Cardinal Infrastructure Group Inc. Class A Common Stock 2026 Q2 Earnings Call

Please go ahead. Good morning, everyone, and welcome to Cardinal Infrastructure Group's second quarter 2026 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, Benji Wood, Chief Operating Officer, and Mike Rowe, Chief Financial Officer. Please note there are accompanying slides available on the Events and Presentation section of our website. Today's call will present certain non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, and adjusted gross profit. For more information about those non-GAAP financial measures and a reconciliation to the most comparable GAAP measure, please see our earnings release, the accompanying slides posted on our website, and the current Form 10-K filed with the SEC. This information is also available in the Investor Relations section of the Cardinal website. Today's call will also include forward-looking statements as defined by the U.S. securities laws.

These statements relate to future events, operating results, or financial performance and are subject to risks and uncertainty that could cause actual results to differ materially. Cardinal Infrastructure Group takes 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 the company's SEC filings. With that, I'll now turn the call over to Jeremy.

Thank you, Emily. Good morning, everyone, and thank you for joining us today. Before I get into our second quarter results, I wanted to start by covering this morning's acquisition announcement. Today, we announced the acquisition of Allied Paving, based in Atlanta, our ninth acquisition since 2021. We closed our follow-on equity offering just weeks ago, and we're already putting that capital to work quickly and on accretive terms. I'll let Benji cover the specifics of the transaction, but importantly, this deal was sourced and executed by the ALGC leadership team with guidance and a playbook from Cardinal. It's been a little over five months since we closed the ALGC acquisition, and the team in Atlanta has absorbed how we operate. They sat with us through Piedmont Pipe to see how we onboard and integrate, and now they've gone out and found, negotiated, and closed a deal themselves.

That's the best proof point we could ask for, and it's what frees me and the rest of the leadership team to pursue additional organic and M&A opportunities. Now let's get into the quarterly results, starting on slide 4. This was a record quarter for Cardinal. Building on an already strong start to the year, revenue increased 114% from the prior year, driven by a continued strength across commercial and industrial and residential end markets. Our ability to flex crews and equipment across our established markets and to build out full turnkey capability as we enter new ones is exactly why we're winning larger, more complex projects, expanding with the customers we already serve, and bringing new logo customers onto the platform.

Cardinal is increasingly becoming the contractor these developers call first, and I'm excited by the continued momentum across our footprint, which positions us well for further strength in the coming quarters. Total backlog at the end of the second quarter was $866 million, up 35% from the same period last year, with balanced growth across both commercial and industrial and residential. Commercial, retail, and retail distribution additions in the quarter were meaningful, a sign of recovery in a relatively slower-moving part of the broader C&I space. Adjusted EBITDA margins came in below where we expected them to be for the second quarter. While adjusted EBITDA dollars grew 43% year-over-year on higher volumes, the cost of meeting customer demand at this level, plus intense weather-related impacts in Georgia, ran ahead of plan. Mike will cover the specifics in a few minutes.

Given this strong performance and the vibrancy across our end markets, we're raising the midpoint of our full year revenue guidance from $680 million to $890 million, just shy of 100% growth from where we ended 2025. We're gaining share, diversifying our end markets, and seeing strong demand signals across the board. Along that raise, we're updating our adjusted EBITDA margin expectation to a range of 16%-18% for the year. That reflects the one-time cost from this quarter, as well as an expected step-up in general and administrative expense through the back half. The demand in front of us right now means we have to invest in the people and resources to keep pace for our customers as much as for ourselves. This opportunity is bigger than anything we've seen, and we're not going to leave it on the table.

