What Cardinal Infrastructure Group (CDNL) Said on Its Q3 Earnings Call

Key Points

• Cardinal withdrew its 2026 revenue and adjusted EBITDA margin guidance after project estimate revisions, residential pricing pressure, and higher fuel and transportation costs sharply reduced profitability. Q3 revenue rose 65% to $202 million, but adjusted EBITDA fell to $9 million from $21 million, and the company reported an $11 million net loss.
• The company is tightening bid reviews, project oversight, and forecasting, with an independent adviser expected to assess its processes. Backlog increased 26% year over year to $815.5 million, though about $175 million was tied to letters of intent or contracts pending execution.
• Cardinal postponed its proposed Hughes Brothers acquisition and authorized up to $50 million in share repurchases over 12 months. CFO Mike Rowe will step down and support the transition while the company searches for a successor.

Cardinal Infrastructure Group NASDAQ: CDNL withdrew its full-year 2026 revenue and adjusted EBITDA margin guidance after project estimate revisions and pricing pressure weighed on third-quarter profitability, even as revenue rose 65%.

The company also postponed its proposed acquisition of Hughes Brothers, announced a share repurchase authorization of up to $50 million and said Chief Financial Officer Mike Rowe would step down. Rowe will remain with Cardinal to support the transition while executive search firm Spencer Stuart seeks a successor.

Third-quarter revenue increased to $202 million from $122 million a year earlier, with $24 million of the $80 million increase coming from organic growth. Adjusted EBITDA fell to $9 million from $21 million, and adjusted EBITDA margin declined to 4.2% from 17.5%.

“These results are not acceptable,” Chairman and CEO Jeremy Spivey said on the earnings call. He said the performance highlighted the need to strengthen estimating, project management and execution across the company.

Project Revisions Weigh on Margins

Cardinal reported a quarterly net loss of $11 million, compared with net income of $10 million a year earlier. Gross profit was $11 million, with gross margin declining to 5.4% from 15.9%.

Rowe said project estimate revisions accounted for approximately 6.5 percentage points of the 13.3-point decline in adjusted EBITDA margin. Residential pricing pressure and lower initial bid margins on some commercial and industrial work accounted for approximately 3.6 points, while higher fuel and transportation costs accounted for approximately 3.5 points. Other factors partially offset those pressures.

Spivey said the $13.2 million in cost estimate revisions was primarily driven by a handful of projects in the Carolinas. Ten projects accounted for 61% of the revisions, while three residential projects accounted for half, he said. Most of the affected projects were more than 75% complete and are expected to finish during the current fiscal year or early in the first quarter of 2027.

Spivey said softer residential conditions and fuel and transportation costs contributed to the pressure, alongside execution issues. Chief Operating Officer Benji Wood said the residential market had softened across the broader Southeast, not just in the Carolinas or Atlanta.

Cardinal Tightens Project Oversight

Wood will take a more direct role in establishing operating standards across the company, drawing on practices used at ALGC. Cardinal also plans to engage an independent third-party adviser to support the changes and assess its estimating and project review processes.

Wood said the company is implementing more consistent bid reviews, greater management oversight and more frequent project reviews. It also plans to standardize estimates of the costs needed to complete projects and escalate changes in productivity, schedules, scope and expected profitability earlier.

Spivey said Cardinal’s new enterprise resource planning system provides better visibility into project performance than the company had during the transition between systems. He said the company is becoming more selective about new work, particularly in the Carolinas, where pricing competition has intensified.

Guidance Withdrawn as Backlog Rises

Rowe said Cardinal withdrew its annual outlook because of the size of the project estimate revisions and ongoing work to improve project-level forecasting. The company expects fourth-quarter adjusted EBITDA to improve from the third quarter but did not provide a specific revenue or margin forecast.

Backlog stood at $815.5 million, up 26% year over year, according to Spivey. Rowe said approximately $640 million was signed work, while $175 million was associated with letters of intent and contracts pending execution. The company did not provide a 2027 backlog conversion forecast.

Spivey said the third quarter is historically slow for new awards because project owners often avoid starting work during winter months. He added that Cardinal expects its end-market mix to lean more toward commercial and industrial work for the foreseeable future as it pursues diversification.

Acquisition Postponed, Buyback Authorized

Cardinal and Hughes Brothers agreed to postpone the proposed acquisition while Cardinal focuses on its existing operations. Spivey said the company still views Hughes Brothers as a strategic fit and does not expect a fourth-quarter cost impact from the postponement.

The board authorized the repurchase of up to $50 million of Class A common stock over the next 12 months. Cardinal ended the quarter with $335 million in cash and cash equivalents and approximately $136 million in net cash, Rowe said.

For the first nine months of 2026, revenue rose 92% to $596 million, including $144 million of organic growth. Adjusted EBITDA increased to $63 million from $56 million, while adjusted EBITDA margin fell to 10.6% from 17.9%. Net income declined to $12 million from $26 million.

About Cardinal Infrastructure Group (NASDAQ:CDNL)

Cardinal Infrastructure Group is a vertically integrated civil infrastructure and site development platform serving residential, commercial, industrial and municipal projects. CDNL delivers its suite of comprehensive infrastructure services that support the planning, preparation, installation, and development of residential, commercial, industrial, municipal, and state infrastructure projects through wholly owned, market leading subsidiaries. Cardinal's operations leverage in-house, highly skilled teams and equipment fleets to deliver wet utility installations (water, sewer, and stormwater systems), as well as grading, site clearing, erosion control, drilling and blasting, paving, and other related site services.

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