"Cardinal Infrastructure Group" Full Year 2025 Earnings Call - Record $682M Backlog and M&A plus vertical integration power a 2026 guide above 20% adjusted EBITDA

Operator: Morning, ladies and gentlemen, and welcome to Cardinal Infrastructure Group’s full year 2025 earnings conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Emily Lear, Director of Investor Relations. Please go ahead, ma’am.

Emily Lear, Director of Investor Relations, Cardinal Infrastructure Group: Good morning, everyone, and welcome to Cardinal Infrastructure Group’s full year 2025 earnings conference call and webcast. I’m pleased to be here today to discuss our results with Jeremy Spivey, Cardinal’s Chairman and Chief Executive Officer, and Mike Rowe, Cardinal’s Chief Financial Officer. Please note that there are accompanying slides available on the Events and Presentations section of our corporate website. Today’s call will present certain non-GAAP financial measures. It will also include forward-looking statements as defined by United States securities laws. These statements relate to future events, operating results, or financial performance, and are subject to risks and uncertainties that could cause actual results to differ materially. Cardinal Infrastructure Group undertakes no obligation to publicly update or revise any forward-looking statements except as legally required, whether due to new information, future developments, or otherwise.

Information regarding these factors that may cause actual results to differ materially from these forward-looking statements is available in company’s SEC filings. With that, I’ll now turn the call over to Jeremy.

Jeremy Spivey, Chairman and Chief Executive Officer, Cardinal Infrastructure Group: Thank you, Emily. Good morning, everyone, and thank you for joining us today. 2025 was a landmark year for Cardinal. We delivered very strong revenue growth, closed three acquisitions, and finished the year with a record $682 million backlog, a company record. To top it all off, we completed our IPO in December. None of that happens without an exceptional team, and I want to acknowledge the Cardinal employees whose commitment to our customers, this company, and to each other made this year possible. For the full year 2025, revenue increased 45% to $456 million. Organically, our business grew approximately 33% year-over-year. Top line growth was broad-based across our residential, commercial, DOT municipal, and paving end markets, demonstrating meaningful progress in diversifying our end-use markets and customer base.

The demand environment across our core geography is as strong as we have seen. Population migration into the Southeast continues to outpace national averages, and our customers are communicating capital deployment plans that extend well into the latter part of this decade. On the commercial side, reshoring and advanced manufacturing investment is translating into robust project pipelines, and the scope of individual projects continues to grow. The need for vertically integrated, experienced, and trusted contractors who can execute timely at scale is only becoming more critical. Because of that, we are well positioned to be that partner. Our workforce grew meaningfully in 2025, both through our acquisitions and organically, and we continue to attract professionals who want to be part of what we are building.

Labor availability is a real constraint across our industry, and while we are not immune to that, we feel well-positioned relative to the opportunity in front of us. In 2025, we closed on three great acquisitions. Purcell Construction in Charlotte, Page and Associates in Greensboro, and Charlotte-based Red Clay Industries, which expanded our paving and services capability across North and South Carolina. Three acquisitions in a single year is a meaningful test for any organization’s integration capacity. Our team executed well and all three businesses are operational and contributing under Cardinal’s growth model. We have built a culture of accountability, safety, and consistency that we believe translates directly into execution quality and positive customer outcomes. That culture is what makes this kind of growth sustainable. Subsequent to year-end on February eighteenth, we closed the acquisition of A.L. Grading Contractors, our largest and most strategically significant acquisition to date.

A fourth-generation site development business in Sugar Hill, Georgia, ALGC provides services including grading, underground utilities, and clearing for large-scale commercial, industrial, and residential projects across Georgia and South Carolina. They bring approximately $160 million in annual revenue at a profile that is meaningfully accretive to our consolidated business. This transaction marks Cardinal’s first expansion outside of the Carolinas and is a deliberate step in our strategy to build density through expansion and vertical integration in high-growth Southeast markets, where population and development trends are most compelling. Given the strength of our platform and our recent ALGC acquisition, we are guiding full year 2026 revenues in the range of $664.9 million-$678.3 million with adjusted EBITDA margins above 20%. Mike will walk through the details a bit later.

