Construction Partners, Inc. (NASDAQ:ROAD) Q4 2025 Earnings Call Transcript

Construction Partners, Inc. (NASDAQ:ROAD) Q4 2025 Earnings Call Transcript November 20, 2025

Construction Partners, Inc. misses on earnings expectations. Reported EPS is $1.01 EPS, expectations were $1.11.

Operator: Greetings. Welcome to Construction Partners Fourth 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. If anyone should require operator assistance, as a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Black, Investor Relations. Thank you. You may begin.

Rick Black: Thank you, operator, and good morning, everyone. We appreciate you joining us for the Construction Partners conference call to review fiscal fourth quarter and year-end financial results for fiscal 2025. 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, 11/20/2025. So please be advised that any time-sensitive information may no longer be accurate as of the date of any replay listening or transcript reading. I would also like to remind you that statements made in today’s discussion 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. Management 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 press release. Construction Partners assumes no obligation to publicly update or revise any forward-looking statements. And now I would like to turn the call over to Construction Partners’ CEO, Jules Smith.

Jules?

Jules Smith: Thank you, Rick, and good morning, everyone. We appreciate you joining us on the call today. With me this morning is Greg Hoffman, our Chief Financial Officer, and Ned Fleming, our Executive Chairman. I’d like to begin today by thanking the more than 6,800 employees in our family of companies for their hard work and dedication in fiscal 2025. A truly transformational year at CPI. Early in the year, we entered the states of Texas and Oklahoma through strategic platform acquisitions, and in May, we established a platform company in Tennessee. We also acquired two substantial subsidiary brands in the dynamic markets of Mobile, Alabama, and Houston, Texas. These five acquisitions, along with organic growth of 8.4%, transformed our top line with 54% total revenue growth.

Even more importantly, we transformed our bottom line with a 92% increase in EBITDA year over year and a record EBITDA margin of 15%. Finally, we ended fiscal year 2025 with a record project backlog of $3 billion. Our people and the culture they create and maintain are the key to our business and the primary differentiator for CPI in our more than 100 local markets, and as a buyer of choice for new acquisitions. As a family of companies, we strive to live out our core values: family and respect, which create an incredible place to work together each day. In addition, our growth strategy delivers on our core value of opportunity by providing numerous pathways for teammates to advance their careers and build better lives. Our final core value is excellence, the daily challenge to do ordinary things extraordinarily well.

And our entire team truly delivered excellence in 2025. Turning now to the New Year, I’m pleased to report that fiscal year 2026 has commenced at full speed with two large and significant acquisitions completed in the month of October. On October 20, we announced the acquisition of P and S Paving in Daytona Beach, Florida. P and S has dominant market share in a very fast-growing part of our country, the East Coast of Florida. They’re led by a great management team, Tim Phillips and Curtis Long. Under their leadership, we are well-positioned to grow organically north and south along Florida’s dynamic East Coast. P and S is a great example of our strategy to get into the right markets with the right partner. Now let’s shift and talk about Texas.

We began fiscal 2025 with the acquisition of Lone Star Paving, which was clearly a big step for CPI to enter Texas. Lone Star is a platform company that has an excellent management team who is ready to take advantage of the growth opportunities in the fastest-growing state in the country. In August, we entered the Houston market with the Durwood Green acquisition. Durwood Green is led by an excellent management team whose President, Brad Green, along with Jonathan and Daniel Green, are all third-generation leaders and owners of the company. The Houston Metro Area population is more than many states. In addition, the geography is broad, and its growth rate is number two in the country. Again, we invested in the right market with the right partner.

In October, we were able to significantly expand our Houston operation under Durwood Green by acquiring eight hot mix asphalt plants and construction crews and equipment from Vulcan Materials. This transaction builds scale in the market and provides the ability to have even more throughput and margin at the liquid asphalt terminal in Houston. In the span of three months, we entered and then tripled our relative market share in Houston, creating an excellent opportunity to grow margins in that market. Last month, on October 22, we hosted our second-ever Analyst Day in Raleigh, North Carolina. The webcast and presentation from that event are still available on our site. During our presentation that day, we reported that CPI eclipsed the Roadmap 2027 goals set forth in our five-year plan just 24 months prior.

