentivizing American manufacturing, I think CPI is going be a big beneficiary of companies saying, hey, we're going to make things in America and where do we wanna locate? Jule SmithPresident & CEO at Construction Partners00:37:09And I think the Southeast and the Sunbelt's gonna get an outside share of that investment. Brent ThielmanMD & Senior Research Analyst at D.A. Davidson00:37:17Okay. Yeah, that's interesting. Kind of a good follow on there, Jewel. I guess what I wanted to ask is as that likely plays out here over the next few years, does the acquisition strategy that you have in place today, I mean, the types of companies that you're buying still play well into leveraging those private markets that can certainly pick up in your geographies. In other words, you continue under the same program you're doing? Brent ThielmanMD & Senior Research Analyst at D.A. Davidson00:37:48Are you looking at different types of deals that could potentially leverage that opportunity down the road? Jule SmithPresident & CEO at Construction Partners00:37:56Yeah, Brent, I would tell you, we're talking to a lot of potential sellers right now as we have been, that's a big part of my job is just to get to know these sellers. And I would tell you, they look very much just like the businesses have for twenty years that CPI has looked at. They're good construction companies. Some of them don't have hot mix asphalt. They're more service related. Jule SmithPresident & CEO at Construction Partners00:38:23Those are very value added acquisitions the right you know where we're already in the market. But when you look at a PRI or a mobile asphalt or Durwood Green, there's just really some still a lot of still strategic opportunities in our space that do exactly what we do. Brent ThielmanMD & Senior Research Analyst at D.A. Davidson00:38:47Okay. Alright. Appreciate it. Thanks, guys. Jule SmithPresident & CEO at Construction Partners00:38:50Alright. Thank you, Brent. Operator00:38:52Next question, Adam Thalhimer with Thompson Davis. Please go ahead. Adam ThalhimerDirector - Research at Thompson Davis & Co00:38:57Hey. Good morning, guys. Nice quarter considering the weather. Jule SmithPresident & CEO at Construction Partners00:39:00Thank you, Adam. Adam ThalhimerDirector - Research at Thompson Davis & Co00:39:02I was curious, given how wet the summer has been, Jewel, would you say you have any color or thoughts on the potential that the construction season could extend further into the December? Jule SmithPresident & CEO at Construction Partners00:39:20Well, Adam, that's an interesting thought. I mean, obviously every year when we get into December, November and December, we have customers that are just begging us to get their projects done. It's a very, very busy time for our different markets. So we're going to extend into the winter as much as we can. Obviously, weather starts to play a factor, but I don't envision us going into November and December without a full plate of work with the backlog we already have and what we're bidding now. Jule SmithPresident & CEO at Construction Partners00:39:55Things will be very busy and if we get a good warm November and December you're going to see us make a lot of hay in those months. Adam ThalhimerDirector - Research at Thompson Davis & Co00:40:04That's what I figured. And then I wanted to ask about your recently acquired states, so Texas, Oklahoma, to some extent Tennessee. How would you say that transportation spending is trending versus your initial expectation? Jule SmithPresident & CEO at Construction Partners00:40:22I think that there we try to study the spending and the budgets before making the acquisitions. And so I would say that on all three states, it's a play out exactly as we expected. Texas, Oklahoma and Tennessee all have very healthy programs. I think Tennessee is up quite a bit year over year. So we're seeing a lot of bidding activity there. Jule SmithPresident & CEO at Construction Partners00:40:49And Texas, I mean, frankly, their program dwarfs every other state in the nation. And we're benefiting from that and we're happy to be in Houston. So I would say all three states are doing very well. Adam ThalhimerDirector - Research at Thompson Davis & Co00:41:07That's good to hear. And then last one, lastly, I wanted to ask on labor. There's gotta be a lot of value, in your assembled labor force of 6,200 plus. I'm just curious, there's been any changes in the availability of labor either for you or your competitors. What's your sense on that? Jule SmithPresident & CEO at Construction Partners00:41:31I think Adam with labor it's a twofold answer. The labor shortages we saw coming out of COVID, those have dissipated. We're back to a normal labor market when we were struggling to find truck drivers three and four years ago. That's gone and labor's available. We're able to build our backlog, but the longer term picture as you've heard me say before is we're going through a generational shrinking slowly but surely of our workforce and we have a lot of gray hair out on our crews that are retiring. Jule SmithPresident & CEO at Construction Partners00:42:07And so that has forced CPI to be proactive in saying how do we attract and retain a workforce? Whether it be the culture that we have in our companies, whether it be the compensation that we offer our workers or whether it be the career opportunities, we call it the three C's, culture, compensation and career. And we feel like that if we can do a good job attracting and retaining a workforce, it's actually gonna become a competitive advantage for us because the businesses in our industry that can attract and retain a workforce are gonna be able to keep bidding and growing. And those that don't attract and retain a workforce are not gonna be able to keep bidding and growing. And so it's something long term that we know we have to be proactive. Jule SmithPresident & CEO at Construction Partners00:42:55And if we are proactive, it's actually gonna help us be one of the winners in our industry. And so workforce is a huge part of what we focus on every day. Adam ThalhimerDirector - Research at Thompson Davis & Co00:43:09Good color. Thanks, Joel. Jule SmithPresident & CEO at Construction Partners00:43:11Okay. Thank you, Adam. Operator00:43:14I would like to turn the floor over to management for closing remarks. Jule SmithPresident & CEO at Construction Partners00:43:19Yes. Thanks to everyone for being with us, and we look forward to speaking with you next