We enter 2026 with a record backlog, a broader platform than we have ever had, and a team that has proven it can execute through a year as demanding as 2025 was. The demand environment across our markets is strong, and we have good visibility into the year ahead. I founded this business because I believed in what we could build, and sitting here today, I could not be more proud of where we are or more excited about the opportunity ahead of us. With that, I’ll turn it over to Mike.

Mike Rowe, Chief Financial Officer, Cardinal Infrastructure Group: Thank you, Jeremy, and good morning, everyone. I will begin with a review of our full year financial results before covering our outlook for 2026.

For the full year 2025, revenue was $456 million, an increase of 45% compared to 2024. The increase was driven by 33% organic growth as residential and commercial demand continued to scale across our core markets, complemented by LePage, Purcell, and Red Clay acquisitions completed in the year. Gross profits were $64 million compared to $47 million in the prior year. On an adjusted basis, gross profits was $96 million, or a 21.1% margin, up 40 basis points year-over-year, reflecting execution quality and scale benefits realized throughout the year. General and administrative expenses for the full year was $23 million, or 5% of revenue. The year-over-year increase reflects $8.5 million in non-recurring costs associated with recent acquisitions and the build-out of our public company infrastructure ahead of and following our IPO.

Excluding non-reoccurring impacts, continuing general and administrative expenses were 3.3% of revenue compared to 3.4% in 2024. Full year, we reported approximately $72 million in EBITDA, or 15.8% margins, and adjusted EBITDA of $81.5 million, a 44% increase compared to 2024, with an adjusted EBITDA margin of 17.9%. Turning to cash flow. Cash flow from operating activities were approximately $38 million for the full year, reflected solid working capital management through the IPO process. Capital expenditures were approximately $44 million, elevated relative to prior periods as we began construction of our asphalt manufacturing plant, invested in fleet to support the recent acquisition growth. Both delivered investments in the long-term capacity of the platform.

The asphalt plant, which we’re expecting to bring online towards the end of the second quarter, is a vertical integration initiative that minimizes our reliance on third-party asphalt supply in the Raleigh market and positions us to serve external customers as well. We intentionally deployed capital in 2025 to build infrastructure that we expect to generate returns for years to come. Turning to the balance sheet. During the year, we raised nearly $140 million through financing activities, including IPO proceeds and our credit facility, and we deployed over $101 million against in-year acquisitions and elevated capital expenditures I just described. We ended the year with $120 million outstanding on our term loan and nothing drawn down on our $75 million revolving credit facility, resulting in a year-end net leverage of 0.4x.

Subsequent to year-end, we amended our credit facilities to provide an incremental $80 million to fund the ALGC acquisition. On a pro forma basis, including ALGC, net leverage is approximately 1.27x, well below our covenant of 2.5x, leaving us with meaningful capacity to continue executing on our growth strategy. We are comfortable with our current capital structure, and we believe it is well suited to support both organic growth and continued M&A activity. Finally, our 2026 guidance. As Jeremy mentioned, we are reiterating our full-year 2026 guidance ranges, which we first provided with the ALGC acquisition announcement on February 18. Revenue is expected to be in the range of $664.9 million-$678.3 million, and we expect adjusted EBITDA margins of 20% or above.

This margin profile represents meaningful expansion relative to 2025, and we see a clear path to getting there. The ALGC carries an adjusted EBITDA margin profile that is meaningfully accretive to our consolidated business, and we are executing on our vertical integration strategy that reduces our reliance on third-party suppliers and contractors, improves input cost control, and expands the scope of what we can self-perform on any given project. Combined with the underlying strength of our core business, we believe the margin profile we are guiding to is achievable and sustainable. Our year-end backlog of $682 million represents a 1.5x our 2025 revenue, providing strong coverage for our 2026 guidance and good visibility to the cadence of the year.

We expect 2026 capital expenditures of approximately $58 million as we complete construction of our asphalt manufacturing facility and continue to upgrade the Cardinal fleet and remain active in evaluating strategic acquisitions. Thinking about the cadence of the year, consistent with typical construction seasonality, we expect 40%-45% of revenue to be recognized in the first half, with the first quarter being our seasonal low point for both revenue and profitability, accelerating through the third quarter, historically our strongest, as crews take full advantage of the summer weather. With that, let’s go ahead and open up to questions.