We achieved our goals two years earlier than planned, and we felt it was important to provide updated goals to the market. A five-year strategic plan called Road 2030. Same strategy just as it was for Roadmap 2027. Road 2030 positions CPI for continued growth and margin expansion. After a 23% budgeted growth year in 2026, we target to double the company again to more than $6 billion in revenue by 2030. We expect to expand EBITDA margins by 30 basis points in fiscal year 2026 and 30 to 50 basis points annually thereafter, reaching a 17% EBITDA margin by the end of the plan period. With margins expanding and the top line compounding, our adjusted EBITDA is projected to grow from $423 million in fiscal year 2025 to more than $1 billion by 2030, an 18% compound annual growth rate.

Road 2030 more than doubles the size of our company while staying in the Sunbelt reflects the strength of our business model, the demand across the Sunbelt, and the opportunities we continue to unlock through pursuing both operational excellence and strategic growth initiatives. Looking ahead to 2026 and supporting our five-year plan, our four macro trends that you’ve heard us talk about but they’re still powerful, and we believe will continue to drive growth for our company. The first is the continued migration to the Sunbelt that has accelerated since COVID. Both people and businesses moving to CPI states. This drives demand for private construction, including not only factories and corporate campuses but numerous data center projects. That CPI is well-positioned to build out a complete site infrastructure.

As the private economy grows, our states are making sure that public infrastructure investment keeps up with the growth. This week, I attended a panel discussion of Sunbelt state governors talking about the importance of infrastructure staying ahead of the growth and the proactive measures they were taking to successfully support and fund the infrastructure of a growing economy for the foreseeable future. The second macro trend that is driving this growth is the reshoring of companies moving their manufacturing facilities and business to the Sunbelt because they want to strengthen their supply chains and avoid tariffs. This reshoring trend in America will mean continued growth in the Sunbelt, and CPI is well-positioned to build those projects.

The third macro trend is related to funding. Both the federal and state governments are investing in infrastructure, and that’s going to continue. We see strong public contract bidding throughout our eight states and over 100 local markets. Expect contract awards in FY ’26 to increase approximately 15% over FY 2025. This is particularly true for the small recurring maintenance projects that represent a large majority of the company’s work. 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 will still take a few more years to be spent. On Capitol Hill, both houses of Congress continue to work with Secretary Duffy on the five-year reauthorization of the surface transportation program.

We expect this bill to be voted on by Spring as this administration continues to prioritize hard infrastructure investments and decreased permitting delays, necessary to support a growing economy. And the final trend is part of our acquisition strategy. Which is we operate in a very fragmented industry of local market players composed primarily of family-owned companies. And this industry is going through a generational transition. As many private owners are getting to retirement age, CPI’s opportunity to have conversations with sellers throughout the Sunbelt continues to grow. Before turning the call over to Greg, to review the financial results for FY 2025, I want to emphasize that as we begin in fiscal year, we remain focused on executing our record backlog in the field and evaluating growth opportunities throughout our Sunbelt footprint.

We also remain focused on the crucial long-term challenge of attracting and retaining the best workforce. We will continue to create a competitive advantage by providing our employees with both attractive career growth and a distinct family of companies culture. At CPI, we know that our people are the key driver to grow our business and create outstanding shareholder value. I’d now like to turn the call over to Greg.

Gregory A. Hoffman: Thank you, Jules. Good morning, everyone. As Jules mentioned, we had a strong finish to our fiscal year with a great fourth quarter that represented revenue of $900 million, an increase of 67% compared to the same quarter last year, of which 10.4% was organic revenue growth. Adjusted EBITDA in Q4 was $154 million, which was twice as much as Q4 last year. Adjusted EBITDA margin for Q4 was 17.1%. Now I will review our key performance metrics for the fiscal year before discussing our outlook for fiscal 2026. Revenue was $2.812 billion, an increase of 54% compared to last year. The breakdown of this revenue growth for the year was 8.4% organic growth and 45.6% acquisitive growth. Gross profit in fiscal 2025 was $439.1 million, an increase of approximately 70% compared to last year.

