Construction Partners is growing. Why is profit below plan?
The road builder still expects strong annual growth. A comparison with its August targets shows how much profitability weakened in the final stretch.
Construction Partners' preliminary results put net income for fiscal 2026 at $141.5 million to $142.5 million. That is well below the $165 million to $168 million it forecast in August.
Research by Ticker Byline shows that the road builder's annual sales estimate still fits its August forecast, while its net-income estimate has dropped about 15% at the midpoint.
More revenue, less profit than planned
On November 5, Construction Partners put revenue for the year ended September 30 at $3.66 billion to $3.68 billion. In August, it had expected $3.64 billion to $3.68 billion.
The gap also appears in adjusted EBITDA, a profit measure that adds back interest, taxes and certain expenses such as depreciation, amortization and stock-based compensation. The latest estimate is $520 million to $524 million, against the August target of $559 million to $569 million.
Its adjusted EBITDA margin, the share of revenue represented by that measure, is now estimated at 14.21% to 14.24%. The August target was 15.36% to 15.46%.
Annual earnings are still set to rise about 40% from fiscal 2025, when net income was $101.8 million. Revenue is up about 30%. The shortfall is against the company's own summer plan.
Rain, diesel and a slower margin recovery
Management pointed to unusually wet weather in July across several of its largest markets and a rapid increase in diesel costs. Both affected profitability as the fiscal year ended.
Higher fuel costs also weighed on Knife River’s contracting margins.
Construction Partners expects improvement in the second half of fiscal 2027 as it finishes lower-margin projects inherited through acquisitions and replaces them with higher-margin work. It also expects higher diesel costs to work their way into project pricing.
Its new annual outlook calls for revenue of $4.175 billion to $4.275 billion and adjusted EBITDA of $585 million to $620 million. The adjusted EBITDA margin range is 14% to 14.5%, below the level it had previously targeted for fiscal 2026.
The acquisition engine keeps running
Construction Partners says it completed seven acquisitions during fiscal 2026, alongside 7% organic revenue growth. Two deals followed the August forecast: Asphalt Express in Oklahoma and Roads, Inc. of NWF in Florida.
It has already added three more businesses in the new fiscal year, including Piedmont Paving in Georgia, announced on November 4. The company has scheduled its year-end results call for November 19.
The Construction Partners company profile follows the latest estimates, earlier quarterly results, financing and completed acquisitions.