quarter. Thank you. Operator00:43:25This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.Read moreParticipantsExecutivesJule SmithPresident & CEOGreg HoffmanSVP & CFONed FlemingExecutive Chairman of the BoardAnalystsRick BlackEVP at Dennard Lascar Investor RelationsTyler BrownAVP at Raymond James FinancialMichael FenigerMD - Equity Research at Bank of America Merrill LynchAndrew WittmannSenior Research Analyst at BairdBrian BirosSenior Analyst at Thompson Research GroupBrent ThielmanMD & Senior Research Analyst at D.A. DavidsonAdam ThalhimerDirector - Research at Thompson Davis & CoPowered by Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Construction Partners Earnings HeadlinesConstruction Partners (NASDAQ:ROAD) Misses Q2 Sales Targets, But Stock Soars 10.4%August 8 at 9:47 AM | msn.comConstruction Partners (ROAD) Q3 Up 51%August 7 at 12:08 PM | fool.comProtect Your Bank Account with THESE 4 Simple StepsStarting as soon as a few months from now, the United States government will make a sweeping change to bank accounts nationwide. It will give them unprecedented powers to control your bank account.August 8 at 2:00 AM | Weiss Ratings (Ad)Construction Partners, Inc. Announces Fiscal 2025 Third Quarter Results | ROAD Stock NewsAugust 7 at 8:35 AM | gurufocus.comConstruction Partners, Inc. Announces Fiscal 2025 Third Quarter ResultsAugust 7 at 8:35 AM | gurufocus.comConstruction Partners, Inc. Announces Fiscal 2025 Third Quarter ResultsAugust 7 at 7:30 AM | prnewswire.comSee More Construction Partners Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Construction Partners? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Construction Partners and other key companies, straight to your email. Email Address About Construction PartnersConstruction Partners (NASDAQ:ROAD), a civil infrastructure company, constructs and maintains roadways in Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The company provides various products and services to public and private infrastructure projects, such as highways, roads, bridges, airports, and commercial and residential developments. It also engages in manufacturing and distributing hot mix asphalt (HMA) for internal use and sales to third parties in connection with construction projects; and paving activities, including the construction of roadway base layers and application of asphalt pavement. In addition, the company is involved in site development, including the installation of utility and drainage systems; mining aggregates, such as sand, gravel, and construction stones that are used as raw materials in the production of HMA; and distributing liquid asphalt cement for internal use and sales to third parties in connection with HMA production. The company was formerly known as SunTx CPI Growth Company, Inc. and changed its name to Construction Partners, Inc. in September 2017. Construction Partners, Inc. was founded in 2007 and is headquartered in Dothan, Alabama.View Construction Partners ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Dutch Bros Just Flipped the Script With a Massive Earnings BeatIs Eli Lilly’s 14% Post-Earnings Slide a Buy-the-Dip Opportunity?Constellation Energy’s Earnings Beat Signals a New EraRealty Income Rallies Post-Earnings Miss—Here’s What Drove ItDon't Mix the Signal for Noise in Super Micro Computer's EarningsWhy Monolithic Power's Earnings and Guidance Ignited a RallyRivian Takes Earnings Hit—R2 Could Be the Stock's 2026 Lifeline Upcoming Earnings SEA (8/12/2025)Cisco Systems (8/13/2025)Alibaba Group (8/13/2025)Applied Materials (8/14/2025)NetEase (8/14/2025)Deere & Company (8/14/2025)NU (8/14/2025)Petroleo Brasileiro S.A.- Petrobras (8/14/2025)Palo Alto Networks (8/18/2025)Home Depot (8/19/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
PresentationSkip to Participants Operator00:00:00Greetings, and welcome to the Construction Partners Third Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Rick Black, Investor Relations. Please go ahead. Rick BlackEVP at Dennard Lascar Investor Relations00:00:25Thank you, operator, and good morning, everyone. We appreciate you joining us for the Construction Partners conference call to review third quarter results for fiscal twenty twenty five. 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, 08/07/2025. Please be advised that any time sensitive information may no longer be accurate as of the date of any replay listening or transcript reading. Rick BlackEVP at Dennard Lascar Investor Relations00:00:59I would also like to remind you that statements made in today's discussion that are not historical facts, including statements of expectations or future events or future financial performance, are 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 and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Rick BlackEVP at Dennard Lascar Investor Relations00:01:43Management 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 our earnings release. Construction Partners assumes no obligation to publicly update or revise any forward looking statements. And with that, I would now like to turn the call over to Construction Partners CEO, Juul Smith. Juul? Jule SmithPresident & CEO at Construction Partners00:02:09Thank you, Rick, and good morning, everyone. We appreciate you all being on the call today. With me this morning are Greg Hoffman, our Chief Financial Officer and Ned Fleming, our Executive Chairman. I'd like to begin today by welcoming the 200 employees of Durwood Green Construction in the Houston area that joined our family of companies earlier this week. As a third generation family business that will continue to be led by Brad, Jonathan, and Daniel Green, the company has earned its reputation as a well respected market leader in Houston, the fifth largest and one of the fastest growing metro areas in the nation. Jule SmithPresident & CEO at Construction Partners00:02:47Led by an entire team of knowledgeable and inexperienced industry veterans, the company operates three hot mix asphalt plants and a rail serviced aggregates terminal. Durwood Green provides construction and paving services for a variety of public and private projects throughout the Houston Metro Area. We expect Durwood Green to continue its legacy of operational excellence and to benefit from vertical integration opportunities as a subsidiary to our Texas platform company, Lone Star Paving. In Texas, our first year has been exactly as we had hoped. And I want to thank the Lone Star team for their outstanding leadership