Construction Partners (ROAD) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Lone Star Paving expands into Texas, adding three of the fastest-growing metro areas and aligning with long-term Sunbelt growth strategy and cultural fit.

• Lone Star's vertical integration, strong management, and operational excellence support scalable growth and margin expansion.

• Transaction accelerates ROAD-Map 2027 goals, enabling earlier achievement of targeted EBITDA margins.

• Texas offers significant infrastructure funding and a business-friendly environment, enhancing growth prospects.

• Lone Star's established brand and experienced management team support further growth in central Texas and beyond.

Financial terms and conditions

• Purchase price is $654 million in cash plus 3 million Class A shares, with cash financed through a new term loan facility.

• Additional $30 million in cash for certain real property, contingent on governmental entitlements.

• Working capital at closing to be paid in four quarterly installments post-closing, subject to adjustments.

• Transaction expected to close in Q1 FY25 and be immediately accretive to earnings.

• Pro forma debt to EBITDA ratio will be 3.5x, targeted to return to 1.5–2.5x within 4–6 quarters.

Synergies and expected cost savings

• Lone Star's business model mirrors existing operations, enabling seamless integration and scalability.

• Vertical integration allows internal sourcing of 33% of aggregates and 90–95% of liquid asphalt, supporting high margins and reducing supply chain volatility.

• Combined entity expected to generate $338–368 million in Adjusted EBITDA in FY25.

• Acquisition expected to be immediately accretive to earnings upon closing.

• Enables achievement of 13–14% EBITDA margin goal in fiscal 2025, two years ahead of schedule.