Construction Partners, Inc. ROAD or CPI’s stock spiked 13.4% on Monday after it announced preliminary results for fiscal 2024 and introduced guidance for fiscal 2025. It also unveiled the acquisition of the platform company in Texas.

Fiscal 2024 Result

For fiscal 2024, CPI is likely to have generated $1.821-$1.825 billion in revenues, up 16.5-16.8% year over year from $1.563 billion registered in fiscal 2023. However, the new range is slightly below the previously estimated guidance of $1.835-$1.860 billion. The company witnessed significant impacts of Hurricanes Debby, Francine, and Helene in August and September.

Net income is expected to be between $68 and $70 million, up 38.8-42.9% from $49 million reported in fiscal 2023 but down from $73.5-$76.5 million guided earlier.

Adjusted EBITDA is likely to be in the range of $219-$222 million, up 26.9-28.6% from $172.6 million generated in fiscal 2023. Based on the revenue generated, adjusted EBITDA margin is likely to be around 12-12.2% compared with 11% in the previous year. Earlier, it anticipated $219-$228 million of adjusted EBITDA and 11.9-12.3% of adjusted EBITDA margin.

As of Sept. 30, 2024, project backlog is expected to be approximately $1.95 billion compared with $1.86 billion on June 30, 2024.

Investors should note that actual results may differ from these estimates due to the company's year-end closing procedures, review adjustments and other developments.

Fiscal 2025 Guidance

For fiscal 2025, CPI expects revenues in the range of $2.42-$2.52 billion, net income within $90-$106 million, adjusted EBITDA in the $338-$368 million range and adjusted EBITDA margin between 14% and 14.6%.

ROAD recently entered a deal to acquire Asphalt Inc., LLC d/b/a Lone Star Paving, a vertically integrated asphalt manufacturing and paving company headquartered in Austin, TX. The above-mentioned guidance includes the expected results of Lone Star Paving, which is likely to close by the first quarter of fiscal 2025-end. This transformational buyout is expected to be accretive from second-quarter fiscal 2025 onward and will enhance profitability on the path to its ROAD-Map 2027 goals.

In 2023, ROAD disclosed certain targets it expects to achieve by fiscal 2027. Per those targets, annual revenue growth is expected to be 15-20%, with approximately half of the growth being inorganic, and adjusted EBITDA margin expansion in the range of 13-14%.

With the acquisition of Lone Star Paving, the anticipated timeline to achieve ROAD-Map 2027 goals has been accelerated by almost two years. Moreover, CPI will continue to benefit from a generational investment in infrastructure, the fast-growing economies in the Sunbelt markets, and various organic and inorganic growth opportunities to scale business and deliver value to its stockholders.

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In the year-to-date period, this vertically integrated civil infrastructure company’s shares have gained 94.6% compared with the Zacks Building Products - Miscellaneous industry’s 24.1% rise.

ROAD Zacks Rank & Stocks to Consider

Currently, CPI carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same space are:

Latham Group, Inc. SWIM: Based in Latham, NY, the company stands as the leading designer, manufacturer and marketer of in-ground residential swimming pools and pool accessories. It presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SWIM’s 2024 earnings per share (EPS) remained stable at 13 cents in the past 60 days. The estimated figure indicates 750% year-over-year growth.

Knife River Corporation KNF: Headquartered in Bismarck, ND, this firm offers construction materials and contracting services throughout the United States, specializing in aggregates-based solutions. It presently flaunts a Zacks Rank #1.

KNF has seen an upward estimate revision for 2024 EPS to $3.72 from $3.64 over the past 60 days. The estimated figure indicates 15.2% year-over-year growth.

Aspen Aerogels, Inc. ASPN: Headquartered in Northborough, Mass, Aspen is a technology leader in sustainability and electrification solutions. It presently carries a Zacks Rank #2 (Buy).

ASPN has seen a downward estimate revision for 2024 EPS to 15 cents from 21 cents over the past seven days. The estimated figure indicates 122.7% year-over-year growth.

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