Operator: Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please limit yourself to one question and one follow-up. One moment for our first question. Our first question is gonna come from the line of Brian Brophy with Stifel. Your line is open. Please go ahead.

Brian Brophy, Analyst, Stifel: Yeah, thanks. Good morning, everybody. Congrats on the nice quarter and great start here. Just wanted to ask on the demand environment, particularly on the housing side. Obviously, the headlines there continue to be softer, but your award and backlog activity continues to be quite healthy, and it sounds like the bidding environment continues to be strong as well. Can you just talk about what you’re seeing out there from a demand perspective, both in North Carolina and Georgia? What do you think is driving some of the disconnect between what you’re seeing and some of the headlines? Is it share gains? Is it continued geographic expansion? Are we seeing more commercial and state DOT work in the backlog? Appreciate any thoughts. Thanks.

Jeremy Spivey, Chairman and Chief Executive Officer, Cardinal Infrastructure Group: Hey, Brian, this is Jeremy. How you doing? I hope you’re doing well. I appreciate the question. It’s a fair question. It’s something that we watch closely. Obviously, we operate the markets that we operate in the Carolinas and in Georgia are attractive markets in the Southeast, where net migration is positive. We continue to have an undersupply of housing and an overdemand for said housing. You know, the Carolinas in general, both North and South Carolina have been flat year-over-year to slightly up, and Georgia is falling in the same boat, more towards the flat. As market conditions, there’s some tailwinds coming with interest rates and some things that the administration is doing to tee up housing to hopefully trend in the right direction.

The headwinds, as we see it, are the geopolitical things happening that are having uncertainty with inflation as it relates to materials and other things that impact trades as they go vertical. Our backlog, our pipeline and visibility in the markets that we operate are very strong. You know, as you and I have discussed in previous conversations, we are privy to a backlog well in advance of projects coming to fruition because of our ability to help and assist clients with underwriting of projects and moving through the entitlement process with value engineering and certain resources that we’re able to provide to help make projects come to life. We see a strong growth ahead of us.

We have a robust pipeline. I’m very excited about what’s coming, about the things that are in the hopper. All said and done, we continue to operate in the best market in the United States. When you look macro at the news, you’re gonna see a macro analysis of the housing in general. If you zero in on the Southeast and specifically the states that we operate in, it’s far less negative than what you’re seeing in the public.

Brian Brophy, Analyst, Stifel: Yeah, that’s really helpful. Then as my follow-up, you touched on this a little bit, but can you remind us how much diesel is as a percentage of your COGS, and to what extent are you guys protected from some of the rise in diesel we’ve seen here recently?

Jeremy Spivey, Chairman and Chief Executive Officer, Cardinal Infrastructure Group: Yeah. We have clauses in our contracts that allow for us to have any kind of major adjustment that wasn’t in our numbers to you know do a change order for, but we’re not seeing that much yet. We don’t expect it to be anything that’s gonna make us change our guidance whatsoever. As a percentage, I can’t really tell you what it is, but we’re not worried about our guidance.

Brian Brophy, Analyst, Stifel: Appreciate it. I’ll pass it on.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Noah Levitz with William Blair. Your line is open. Please go ahead.

Noah Levitz, Analyst, William Blair: Great. Jeremy, Mike, and Emily, good morning, and congrats on the great results. To start off, I just wanted to confirm, fourth quarter revenue and EBITDA. It seems as if it came in roughly $146 million on the top line with EBITDA of $26 million. Just off of that, it implies roughly flattish margins for the quarter, relative to the full year. I just wanted to you know split out the disconnect for the guidance between, you know, how much of that greater than 20% is coming from ALGC, which is obviously very accretive, and then how much are you kind of baking in on the organic side, with synergies from like the Red Clay acquisition, the asphalt plant coming online, operational efficiencies and whatnot? Thanks.

Jeremy Spivey, Chairman and Chief Executive Officer, Cardinal Infrastructure Group: Yeah. I can confirm what you said for the fourth quarter, and great volume, and it helped us with obviously the adjusted EBITDA. In terms of projected margins, we don’t split it out, but we have three things that are gonna help us to get to the 20%. Obviously, we already mentioned in our February 26th 8-K that we were on a company that had 26.3% adjusted gross margin. That’s very accretive. Second, we’re continuing to do vertical integration, and as vertical integration is gonna continue to improve our margins.

