Construction Partners Inc Soars on Acquisitions and Strong Backlog: A Sunny Outlook for the Sunbelt Contractor

Construction Partners Inc (CPI) delivered a blockbuster quarter on May 9, 2025, as surging infrastructure demand, strategic acquisitions, and a record backlog fueled its strongest financial performance in years. The company’s Q2 2025 results, highlighted by a 54% revenue jump and a revised upward outlook, underscore its dominance in the Sunbelt region’s booming construction sector. Here’s what investors need to know.

Financial Breakdown: A Turnaround Story

CPI’s Q2 revenue surged to $571.7 million, a staggering 54% increase from the prior year. This growth was driven by both organic expansion (7%) and acquisitions (47%), with the purchase of Professional Road Industries (PRI) in Tennessee proving pivotal. Net income flipped from a $1.1 million loss in Q2 2024 to a profit of $4.2 million, while Adjusted EBITDA soared to $69.3 million, a 135% year-over-year jump. The adjusted EBITDA margin also expanded to 12.1%, reflecting improved cost discipline.

Strategic Acquisitions and Sunbelt Expansion

The PRI acquisition, finalized earlier this year, added nearly 300 employees and bolstered CPI’s presence in Tennessee, a state experiencing rapid economic growth and robust transportation funding. CEO Fred Smith emphasized that the deal exemplifies CPI’s “acquisition-led growth strategy”, which pairs well with organic expansion and greenfield projects.

The company also raised its full-year 2025 guidance, projecting revenue of $2.77–$2.83 billion, up from its prior outlook of $2.5–$2.6 billion. Net income is now expected to reach $106–$117 million, while Adjusted EBITDA is targeted at $410–$430 million—a reflection of its confidence in executing its growth roadmap.

Backlog at Record Levels: A Signal of Future Strength

CPI’s backlog—the value of projects already contracted but not yet completed—hit an all-time high of $2.84 billion, up 60% from Q2 2024. This figure is particularly significant because it represents guaranteed revenue in upcoming quarters. Management noted that the backlog includes major public infrastructure projects in Sunbelt states like Florida, Texas, and Georgia, where population growth and federal/state funding are fueling demand.

Balance Sheet and Risks

While CPI’s growth is impressive, its debt load has risen sharply to $1.32 billion, reflecting the costs of acquisitions and expansion. However, CFO Gregory Hoffman stressed that the company’s strong cash flow and “vertically integrated” business model—combining construction, asphalt production, and aggregate operations—allow it to manage this debt effectively.

Risks remain, including weather disruptions and supply chain volatility. CPI’s reliance on government infrastructure projects also ties its fortunes to political and regulatory stability, though federal funding for roads and bridges has remained a bipartisan priority.

Investor Takeaways

CPI’s Q2 results and revised guidance paint a compelling picture for long-term investors. The company’s ability to leverage both organic growth and acquisitions in high-demand markets positions it to capitalize on the $3.5 trillion infrastructure bill passed by Congress in 2021. With a backlog up 60% year-over-year and a management team focused on disciplined growth, CPI appears well-equipped to navigate risks and sustain momentum.

The stock’s performance, however, will hinge on execution. While CPI’s shares have risen steadily over the past year, investors should monitor debt levels and the timing of backlog conversion into revenue.

Conclusion

Construction Partners Inc’s Q2 results mark a pivotal moment for the company. With a record backlog, strategic acquisitions, and a Sunbelt market poised for sustained growth, CPI is a prime example of a contractor thriving in an era of infrastructure investment. While debt and macroeconomic risks linger, the data—54% revenue growth, a 135% EBITDA surge, and a backlog up to $2.84 billion—suggests this is a story worth watching. For investors seeking exposure to U.S. infrastructure, CPI’s execution of its growth strategy could prove a solid bet.

Disclosure: This analysis is for informational purposes only and should not be construed as financial advice.