As a percentage of total revenues, gross profit was 15.6% compared to 14.2% last year. General and administrative expenses as a percentage of total revenue in fiscal 2025 decreased to 7.1% compared to 8.1% last year. Net income was $101.8 million, an increase of 48% compared to last year. Adjusted net income was $122 million, an increase of 73% compared to fiscal 2024. Adjusted EBITDA was $423.7 million, an increase of 92% compared to last year. Adjusted EBITDA margin was 15%, compared to 12.1% in fiscal 2024. You can find GAAP to non-GAAP reconciliation of net income and adjusted EBITDA financial measures at the end of today’s earnings release. Turning now to the balance sheet. We had $156 million of cash and cash equivalents and $303.5 million available under our credit facility at fiscal year-end, net of a reduction for outstanding letters of credit.

As a reminder, on June 30, we amended our credit agreement by providing for a total facility size of $1.1 billion consisting of a term loan in the amount of $600 million and a revolving credit facility in the amount of $500 million. We utilized the proceeds from the increased term loan to pay down the then-outstanding balance on the revolving credit facility, realizing the full availability on the facility as of June 30. In addition, the amendment extended the facility maturity date to June 2030. As of the end of the quarter, our debt to trailing twelve months EBITDA ratio was 3.1 times. We remain on pace with our strategy of reducing the leverage ratio to approximately 2.5 times by late 2026 to support sustained profitable growth. In fiscal 2025, cash flow from operations was $291 million, up from $209 million in fiscal 2024.

We continue to expect to convert 75% to 85% of EBITDA to cash flow from operations in fiscal year 2026. Capital expenditures for fiscal 2025 were $137.9 million, within the range we provided of $130 million to $140 million. We expect total capital expenditures for fiscal 2026 to be in the range of $165 million to $185 million. This includes maintenance CapEx of approximately 3.25% of revenue, with the remaining amount invested in high-return growth initiatives. Turning now to our outlook. As we reported last month, here are the ranges for our fiscal year 2026. Revenue in the range of $3.435 billion. Net income in the range of $150 to $155 million. Adjusted net income in the range of $158.1 to $164.2 million. Adjusted EBITDA in the range of $520 million to $540 million.

Adjusted EBITDA margin in the range of 15.3% to 15.4%. Consistent with historical seasonality, we anticipate the first half of the fiscal year to contribute approximately 40% to 42% of annual revenue and 30% to 34% of adjusted EBITDA. In the second half of the year, during our peak construction season, we expect to deliver the remaining 58% to 60% of revenue and 66% to 68% of adjusted EBITDA. Lastly, as Jules mentioned, we entered the New Year with a record project backlog of $3 billion at 09/30/2025. We have approximately 80% to 85% of the next twelve months’ contract revenue covered in backlog. And with that, we will open the call to questions. Operator?

Q&A Session

Operator: Thank you. We will now be conducting a question and answer session. You may press 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset. Our first question is from Kathryn Thompson with Thompson Research Group. Please proceed.

Kathryn Thompson: Good morning.

Jules Smith: Good morning.

Kathryn Thompson: You’ve done a very nice job of meeting the financial goals that you outlined in your previous investor day and late 2030 goals out in late October. And part of that is M&A, which you talked about several acquisitions that you completed recently. So as you build momentum with your growth trajectory and consolidation of the market, could you talk a little bit more about what you’re doing in terms of integration and maybe what’s different today versus, say, five years ago as you’re going down this growth path? In terms of smooth integrations? Thank you.