Finally, the final thing I’ll add to that is that, you know, we are still getting pick up through drop through and everything through our volumes and our business and what we’re doing inside Cardinal Civil and the Carolinas division. The asphalt plant is another thing I’d add to it too as well. The asphalt plant is absolutely something that we’re gonna see pick up in our margin as well.

Noah Levitz, Analyst, William Blair: Great. Thanks. A follow-up from me. The 33% organic growth is, you know, exceptional, really strong. Can we just break that down a bit, by geography? Obviously, you have greater market share in Raleigh, and then you go Charlotte and Greensboro. Just trying to, you know, explain the growth rates, especially in Raleigh, given how much market share you have. Just off of that, ALGC is based in the Greater Atlanta area. Would you say that that growth is more, you know, relative to Raleigh, similar to Raleigh? And is that how we should be looking at the growth of the ALGC business? Thanks.

Mike Rowe, Chief Financial Officer, Cardinal Infrastructure Group: I’ll try to answer all that. That’s a good question. Fair question, too. Listen, Raleigh, we don’t see any slowing down whatsoever. I can confirm we’re gonna grow 20%+, and Charlotte’s growing at 45%, up over 30% from the previous year. We’re growing faster in Charlotte than we are in Raleigh. You’d expect that, it’s a newer market. And then, ALGC in Georgia, yes, they are absolutely. You can think of them in the same way you think of Raleigh. They’re gonna grow in that same vein. Maybe not in the same level we have, but they’re gonna continue to grow. Yeah.

Jeremy Spivey, Chairman and Chief Executive Officer, Cardinal Infrastructure Group: Operationally, Noah, hope you’re doing well. Operationally, Raleigh’s a more mature market for us. Obviously, it’s where we started. We spent a lot of time here integrating, capturing market share. We’re now, you know, in the Raleigh market, we’re diversifying end markets, so we’re having some good growth there. The Greensboro market’s very new for us. You know, we have a long, long runway there as that starts to evolve into an attractive market for infill. There, there’s a lot to come in that market. For Charlotte, you know, we’re still capturing market share on the residential side. We just got to where we’re fully integrated with services, and now we’re starting to diversify end markets.

You know, if you look at an opportunity in the Carolinas, we have a ton of runway in the Charlotte market to get to a maturity level that we are here in the Triangle and the Raleigh market. As it relates to Georgia, you know, Georgia is a multigenerational business that’s been operating at the same level for years, with no movement on integration or growth or expansion, or diversification in end markets. As we get into that business and you know, obviously, with the acquisition, our visions align with the ownership there, who’s staying on board to help execute the plan. The goal there is to do what we’ve done in Raleigh, and it’s a much bigger market.

As we start to layer in all the vertical services and get fully integrated, then we start with the regional expansion in the Georgia market. There’s years of growth opportunity to come for us there in Charlotte and in the Greensboro markets.

Noah Levitz, Analyst, William Blair: Great. Exciting times ahead. Thanks for taking my questions, and congrats on your first quarter as a public company.

Jeremy Spivey, Chairman and Chief Executive Officer, Cardinal Infrastructure Group: Thank you, Noah. Appreciate it.

Mike Rowe, Chief Financial Officer, Cardinal Infrastructure Group: Thank you, Noah.

Operator: Thank you. I would now like to hand the conference back to Jeremy for closing remarks.

Jeremy Spivey, Chairman and Chief Executive Officer, Cardinal Infrastructure Group: Thank you, operator, and thank you all again for joining us this morning. I want to reiterate my gratitude to the entire Cardinal team for an outstanding 2025 and for all they have done to lay the groundwork for what promises to be a tremendous 2026. Their commitment to safety, dedication to our customers, pride in the quality of the work, and belief in the culture that we have created is what this company is built on. I’d also like to give a special recognition to the entire accounting team, investor relations, and general counsel. Their hard work helped make our first earnings call a great success. I hope you all thought that the quality of information delivered to be as strong as I did. We look forward to building on the foundation that this incredible team has established in 2026 and beyond.

Thank you, and I hope you all have a great day.

Operator: Ladies and gentlemen, this does conclude today’s conference call. We thank you for your participation. You may now disconnect. Have a great day.