and dedication as we begin expanding to new markets. Jule SmithPresident & CEO at Construction Partners00:03:34We continue to see strong economic growth, favorable demographic trends, and a well funded transportation program, as well as additional opportunities for acquisitive and organic growth. The Durwood Green acquisition is a great example of our continued execution of the CPI strategy of seeking out growing markets and partnering with an experienced and talented local management team. Turning now to the third quarter, our results demonstrate the strength of our people, where despite persistent weather related delays in the quarter, our teams executed with discipline and delivered robust operational results, driving a record adjusted EBITDA margin of 16.9%. In the Southeast alone, May marked the second wettest month on record, leading to project delays and impacting fixed asset cost recoveries. While we can't control the weather, our team's resilience and operational excellence enabled us to still gain margin on many of our projects, generate strong operational cash flow and build backlog to $2,940,000,000 Now let's take a closer look at the current market conditions that are driving our ability to build backlog even during our busy construction work season. Jule SmithPresident & CEO at Construction Partners00:04:59On the public side of our business, we see strong public contract bidding throughout our eight states and over 100 local markets. Supporting this strong environment are healthy state infrastructure budgets, including many supplementary state programs as well as local city and county infrastructure programs and the IIJA federal program funds that all add up to significant year over year increases in contract awards. As we begin looking to fiscal year twenty twenty six beginning October 1, public spending on roads and bridges, particularly for maintenance and lane expansions, is forecasted to once again grow substantially as state and local governments strive to build and maintain the infrastructure necessary to keep up with the migration of both residents and businesses to our Sunbelt footprint. On Capitol Hill, both houses of Congress continue to work with Secretary Duffy on the five year reauthorization of the IIJA and Surface Transportation Program, and this administration continues to prioritize hard infrastructure investments and decrease permitting delays necessary to support a growing economy. In the commercial markets, we continue to have a steady amount of bidding opportunities with developers and general contractors in our local markets. Jule SmithPresident & CEO at Construction Partners00:06:28The makeup of our backlog and percentage of public work continues to stay remarkably steady over the last several quarters, which indicates that our Sunbelt markets continue to have healthy private economic growth and activity. Our bidding activity remains focused on the non residential type projects such as warehouses, industrial parks, schools, and manufacturing facilities. We expect economic growth to continue in our current markets, by migration to the Sunbelt states by both families and businesses. Finally, we expect to benefit from significant new investments in American manufacturing in our business friendly states as new tariffs begin to incentivize and accelerate the reshoring trend to begin after the pandemic several years ago. Fiscal year 2025 has been a dynamic year of growth for CPI as we've increased the size of our business over 50% through both organic growth and acquisitions. Jule SmithPresident & CEO at Construction Partners00:07:36We understand the benefits of and remain laser focused on organic growth. We also continue to focus on the best strategic acquisitions in growing markets and we are having numerous conversations with potential sellers who would like for their employees to experience the culture and opportunities provided by joining the CPI family of companies. In closing, we are now in the heart of our busy work season and all of our local markets are at full capacity and utilization. Having a record backlog to build, adding the Durwood Green organization, and now knowing that our July volumes were strong gives us a confident confidence to maintain our FY '25 guidance. As we head toward a new fiscal year in the next sixty days, we're excited about the tailwinds at our back, including strong public funding, a growing private economy, and a long strategic growth runway ahead. Jule SmithPresident & CEO at Construction Partners00:08:36I'd now like to turn the call over to Greg. Greg? Greg HoffmanSVP & CFO at Construction Partners00:08:42Thank you, Jill, and good morning, everyone. I'll begin with a review of our key performance metrics for the 2025 compared to the third quarter a year ago. Revenue was $779,300,000 an increase of 51% compared to the same quarter a year ago. The mix of our total revenue growth for the quarter was 5% organic revenue and 46% from recent acquisitions. G and A expenses as a percentage of total revenue in the quarter were 6.6% compared to 7.3% in the third quarter last year. Greg HoffmanSVP & CFO at Construction Partners00:09:23As we continue to build scale, we are targeting G and A expenses for the fiscal year to be approximately 7.2% to 7.3% of revenue. As a reminder, FY24 G and A expenses were 8.3% of revenue. Net income for the quarter was $44,000,000 and adjusted net income was $45,200,000 and $0.81 per diluted share in Q3. Adjusted EBITDA was $131,700,000 an increase of 80% compared to Q3 last year. Our adjusted EBITDA margin was 16.9% for the quarter, up two eighty basis points over the same quarter last year. Greg HoffmanSVP & CFO at Construction Partners00:10:11In addition, as Jewel mentioned, we are reporting a project backlog of $2,940,000,000 at 06/30/2025. We have approximately 80% to 85% of the next twelve months revenue covered in backlog. Turning now to the balance sheet, we had $114,300,000 of cash and cash equivalents and $493,500,000 available under our credit facility at quarter end, net of reduction for outstanding letters of credit. On June 30, we amended our credit agreement by providing for a total facility size of $1,100,000,000 consisting of a term loan in the amount of $600,000,000 and a revolving credit facility in the amount of $500,000,000 We utilized the proceeds from the increased term loan to pay down the outstanding balance on the revolving credit facility, realizing the full availability on the facility, net of a reduction