Jules Smith: Yes, Kathryn, 2025, as you noted, was a transformational year for us. And a lot of that was the acquisitions we did. We’ve been busy, but the strategy that we talked about in October hasn’t changed. We’re gonna look for the right markets with the right partners. The sellers continue to be a generational consolidation. You know, one thing I will say has been busy this year. And Ned, who’s with us, he’s been right there with us on a lot of these acquisitions. So I’d love just to turn that question over to him and get his thoughts on just our acquisitions and strategy. Kathryn, thank you. Thank you for your support. I think that a couple of things start at the big picture. We’ve got a great team that really looks at all the acquisitions.

They understand the strategic benefits of each acquisition. They know how to do diligence so that we end up generally knowing more about the business than the people we’ve purchased it from. They understand the organizational fit and the financial fit. So I think it all begins with having a really a from the opportunity standpoint, we see more opportunities today than we did five years ago. I think it’s important to note that. I think that has to do with the generational transition that’s happening. But the opportunities today, we actually, as we look at it through our acquisition working group, we see more opportunities now than we did five years ago, three years ago, and four years ago. And that in large part is directed because we have a great team that’s out there in the marketplace that people trust.

From an integration standpoint, we’ve always had a theory that if we buy the right companies that have a good cultural fit with management teams that are, I think, good listeners and good learners, that’s easier to integrate. But the other thing that we’ve always done, and we’re better at it today than we’ve ever been, is we’ve included people throughout the company in that integration. It’s not just one group. These people will get to know people that they’re gonna work with through the integration. They’ll get to have people they can call to answer questions in the integration. So for us, I think not better at integration, it’s smoother today than it ever was. It’s also become a real honor for people to get to work on the integration team throughout the company.

So you may have somebody that’s gonna do the same position that you are as we acquire you that you’ll get to know in the process, and you’ll have somebody that actually does that job that you can call and get to know. The last piece of it is that Jules and Greg have done a terrific job of making sure that all the leaders of these businesses have gotten to know each other. They get together quarterly throughout the year to make sure it differs and with different focuses so that everybody knows each other. So when there’s an issue or a problem, it’s not just solved by corporate. It’s solved throughout the organization. And that’s been a real important piece of it as we’ve gone there. But I would just say I am so impressed with the team that Jules put together that acquires these businesses and how we’ve incorporated people throughout the company to integrate it.

Greg and Jules are happy to talk more about that, but I think as a board, or to speak for the board, I would just say we see it being smoother and better than it’s ever been, and we see more opportunities than we ever have.

Kathryn Thompson: Thank you for that. It sounds like you’ve been building your muscle, had a good footprint, but also are building that muscle for integration with the companies you acquire. One follow-up question, then I’ll hop back in the queue. Is just with, you know, the government was shut down for a regular amount of time, but just confirm did that impact your business? Where do you see it going forward in terms of how you plan your business? Thank you.

Jules Smith: Yeah, Kathryn. The government shutdown, you know, we’re glad that everything’s over and we’re back to normal. But the reality is it didn’t really affect our industry because the funds go through the Highway Trust Fund. So we didn’t really see any revenue impact or bidding impact for the forty days that the government was shut down.

Kathryn Thompson: Okay. Perfect. Thanks so much, and best of luck.

Jules Smith: Thank you.

Operator: Our next question is from Tyler Brown with Raymond James. Please proceed.

Tyler Brown: Hey, good morning, guys.

Jules Smith: Morning, Tyler.

Gregory A. Hoffman: Good morning, Tyler.

Tyler Brown: Hey, Jules. I know you addressed it a little bit upfront, but what is the confidence level around getting to a vote on that reauthorization bill by spring? I’m just curious if you’re hearing that from lawmakers. Just it sounds like there’s some real momentum there, but just any other color would be really helpful.

Jules Smith: Sure. Yeah. Tyler, the reality is, as we’ve often said, is the most bipartisan thing in Washington. So that continues to be true. In September, I would have told you that, and this is something I’ve heard from politicians on the hill, they were running ahead of schedule compared to where they historically are on the five-year reauthorization. They were well ahead of schedule. There was momentum. I think the government shutdown has gotten that lead back to where they normally are. So what I’m hearing is that both chambers are working on in committee the bill. They then will turn to, you know, what the pay fors. How they get it paid for, highway trust funds, the major thing, and then the question is how they make up the difference.