Visibility into customers' multi-year capital deployment and investment plans is encouraging, and we're seeing that strength broadly. Continued momentum in commercial and industrial site work, and recently, a genuine recovery in commercial retail. In residential, demand across our Southeast markets continues, driven by the migration and population growth into our footprint, even as builder margins compress more broadly nationally. National home builders continue to move forward with large, multi-phase residential communities, supported by the persistent structural undersupply of housing in our core markets. The Raleigh market is one clear illustration of these supportive housing fundamentals. Raleigh's mayor recently emphasized that the city is currently facing a severe 37,000-unit housing shortage, declaring that increasing the housing supply is a top policy priority. A recent statewide housing analysis from the North Carolina Home Builders Association shows just how big this gap really is.

Wake and Mecklenburg counties are expected to face housing shortfalls of over 110,000 homes each by 2029, as population growth in Raleigh and Charlotte significantly outpace new construction. This dynamic isn't unique to Raleigh or Charlotte. According to the U.S. Census Bureau's most recent population estimates, North Carolina and Georgia, the two states where we operate today, both ranked among the fastest-growing states in the country over the year ended July 2025, with North Carolina adding the most residents of any state nationally, 84,000. That same data shows South Carolina, Tennessee, and Florida among the 10 fastest-growing states. We aren't in those markets today, but the same demographic tailwinds driving our growth in the Carolinas and Georgia are building across the broader Southeast. That's exactly the kind of long-term backdrop we look for as we continue to evaluate where this platform expands next.

Let me step back for a moment and reflect on our journey since our IPO. We've consistently focused on our three-part growth strategy: driving vertical integration, diversifying our end markets, and pursuing selective acquisitions that build local density and expand our geographic footprint. These last seven months have been a period of remarkable execution, operational scaling, and strategic expansion for Cardinal Infrastructure Group, reflected in this quarter's 114% revenue growth and today's raised full-year revenue guidance. Our performance continues to demonstrate the strength of our self-performing, vertically integrated business model across our high-growth Southeastern footprint. Beyond the strong execution from our crews, we hit several strategic milestones for the broader platform this quarter. In May, we added Piedmont Pipe in Charlotte, building further density in a market we already knew well.

We completed construction of our first asphalt manufacturing facility, which will reduce reliance on third-party asphalt suppliers in Raleigh, and in time, will give us the ability to serve outside customers. In June, we completed a follow-on public offering to strengthen the balance sheet to fund our strategy going forward. With our record backlog, expanding service lines, robust end markets, and an M&A pipeline unlike anything we've seen before, we believe Cardinal is exceptionally well-positioned for the second half of 2026 and beyond. With that, I'll hand over the call to our Chief Operating Officer, Benji Wood, to discuss our operational execution and the details of today's acquisition announcement. Benji, the floor is yours.

Thank you, Jeremy, and good morning, everyone. I'll start with Allied Paving and close with a broader operational and safety update across the platform before turning it over to Mike. Let me start with Allied Paving since it's the highlight of the day. Allied brings an experienced paving crew and complementary equipment to the North Atlanta market, and it fits neatly alongside A. L. Grading Contractors' existing grading and site work capabilities. With Allied's paving crew now part of the platform, we can sequence paving directly behind our own grading and site work teams, which compresses project timelines and keeps that margin in-house instead of passing it to a subcontractor. It also takes A. L. Grading Contractors a massive step closer to the kind of fully self-performing, full-stack model we've built in Raleigh, where we control a project from start to finish.

As Jeremy mentioned, this transaction was sourced and run by the A. L. Grading Contractors team using the playbook and capital we've built as a platform. We couldn't be more excited to have Allied Paving Contractors join the team, and our current A. L. Grading Contractors's ability to find and execute deals like this will become a real differentiator for Cardinal Infrastructure Group as we keep growing, sourcing and executing bolt-on deals to finish building out the turnkey stack. This is how we'd expect future platforms we may acquire to grow going forward, and it's exactly why finding motivated, aligned leaders and retaining them is so core to who we are. Getting to watch my own team be the ones to prove that out is personally pretty rewarding. Looking beyond Allied Paving Contractors, we continue to see strong crew productivity across the Cardinal Infrastructure Group footprint in the quarter. Charlotte is a good example of what density does for us.