for outstanding letters of credit. In addition, the amendment extends the facility maturity date to June 2030. Greg HoffmanSVP & CFO at Construction Partners00:11:23As of the end of the quarter, our debt to trailing twelve months EBITDA ratio was 3.17 times. We remain on pace with our strategy of reducing the leverage ratio to approximately 2.5 times by late fiscal twenty twenty six to support sustained profitable growth. Cash provided by operating activities was $83,000,000 compared to $35,000,000 in the same quarter a year ago. We remain on pace to convert 80% to 85% of EBITDA to cash flow from operations in FY twenty five. Capital expenditures for the quarter were $36,700,000 We continue to expect total capital expenditures for fiscal twenty twenty five to be in the range of $130,000,000 to $140,000,000 This includes maintenance CapEx of approximately 3.25% of revenue, with the remaining amount invested in new growth initiatives. Greg HoffmanSVP & CFO at Construction Partners00:12:26And finally, we are maintaining our prior outlook with revenue in the range of 2,770,000,000.00 to $2,830,000,000 In regard to our overall revenue mix for the year, we continue to expect organic revenue to be in the range of 8% to 10%. Net income in the range of $106,000,000 to $117,000,000 adjusted net income in the range of $124,000,000 to $135,000,000 adjusted EBITDA in the range of $410,000,000 to $430,000,000 and adjusted EBITDA margin in the range of 14.8% to 15.2%. And with that, we will open the call to questions. Operator? Operator00:13:15Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. Operator00:13:31For participants using Your first question comes from Tyler Brown with Raymond James. Please go ahead. Tyler BrownAVP at Raymond James Financial00:13:42Hey, good morning, guys. Jule SmithPresident & CEO at Construction Partners00:13:44Good morning, Tyler. Tyler BrownAVP at Raymond James Financial00:13:46Hey, Joel. So obviously, very solid quarter in the face of what was very challenging weather. I think you talked a little bit about the fixed cost deleveraging, but it doesn't really seem that you guys missed a beat. I mean, gross margins were maybe the best they've been in 20 quarters on my math. Can you just kind of talk about how you navigated weather so well? Tyler BrownAVP at Raymond James Financial00:14:07I mean, how do you flex costs when you have that lack of paving days? Jule SmithPresident & CEO at Construction Partners00:14:12Yeah, Tyler, we were very pleased with how the quarter, how the margins came through this quarter. I mean, there's no question when you have a quarter with that weather, it's an impact and we play an outdoor game and weather can impact us negatively or if it's really dry can impact us positively. But I would say we just really, our business is clicking on all cylinders. We talk about the three margin levers of building better markets, vertical integration and scale. And all of those really are kicking in at the same time, which we expected. Jule SmithPresident & CEO at Construction Partners00:14:52So even though we had a wet quarter, it didn't really stop those from coming through. It affected the top line, it affected some fixed asset recovery, but those three margin levers are starting to work really well together and we're expecting that to continue in the fourth quarter. Tyler BrownAVP at Raymond James Financial00:15:12Okay. That's great. Curious about your comments. I think in the prepared remarks right at the end, you mentioned that you were roughly at full utilization. So how do we read that? Tyler BrownAVP at Raymond James Financial00:15:25Will that be a bit of a hindrance to organic growth next year? Or are you going to need to step up CapEx to support that growth? Just any color there. Jule SmithPresident & CEO at Construction Partners00:15:35Yes. No, I wasn't trying to signal any capacity constraints. I just was basically saying we have a full backlog and we're on full cylinders. And our CapEx program supports our organic growth that we expect. As you know, Greg runs a pretty robust program to look for the best organic growth opportunities and that's where the CapEx dollars flow. Jule SmithPresident & CEO at Construction Partners00:16:00So I wasn't trying to communicate any capacity constraints just that as normal we are at full utilization and building that record backlog. Tyler BrownAVP at Raymond James Financial00:16:10Okay. Okay. I just wanted to make sure I had that. And then just a quick modeling question, Greg. Just on the M and A contribution, what will the contribution be here in 'twenty five that's expected in the guidance? Tyler BrownAVP at Raymond James Financial00:16:24And then again, kind of based on what we know today with deals that have closed, how much rollover benefit should we see in fiscal 'twenty six already? Greg HoffmanSVP & CFO at Construction Partners00:16:32Yeah. So Tyler, the Q4 acquisition revenue impact is gonna be somewhere in the $270,000,000 to $280,000,000 range. And then carrying over into 2026, we should see somewhere in the neighborhood of $240,000,000 to $250,000,000 Tyler BrownAVP at Raymond James Financial00:16:53Okay. So a good kick start into '26. Okay. My last one. Yeah. Tyler BrownAVP at Raymond James Financial00:16:59So I think you guys are gonna do something, call it, like, 2,800,000,000.0 in revenue, 420,000,000 or so of EBITDA. Those numbers are actually right at or above the targets that you set out less than two years ago, and you're achieving them two years early. So just I know the complexion of the business has obviously changed a lot, but does it make sense to maybe reset those targets maybe here in the next couple of months? Appreciate it. Jule SmithPresident & CEO at Construction Partners00:17:27Tal, I do think that the Lone Star acquisition was a transformative acquisition as we said last October. PRI that joined us in May has had a great two months. The Durwood Green acquisition is going to be very additive. So yes, I mean we need to update and communicate what our business looks like moving forward now after those transformative acquisitions. I'm going to throw it to Ned who's got some big picture thoughts. Jule SmithPresident & CEO at Construction Partners00:18:01I think that's a good time to let him weigh in on this. Ned FlemingExecutive Chairman of the Board at Construction Partners00:18:04Tyler, you're a great straight man. I appreciate it. Thank you, sir. But the honest truth is we're trying to make great long term