Construction Partners, Inc. Reports Robust Q2 Growth Amid Infrastructure Boom

Construction Partners, Inc. (NASDAQ: ROAD) delivered a standout performance in its fiscal 2025 second quarter, reporting significant revenue growth, margin expansion, and a record project backlog. The results underscore the company’s strategic execution in capitalizing on infrastructure demand across its core Sunbelt markets.

Key Financial Highlights

• Revenue: Soared to $571.7 million, a 54% year-over-year increase, driven by acquisitions (contributing $173.1 million) and organic growth ($27.2 million).
• Net Income: Turned positive to $4.2 million, reversing a $1.1 million loss in Q2 2024.
• Adjusted EBITDA: Jumped 135% to $69.3 million, with a margin of 12.1%, up 400 basis points from the prior year.
• Backlog: Hit a record $2.84 billion, up 60% year-over-year, signaling strong future project pipelines.

Strategic Momentum and Acquisitions

The company’s acquisition of PRI (Precision Road, Inc.) in Tennessee marked a pivotal move, expanding its geographic footprint and operational capacity. This deal added 300 employees and extended operations from Knoxville to Memphis, complementing existing assets in Nashville. CEO Fred J. Smith III emphasized that PRI’s leadership and alignment with CPI’s safety-first culture position the firm to capitalize on Tennessee’s booming infrastructure spending, fueled by state and federal funding.

The Sunbelt region’s population growth, commercial development, and public infrastructure projects remain key drivers. CPI’s vertically integrated model—combining asphalt plants, aggregate facilities, and construction crews—enables cost efficiency and scalability, as seen in its 12.1% EBITDA margin, up from 7.9% in 2024.

Outlook and Guidance

CPI raised its full-year fiscal 2025 guidance, reflecting confidence in its growth trajectory:
- Revenue: $2.77–2.83 billion (up from prior estimates).
- Adjusted EBITDA: $410–430 million (margin of 14.8%–15.2%).
- Net Income: $106–117 million.

Analysts are bullish: the average 12-month price target stands at $103.97, implying a 15.6% upside from the current price of $89.93.

Risks and Challenges

Despite strong results, risks persist. CPI’s reliance on government funding and permits could face delays, while supply chain disruptions and inflation remain threats. The company also carries $1.4 billion in debt, though management maintains strong bonding capacity to fund projects.

Conclusion

Construction Partners’ Q2 results reflect a company in prime position to capitalize on the infrastructure boom. With a record backlog, strategic acquisitions, and margin expansion, CPI is well-equipped to sustain growth in its high-demand Sunbelt markets.

The stock’s $103.97 price target and 12.1% EBITDA margin signal investor confidence in CPI’s ability to convert its geographic and operational advantages into long-term value. While risks such as regulatory hurdles and economic headwinds linger, the company’s execution to date—driven by disciplined acquisitions and cost management—supports a buy stance for investors focused on the U.S. infrastructure sector.

Key Data Points:
- Revenue Growth: 54% Y/Y (Q2 2025).
- Backlog: $2.84B (up 60% Y/Y).
- Adjusted EBITDA Margin: 12.1% (vs. 7.9% in 2024).
- Analyst Target: $103.97 (15.6% upside from $89.93).

As the U.S. prioritizes infrastructure investment, Construction Partners’ execution and scale make it a compelling play on this multiyear trend.