They’re working with this administration. You know, I’ve heard good things about just what this administration is prioritizing. They know that they need to spend the money wisely on infrastructure projects that are gonna support the economy. So from what I reported in my prepared remarks is just what I’m hearing is that they’re now shooting for voting to be, you know, done this spring in anticipation of, you know, an October 1 new fiscal year that this five-year plan will start to fund.

Tyler Brown: Okay. That is extremely helpful. Thank you for that. Greg, quick modeling or housekeeping item. But how much rollover M&A revenue should we be modeling just again based on deals that are done to date? And will those be neutral, accretive, or dilutive to margins broadly speaking?

Gregory A. Hoffman: Yeah. So let’s kind of break it down by 2025 acquisitions and then 2026 acquisitions. So the 2025 acquisitions will carry over about $240 to $250 million in revenue. And then acquisitions that occurred here in ’26 will be another $200 million. And I would say that the combined impact of those are neutral to our current margin position and what we projected for ’26.

Tyler Brown: Okay. I would say so. The, you know, just as we said at our Analyst Day, Tyler, you know, the reason our margins have grown, you know, in addition to what our legacy business would have done, these acquisitions we made in 2025 had good margins. And I would say that, you know, we had continued to expect that the businesses we closed in 2026 will be the same way.

Tyler Brown: Okay. Yep. No. Very helpful. And then just if I can squeeze the last one in here on cash flow. So I think it was a little bit slow maybe here late in the fiscal 2025. But it sounds like, Greg, you expect cash from ops to be, again, roughly 80% of EBITDA or in that 75% to 80% range. Right?

Gregory A. Hoffman: Yeah. That’s right. 75% to 85%. As a matter of fact, the last three years on average, were 80% when you total those up. You know, the positive ’25 due to really great weather, really great performance. All also caused really large billings and large cash outflows. So, you know, the cash will come. It’s just, you know, being pushed into the following year.

Tyler Brown: Okay. Great. And then conceptually, and I know we’ll get the detail in the K, but do you still expect to be kind of a de minimis cash taxpayer over the next few years? Is there any change in that big picture?

Gregory A. Hoffman: No. There’s not. You know, we talked a little bit about maybe in the last call, about the one big beautiful bill and what that did to our cash taxes. We talked that maybe that was, like, a $15 to $20 million dollar savings for us this year. And yeah, when you see the 10 K, you’ll see that it was about $5 million in cash taxes where we thought it was gonna be higher because we projected maybe not having, you know, some relief there. But, obviously, we got it. And, yes, going forward, be more of the same.

Tyler Brown: Okay. Alright. Thank you, guys. Appreciate it.

Jules Smith: Thanks, Tyler.

Operator: Our next question is from Michael Feniger with Bank of America. Please proceed.

Michael Feniger: Yes. Thank you, gentlemen, for squeezing me in and taking my question. I apologize if I missed it. You guys have done some transformational M&A. Just Jules, is 2026 a little different in terms of the type of M&A? Is it more bolt-on versus platform? I guess the genesis of the question is, you know, is the focus on ’26 to get that leverage to that two and a half by late ’26, and then you rev up the M&A engine back up again? Or are you kinda trying to fly two planes at once? I think that’s kind of the genesis of the question. You know, given some of the strong M&A you guys have done in the last year or so?

Jules Smith: Yeah, Michael. Good question. I don’t know if we’re trying to fly two planes at once. That sounds a little dangerous. We’re just trying to execute on our strategy. Yeah. Fair. But the reality is 2025 was a, when we say a transformational year, you know, that’s not a normal M&A year. It was a great year. I mean, to do three plus platform acquisitions in one year, that’s not typical. But we just saw the opportunities present themselves with Lone Star, Overland, and PRI. And so, you know, frankly, our guidance for 2026, some of this transformational year is carrying over and affecting our new year in a positive way. You know, for us to be growing 23% already. Our M&A strategy, we continue to talk with a lot of sellers.