decisions. We don't run this business on a ninety day increments. Ned FlemingExecutive Chairman of the Board at Construction Partners00:18:15We're trying to make great decisions that continue to compound wealth. A good example of that is Houston. We probably see every transaction that you can see in this space. And we made a decision to invest in Houston. Houston has 7,200,000 people. Ned FlemingExecutive Chairman of the Board at Construction Partners00:18:31It was the fastest more people moved there last year than any metropolitan area in the country except for Dallas and Dallas beat it by 16,000 people, I believe. And it looks like it's going to continue to grow. That's more people than a lot of states in the country with that kind of growth. And so the first step is we've got great people there. We've got great growth. Ned FlemingExecutive Chairman of the Board at Construction Partners00:18:52You're going to see more things happen in growing areas. So we're trying and we'll continue as we have from the very start to make great long term decisions that continue to compound wealth, not just for one or two quarters, but for the next five to ten years. So the answer is yes, you will just, I would say stay tuned. We will have a little bit of a reset here over the next few months as to what we think we're going to do since we hit the projection so quickly. But make no mistake The about board is paying attention to where we invest it. Ned FlemingExecutive Chairman of the Board at Construction Partners00:19:27Several members of the board met the team in Houston. We're paying attention to who we're in business with. That's our first step. Where we're placing capital, we're going to continue to allocate capital that can compound wealth from the next five to ten years. Tyler BrownAVP at Raymond James Financial00:19:43Yep. Perfect. Excellent. Thank you guys so very much. Jule SmithPresident & CEO at Construction Partners00:19:47Thanks, Tyler. Operator00:19:50Next question, Michael Feniger with Bank of America. Please go ahead. Michael FenigerMD - Equity Research at Bank of America Merrill Lynch00:19:54Great. Thanks, guys. Thanks for taking my my questions. Just I'm curious, Joseph, you you made a comment earlier about public spending for maintenance and lane expansion is forecasted to grow substantially in in 2026. Is this is this based on conversations with customers, or is this based on your understanding of of where budgets are looking as we fast forward to next year? Michael FenigerMD - Equity Research at Bank of America Merrill Lynch00:20:18I'm just looking to get a sense if you kind of flesh out your confidence around that comment. Jule SmithPresident & CEO at Construction Partners00:20:25Yeah, Michael, know, and you and I've discussed when we're talking about public funding, there's several different ways to measure it and it can get a little confusing. So we're talking about contract awards when you add the state programs which include federal money, local and county programs because that's all part of our backlog and our bidding. We feel like even though nationally the numbers move around our states this year in FY '25 contract awards are up about 14%. And so when we look at those programs, the budgets that they have, they're going in FY '26, we think it's going to be up a similar amount. And so that's what I was speaking to is really the contract awards as we look at the budgets and programs in place on the public funding side. Michael FenigerMD - Equity Research at Bank of America Merrill Lynch00:21:23Perfect. And when we think of 2026, I know you're not guiding Jules and Greg. Just kind of following up on on on Tyler's question about the m and a. Just any other puts and takes we should think about for next year? I mean, obviously, if if weather normalizes, you know, a positive there, anything on costs that you're seeing on the liquid side, pricing in the backlog, just kind of thinking the puts and takes as we kind of start looking at the building blocks for 2026? Jule SmithPresident & CEO at Construction Partners00:21:56Yeah, well, Mike, it's getting about that time. So, I'll talk to the backlog and then let Greg speak to the costs that he's seeing. As we look forward into 2026, obviously as Greg just said, we've got a lot of acquisitive revenue rolling over into '26. We expect organically to be up high single digits like we expect to be this year. We don't really see any change in that. Jule SmithPresident & CEO at Construction Partners00:22:24So from a growth standpoint, 2026 is looking like a typical CPI year being up 15 to 20% if not a little more. So that's good on the top line side. Greg, you wanna speak to what you see on the margin and cost side? Greg HoffmanSVP & CFO at Construction Partners00:22:43Sure. I said in the remarks that our backlog covers the next 80 to 85% of our twelve month revenue and the cost is built in there for the appropriate margin as we think about 40 to 50 basis point improvement in margin. So those costs are set and built in. Certainly, there's some energy pricing that could impact that. We do talk about a slight headwind if energy prices go up and the reverse is true if they go down. Greg HoffmanSVP & CFO at Construction Partners00:23:20And so currently right now where we see is liquid AC being very stable. Diesel has been very stable. Natural gas is up a little bit, but we do do enough hedging to make that a minimal impact on us. So feel pretty good about cost in the future. Michael FenigerMD - Equity Research at Bank of America Merrill Lynch00:23:38Great. I'll just sneak one more in there. Just the the free cash flow was was really strong in the quarter. Just when we look at that and we think about your leverage, any update on the timeline where you 've when you do you get inside your your range? And, Jules, do you feel okay still doing some acquisitions while also trying to deleverage, or are they mutually kind of exclusive as as we kind of turn the page and go through, one more quarter and go into 2026? Jule SmithPresident & CEO at Construction Partners00:24:09Yeah, Michael, good question. It's something we think about a lot. We're committed to, getting back into the target range on our leverage, But at the same time, we want to continue to run our business. As Ned said, we're making decisions for five, ten, fifteen years. And so as we look at the acquisitive opportunities, we're passing on some. Jule SmithPresident & CEO at Construction Partners00:24:35We're working with sellers