Construction Partners (ROAD) Baird 2024 Global Industrials Conference summary

Business overview and recent expansion

• Expanded operations to Texas, now active in seven Sunbelt states and 65-75 local markets.

• Focuses on road maintenance, construction, and turnkey site work for commercial projects, centering markets around hot-mix asphalt plants.

• Emphasizes a local, platform-based business model, with each state having a key management team.

• Recently acquired Lone Star Paving, a major player in Central Texas, accelerating growth plans.

Strategic plan and financial targets

• Roadmap 2027 targets $2.7–$3.2 billion in revenue and 13–14% EBITDA margin by 2027.

• Fiscal 2024 revenue reached $1.823 billion with a 12.1% EBITDA margin, reflecting 17% year-over-year growth.

• 2025 guidance midpoint is $2.6 billion in revenue and 14.3% EBITDA margin, incorporating Lone Star acquisition.

• Growth strategy combines 10% organic and 10% inorganic (acquisition-driven) expansion annually.

Lone Star acquisition impact

• Lone Star Paving adds $530 million in revenue and $120 million in EBITDA, with a 22.5% margin.

• Acquisition accelerates progress toward 2027 goals by several years.

• Lone Star’s high margins stem from market consolidation, vertical integration, and access to aggregate and liquid asphalt facilities.

• Purchase price was $654 million in cash and 3 million shares, with a multiple of about 7.5x EBITDA.