I would say right now, we’re having conversations in all eight of the states we’re in at different stages. We’ll continue to try to make good decisions. You know, we don’t close every deal or that with the people we talk with. We try to study and pick the best ones. I would say for 2026, you’re gonna see us continue to do bolt-on acquisitions where we think that the strategy is, the strategic positives are just too much to pass up on. At the same time, as Greg said, we are focused on deleveraging. As the cash flow and the EBITDA rolls through, that should naturally happen. The goal is by late 2026 to be back around that two and a half times leverage.

Michael Feniger: Perfect. And, Jules, just my follow-up, just you kinda talk about what you guys are seeing on the cost inflation side? I would think liquids have been pretty tame. And really, you’re seeing on the pricing side, so that price-cost spread, as you guys kinda roll over into 2026, how you guys are feeling about that? Thanks, everyone.

Jules Smith: Yeah. You know, Michael, it’s 2025, you know, after a couple of years a few years ago of record inflation, 2025 was about the most benign inflation year, you know, we’ve seen in a long time. The construction material cost went up a normal amount, but that’s stuff that we put in our estimates as pass-through, and there were no surprises. There were no real spikes. And then, I’ll let Greg answer for energy. He tracked that pretty closely, but it was really just a very normal year, I would say.

Gregory A. Hoffman: Yeah. I would say that, you know, when you said it, Jules, when you’re talking about inflation and if you see spikes, those are difficult to pass through, but it was pretty steady all year. And energy was no different. Liquid AC, a pretty big component of our cost, was pretty stable all year. Diesel was relatively stable all year. So I think that it was a pretty stable year overall.

Jules Smith: Right. And Michael, I know we’ve talked about labor costs. You know, our labor costs now are going up what you would think in a typical year. That three to 4% that we can easily put in our estimates and predict.

Michael Feniger: Thank you, Jules.

Jules Smith: Alright. Thank you, Michael.

Operator: Our next question is from Adam Thalhimer with Thompson Davis and Company. Please proceed.

Adam Thalhimer: Hey. Good morning, guys.

Jules Smith: Morning, Adam.

Adam Thalhimer: Actually, I wanted to continue on Michael’s pricing question. When you look at recent bids, does it feel like your competitors are pretty full and pricing still healthy?

Jules Smith: I would say so. Yes. You know, the bidding environment, we’re always in a competitive market. And that’s not that’s been the case since we were founded 22 years ago. I will tell you it helps to be in growing markets. And so that’s why when we say we wanna get to the right markets with the right partner, we’d rather be bidding in a growing market where everyone has a chance to fill their backlogs and to bid, you know, patiently. And so feel like that continues to be the case. You know, have a record backlog. But at the same time, you can tell in our guidance that we’re expecting margins to expand and grow. And you can’t do both of those if you don’t have healthy markets to bid in.

Adam Thalhimer: Sounds good. And then, Jules, when you pull your operating guys, what do you hear back from them on private construction demand? How uniform are their responses on that?

Jules Smith: Yeah. The private economy, Adam, I would say, you know, when Greg and I look at the backlog each quarter and we say, okay. What’s the revenue split? I would say, you know, it’s been pretty consistent. Maybe it’s ticked up a little bit a percent or two toward public versus private, but we still got a very healthy, you know, 34 to 35% of our backlog is private. In all 100 of our markets, they’re different economies, microeconomies, to speak. But we still see a lot of demand, as I said, you know, from people and businesses migrating to the Southeast. So we get a lot of opportunities to bid commercial projects. So that really hasn’t changed a lot. You know, we monitor it. We know we’re gonna get asked. But we’re blessed to be in the Sunbelt where there’s still the private economy is growing.