to accommodate our timing as much as we can. But at the same time, there are several as we've made this year, there's several key strategic acquisitions that we think are crucial and important to the long term health of our business. And so we're gonna deliver and at the same time, we're gonna continue to make good strategic decisions for the business. Greg HoffmanSVP & CFO at Construction Partners00:25:03And so in terms of our what I mentioned in my remarks, Mike, ratio is 3.17. We're expecting based on normal cash generation through to the 2026 to be near that 2.5 times leverage ratio. So yeah, to your point, we're going to generate 80% to 85% cash flow from operations, 80% to 85%, I'm sorry, 80% to 85% of our EBITDA into cash flow for operations. And the trailing twelve months right now is almost there, 79%. So we'll continue to do what we've done, deleverage over time. Operator00:25:55Next question, Andy Wittmann with Robert W. Baird. Please proceed. Andrew WittmannSenior Research Analyst at Baird00:26:01Great. Good morning. Thanks for taking my question. All the good demand for your services in your markets driving good growth, I was just wondering how this is affecting the competitive environment as it relates to your competitors, maybe maybe also realizing that the the services are scarce and they might have some pricing power. Obviously, Jewel, this has been a really important part of your strategy to build these better markets. Andrew WittmannSenior Research Analyst at Baird00:26:27Now was just wondering if you could assess for us what you're seeing in your markets to the extent that you've been able to or see the building of those markets being better and what you're seeing in the marketplace today. Jule SmithPresident & CEO at Construction Partners00:26:40Yeah, Andy, you're right. One of our three margin levers is building better markets and we see that the demand side is helping us with that. When there's a good bidding environment, as you would expect margins stay healthy. And I think you saw that rolling through this quarter is even though our crews and our teams really did a great job growing margin on projects, which we expect and they had a great quarter doing that. It's really nice to start off with healthy margins, at the beginning. Jule SmithPresident & CEO at Construction Partners00:27:14And so the demand environment on the public side and the private side gives us the opportunity to be patient at the bid table to add projects in our backlog at good margins. And so I think we continue to see that it's been something that's been pretty steady for several years now and we're busy and able to stay patient at the bid table and our competitors are also. Ned FlemingExecutive Chairman of the Board at Construction Partners00:27:42Andy strategically Jewel and the team have done a great job of picking markets that are healthy. That's an important part of it growing healthy markets. Houston is a great example. Andrew WittmannSenior Research Analyst at Baird00:27:56Yeah. And you just heard that in Jules response previously. There are some key markets that you guys want to be in. Sounds like you've identified the next ones that are the the good markets that you wanna be in as well. Right, Joel? Jule SmithPresident & CEO at Construction Partners00:28:08Yes. Andy, you know, as Ned said, Houston was is a great example. You know, we you say metro area and you think they're all pretty much the same. Houston, I mean, it's just incredible the amount of people there and the rate of growth when you look at how fast that metro area is growing on an annual basis. So not all states are equal, not all metro areas are equal. Jule SmithPresident & CEO at Construction Partners00:28:30And so for us to generate organic growth, which is a big part of our story we need to be in places that are growing and so as we look to allocate capital, Ned and I talk a lot about where do we want to be in The United States? Where do we want to direct our growth? We've got a lot of opportunities. We can't do them all. And so we just try to make the best decisions on where we can be that allows our business to grow and have healthy margins. Andrew WittmannSenior Research Analyst at Baird00:29:02Yep. Okay. Greg, a follow-up one for you. The One Big Beautiful allows a 100% bonus depreciation. Jule SmithPresident & CEO at Construction Partners00:29:10Mhmm. Andrew WittmannSenior Research Analyst at Baird00:29:10And so we're seeing a lot of companies that buy things, equipment like you do, increasing their cash flow guidance as a result of that. I was wondering if you could help us understand what the benefit is to your cash flow from this year, or maybe on an ongoing basis, at least while this law is in effect, from that bonus depreciation. And maybe refresh my memory, I don't know that you updated your cash flow guidance for this. So maybe you did, maybe you didn't, but could you just clarify if there's any change to your cash flow guidance as a result of the OBVA? Greg HoffmanSVP & CFO at Construction Partners00:29:42Yeah, I think the guide we've been saying is, like I said earlier, 80% to 85% converting that EBITDA to cash flow. So I think we still fall within that range, Andy. How it specifically impacts us? Yes, we do take bonus depreciation. Greg HoffmanSVP & CFO at Construction Partners00:30:02This year it is down to 60%. So that was certainly reflected in what we originally talked about in our guide. When asked about what that what our cash taxes would be, I've said in the $15,000,000 range now that this bill has passed. Interestingly, it's acquisitions for us and or equipment purchases that have occurred after 01/15/2025. So unfortunately, we don't get to pull Lone Star in that. Greg HoffmanSVP & CFO at Construction Partners00:30:37So it's still at 60%, but other acquisitions post onefifteentwenty five as well as those equipment purchases will be at 100% bonus depreciation. So that 15 goes down dramatically, probably 10 or 12 or 13. Mean, obviously, we're still going to pay state. It doesn't impact the state. So yeah, a nice lift. Andrew WittmannSenior Research Analyst at Baird00:31:01Yeah. So you're you're down from 15, down 12. So you're repaying just a few million dollars in federal taxes, is what you're saying? Greg HoffmanSVP & CFO at Construction Partners00:31:08That's right. Yep. Andrew WittmannSenior Research Analyst at Baird00:31:10Okay. Great. Thanks. Jule SmithPresident & CEO at Construction Partners00:31:13Yep. Thank you, Andy. Operator00:31:16Next question, Brian Bureaus with Thompson Research Group. Brian BirosSenior Analyst at Thompson Research Group00:31:21Hey. Good morning. This is Brian on for Katherine Thompson. Thanks for taking my questions today. Jule SmithPresident & CEO at Construction Partners00:31:25Good morning, Brian. Brian BirosSenior Analyst at Thompson Research Group00:31:26Had some Good morning. You two obviously had some tough weather. You guys put up a great result though. But curious to hear about trends in July so far. We've heard that July was a great quarter for many in the industry. Brian BirosSenior Analyst at Thompson Research Group00:31:38I'm seeing volumes up double digits. I was just curious if you could touch on how July trended for you. Jule SmithPresident & CEO at Construction Partners00:31:45Yeah, Brian. So as I said in my prepared remarks, July had really good volumes and it started, out the first week, in North Carolina and Texas, it was wet. But the last three weeks, and especially the last two weeks were really good volume, months. You know, as we looked at how to guide for the fourth quarter, we obviously don't know the weather in August and September. Our guide normally just we assume normal weather. Jule SmithPresident & CEO at Construction Partners00:32:16Right? But we know July we had really good volumes and so we felt like it was important to communicate that. So we saw what as you said some of the other folks in our industry have seen is it after a very wet spring quarter, it was nice to for July to be to to have some weather that we could get out and work. Brian BirosSenior Analyst at Thompson Research Group00:32:41Got it. And then so q two record margins, I think, up two eighty basis points again in a tough weather quarter. I mean, there a way to frame how much they would have been without weather? I know you mentioned the three levers that are really kind of just driving the performance, not irregardless of weather, but taking the weather impact to be not as great. But just trying to think through the exercise of if you had normal weather in Q2, what kind of numbers could we have seen? Brian BirosSenior Analyst at Thompson Research Group00:33:10Trying to think then for Q3 and even just for next year. Jule SmithPresident & CEO at Construction Partners00:33:14Yeah, that's a good question, Brian. And it's not an exact science. Greg and I could sit here and argue for an hour about exactly what may have happened had we had normal weather. But there's no question, our quarter would have been better. We would have had more revenue and in the summer where we over recover on our fixed assets, it would have been higher. Jule SmithPresident & CEO at Construction Partners00:33:38And so that's what we're looking forward to happening in the fourth quarter. Brian BirosSenior Analyst at Thompson Research Group00:33:44Got it. And then last one for me, maybe on the Houston market, you've touched a bit on the call so far, massive market. Can just maybe touch on how you plan that market now, kind of like what services you offer and kind of what adjacent services are still out there for bolt ons? I guess really just the opportunity set there and maybe how that market looks between public and private trends. Thank you. Jule SmithPresident & CEO at Construction Partners00:34:08Yeah. So Brian, as we start in Houston here this week really is our first week with the Durwood Green organization. They look a lot like our typical CPI company. They do paving services. They do some other concrete paving services which is know characteristically Houston market. Jule SmithPresident & CEO at Construction Partners00:34:32And they run three asphalt plants do a lot of FOB sales so very much like a typical CPI company. As we've said as we get going in that market, today's acquisitions drive tomorrow's organic growth. So we were gonna look for organic growth opportunities in the Houston market just like we do everywhere else. Brian BirosSenior Analyst at Thompson Research Group00:34:55Good here. Thanks. I'll pass it along. Operator00:34:59Next question, Brent Thielman with D. A. Davidson. Please go ahead. Brent ThielmanMD & Senior Research Analyst at D.A. Davidson00:35:04Hey. Thanks, all. Hey. Congrats working some tough conditions here. Good show in here. Brent ThielmanMD & Senior Research Analyst at D.A. Davidson00:35:11Jewel, wanted to maybe ask a different way around the weather in that, I'm trying to think about the markets that were less impacted for you through the quarter. And really, is kind of in context of kind of the bigger organic growth outlook for the year. But I mean, do you could you give any context on markets that are just really hitting on all cylinders right now, maybe potentially beyond kind of this 8% to 10% organic growth rate you've talked about for the year? Just trying to think through where are you really seeing some great momentum in the business. Jule SmithPresident & CEO at Construction Partners00:35:48Yeah. Brent, you know, we've got a 100 different markets. And so I'm trying to think of which ones I would call out because there's a lot of them doing really well. Clearly Florida and Texas are great growth states, but so is South Carolina, North Carolina, Tennessee. There's a lot of them, you know, I would say clearly, the Lone Star markets of Austin and San Antonio and Temple Killeen are big growth areas, Panhandle Of Florida, the Research Triangle here in North Carolina. Jule SmithPresident & CEO at Construction Partners00:36:25But we see a lot of growth in all of our markets. They're not all equal but it's to call out just a few. The Southeast as a whole just the region as I said in the prepared remarks, just continues to see a lot of migration. The states are trying to keep up with the growth and that's what you see coming through on the public side in the funding. And then as I said, I think with the tariffs incentivizing American manufacturing, I think CPI is going be a big beneficiary of companies saying, hey, we're going to make things in America and where do we wanna locate? Jule SmithPresident & CEO at Construction Partners00:37:09And I think the Southeast and the Sunbelt's gonna get an outside share of that investment. Brent ThielmanMD & Senior Research Analyst at D.A. Davidson00:37:17Okay. Yeah, that's interesting. Kind of a good follow on there, Jewel. I guess what I wanted to ask is as that likely plays out here over the next few years, does the acquisition strategy that you have in place