Adam Thalhimer: And just lastly for me, the other thing happening in the Sunbelt is just massive data center construction, and we’re hearing that some of these campuses are just getting larger and larger. And it’s a bit off the wall for you guys, but I’m just curious if those are big enough to actually pull some paving work.

Jules Smith: Oh, yes. You know, I mentioned that in my prepared remarks. You know, we get asked about data centers a lot. That’s not something that we go around specializing in. You know, we’re organized in local markets. But there are data centers being built in a lot of our markets, and we participate in those. We put in the site infrastructure. We build the roads. And you’re right. Some of them are pretty large projects. But for us, they’re similar to, Amazon warehouse or, you know, a distribution facility. The site has to, you know, be cleared, graded, the utilities have to go in, the stormwater has to be maintained, and they have to have a good access road. So, you know, for us, data centers are a good opportunity to build when we can reach them in our local markets.

Adam Thalhimer: Thanks, Jules. Good luck in Q1.

Jules Smith: Alright. Thank you, Adam.

Operator: Our next question is from John Valises with D. A. Davidson. Please proceed.

John Valises: Good morning.

Jules Smith: Morning, John.

Gregory A. Hoffman: Morning, John.

John Valises: Outside any reauthorizations coming from Washington, are there any potential revenue-raising initiatives or ballot measures like a gas tax or sales tax you guys are monitoring across your core markets?

Jules Smith: Yeah, John. I was just, you know, studying that this week. Every one of our states, all eight states in the last year have had multiple ballot initiatives to fund infrastructure. Tennessee had probably the most. We had eight different initiatives. I was just talking to the governor of Tennessee a few days ago about just what his state saw and with the growth and the need to get ahead of it. So they passed the Transportation Modernization Act, which, you know, put billions of dollars toward transportation. They did a one-time transfer of a billion dollars from the general fund this past year. And then things like, they put a tax, like a 1¢ tax or some percent tax on the sale of new and used tires to go toward transportation.

And all of our states in some way have taken steps to fund infrastructure to invest in it. And that’s why I mentioned just in the Sunbelt, they see the growth coming there. They don’t wanna fall behind. And so they’re taking supplemental measures to what the gas tax gives them and what Washington through the surface transportation program gives them.

John Valises: Makes sense. Thank you. And sorry if I missed this. Because you guys talked a little bit about energy pricing and all. But can you perhaps provide a little more color about oil mix prices? And what sort of levels are you guys currently seeing now? And what do you guys expect for fiscal 2026? And is that in any way contemplated in your outlook?

Jules Smith: John, could you repeat that? You broke up a little bit. What specifically were you asking about as far as pricing?

John Valises: Yeah. No problem. I was just asking about what sort of asphalt mix prices are you guys currently seeing today? And what are you expecting in 2026? And then is that in any way contemplated in your fiscal 2026 guidance?

Gregory A. Hoffman: Yeah. So our asphalt, you know, we manufacture it. And so, you know, for us, we’re going to raise prices as we get higher input costs. And, you know, as we can pass that through in our projects. I’ll let Greg speak to what he’s seeing in terms of liquid asphalt, which is a major input cost and aggregates. But for us, hot mix asphalt is, you know, the key thing we produce.

Gregory A. Hoffman: Yeah. As Jules said, we will pass through as we understand what pricing does. With liquid asphalt specifically, the, you know, obviously a pretty big component of our asphalt mix. Most of our states have a liquid AC index that’s pegged to the day you bid the job. So certainly, gives us some cost stability there that we can count on. But, certainly, we’re escalating costs as needed based on, you know, the extent and duration of the job in order to make sure that we’ve got our costs covered in a bid or if we’re pricing out to a customer that’s buying our asphalt third party.

Operator: We have reached the end of our question and answer session. I would like to turn the call back over to management for closing remarks.

Jules Smith: I just wanna thank everyone for being with us. We’re excited that FY 2026 is off and running. Thank you.

Operator: Thank you. This will conclude today’s conference. You may disconnect at this time, and thank you for your participation.