today, I mean, the types of companies that you're buying still play well into leveraging those private markets that can certainly pick up in your geographies. In other words, you continue under the same program you're doing? Brent ThielmanMD & Senior Research Analyst at D.A. Davidson00:37:48Are you looking at different types of deals that could potentially leverage that opportunity down the road? Jule SmithPresident & CEO at Construction Partners00:37:56Yeah, Brent, I would tell you, we're talking to a lot of potential sellers right now as we have been, that's a big part of my job is just to get to know these sellers. And I would tell you, they look very much just like the businesses have for twenty years that CPI has looked at. They're good construction companies. Some of them don't have hot mix asphalt. They're more service related. Jule SmithPresident & CEO at Construction Partners00:38:23Those are very value added acquisitions the right you know where we're already in the market. But when you look at a PRI or a mobile asphalt or Durwood Green, there's just really some still a lot of still strategic opportunities in our space that do exactly what we do. Brent ThielmanMD & Senior Research Analyst at D.A. Davidson00:38:47Okay. Alright. Appreciate it. Thanks, guys. Jule SmithPresident & CEO at Construction Partners00:38:50Alright. Thank you, Brent. Operator00:38:52Next question, Adam Thalhimer with Thompson Davis. Please go ahead. Adam ThalhimerDirector - Research at Thompson Davis & Co00:38:57Hey. Good morning, guys. Nice quarter considering the weather. Jule SmithPresident & CEO at Construction Partners00:39:00Thank you, Adam. Adam ThalhimerDirector - Research at Thompson Davis & Co00:39:02I was curious, given how wet the summer has been, Jewel, would you say you have any color or thoughts on the potential that the construction season could extend further into the December? Jule SmithPresident & CEO at Construction Partners00:39:20Well, Adam, that's an interesting thought. I mean, obviously every year when we get into December, November and December, we have customers that are just begging us to get their projects done. It's a very, very busy time for our different markets. So we're going to extend into the winter as much as we can. Obviously, weather starts to play a factor, but I don't envision us going into November and December without a full plate of work with the backlog we already have and what we're bidding now. Jule SmithPresident & CEO at Construction Partners00:39:55Things will be very busy and if we get a good warm November and December you're going to see us make a lot of hay in those months. Adam ThalhimerDirector - Research at Thompson Davis & Co00:40:04That's what I figured. And then I wanted to ask about your recently acquired states, so Texas, Oklahoma, to some extent Tennessee. How would you say that transportation spending is trending versus your initial expectation? Jule SmithPresident & CEO at Construction Partners00:40:22I think that there we try to study the spending and the budgets before making the acquisitions. And so I would say that on all three states, it's a play out exactly as we expected. Texas, Oklahoma and Tennessee all have very healthy programs. I think Tennessee is up quite a bit year over year. So we're seeing a lot of bidding activity there. Jule SmithPresident & CEO at Construction Partners00:40:49And Texas, I mean, frankly, their program dwarfs every other state in the nation. And we're benefiting from that and we're happy to be in Houston. So I would say all three states are doing very well. Adam ThalhimerDirector - Research at Thompson Davis & Co00:41:07That's good to hear. And then last one, lastly, I wanted to ask on labor. There's gotta be a lot of value, in your assembled labor force of 6,200 plus. I'm just curious, there's been any changes in the availability of labor either for you or your competitors. What's your sense on that? Jule SmithPresident & CEO at Construction Partners00:41:31I think Adam with labor it's a twofold answer. The labor shortages we saw coming out of COVID, those have dissipated. We're back to a normal labor market when we were struggling to find truck drivers three and four years ago. That's gone and labor's available. We're able to build our backlog, but the longer term picture as you've heard me say before is we're going through a generational shrinking slowly but surely of our workforce and we have a lot of gray hair out on our crews that are retiring. Jule SmithPresident & CEO at Construction Partners00:42:07And so that has forced CPI to be proactive in saying how do we attract and retain a workforce? Whether it be the culture that we have in our companies, whether it be the compensation that we offer our workers or whether it be the career opportunities, we call it the three C's, culture, compensation and career. And we feel like that if we can do a good job attracting and retaining a workforce, it's actually gonna become a competitive advantage for us because the businesses in our industry that can attract and retain a workforce are gonna be able to keep bidding and growing. And those that don't attract and retain a workforce are not gonna be able to keep bidding and growing. And so it's something long term that we know we have to be proactive. Jule SmithPresident & CEO at Construction Partners00:42:55And if we are proactive, it's actually gonna help us be one of the winners in our industry. And so workforce is a huge part of what we focus on every day. Adam ThalhimerDirector - Research at Thompson Davis & Co00:43:09Good color. Thanks, Joel. Jule SmithPresident & CEO at Construction Partners00:43:11Okay. Thank you, Adam. Operator00:43:14I would like to turn the floor over to management for closing remarks. Jule SmithPresident & CEO at Construction Partners00:43:19Yes. Thanks to everyone for being with us, and we look forward to speaking with you next quarter. Thank you. Operator00:43:25This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.Read moreParticipantsExecutivesJule SmithPresident & CEOGreg HoffmanSVP & CFONed FlemingExecutive Chairman of the BoardAnalystsRick BlackEVP at Dennard Lascar Investor RelationsTyler BrownAVP at Raymond James FinancialMichael FenigerMD - Equity Research at Bank of America Merrill LynchAndrew WittmannSenior Research Analyst at BairdBrian BirosSenior Analyst at Thompson Research GroupBrent ThielmanMD & Senior Research Analyst at D.A. DavidsonAdam ThalhimerDirector - Research at Thompson Davis & CoPowered by