Cardinal Infrastructure Group Inc. (CDNL) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates robust financial performance, with record high backlog, significant revenue growth, and improved gross margins. The Q&A session confirms strong market expansion potential and effective synergy realization from acquisitions. Management's optimistic guidance and strategic initiatives, such as the new asphalt plant, further support a positive outlook. The lack of any negative management responses also reinforces confidence. Despite some margin pressures, overall indicators point towards a strong positive stock price reaction.
Key Financial Performance
Revenue Revenue grew approximately 105% year-over-year with organic growth of approximately 64%. This growth was broad-based across all regions and markets, driven by strong performance in residential, commercial, manufacturing, and industrial sectors. Raleigh increased revenues over 40%, and ALGC grew mid-teens despite tougher weather comparisons.
Backlog Backlog ended the quarter at $854 million, an all-time high, up 60% year-over-year and up 30% organically. ALGC contributed just over $160 million to the total. The growth was driven by strong volumes of work across various sectors, including residential, retail, and industrial projects.
Gross Profit Gross profits for the quarter were $24.9 million or 14.9%, compared to $9.9 million and 12.1% in the prior year. Gross margins increased 280 basis points due to scale benefits from higher volumes and tightly managed operating costs.
Adjusted Gross Profit Adjusted gross profits were $34 million, up 107% year-over-year, with adjusted gross margins expanding approximately 20 basis points year-over-year. The expansion was supported by seasonal headwinds and integration activities at ALGC.
General and Administrative Expenses (G&A) G&A expenses for the quarter were $10 million or 6% of revenue, with $3.5 million tied to nonrecurring acquisition costs and public company readiness costs. On a continuing basis, G&A was 3.9% of revenue, expected to improve as the year progresses.
Adjusted EBITDA Adjusted EBITDA for the quarter was $27 million, up 84% year-over-year, with adjusted EBITDA margins at 16%, down from the prior year. Margins were impacted by winter weather and growth initiatives.
Cash Flow from Operating Activities Cash flow from operating activities was $9.3 million compared to $12.1 million in the prior year, driven by increased working capital requirements for growth, specifically increased billings not yet collected.
Capital Expenditures (CapEx) Capital expenditures were $9.3 million, excluding acquisitions, reflecting investments in an asphalt manufacturing facility and fleet and equipment. Full-year CapEx is forecasted at $58 million.
Net Leverage Net leverage at quarter end was approximately 1.2x, well below the covenant of 2.5x, indicating a strong balance sheet.
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Operating Highlights
Data Center Contract: Secured a $24 million contract to self-perform all services for a data center, expected to complete in 2027.
Market Diversification: Pre-IPO residential focus reduced from 75% to 65%, with growth in multifamily, retail, and campus build-outs.
Geographic Expansion: Expanded operations in North Carolina, South Carolina, and Georgia, with a focus on Charlotte, Greensboro, and Atlanta.
Revenue Growth: Achieved 105% year-over-year revenue growth, with 64% organic growth.
Backlog Growth: Backlog reached an all-time high of $854 million, up 60% year-over-year.
Vertical Integration: Self-performs full civil scope on projects, reducing reliance on subcontractors and compressing schedules by 6-8 weeks.
Operational Efficiency: Completed multiple projects ahead of schedule and bid margin, including residential, commercial, and industrial projects.
Acquisition Strategy: Completed 7 acquisitions since 2021, adding $310 million in annual revenue. Focused on tuck-ins for vertical integration and platform deals for geographic expansion.
Revenue Guidance Increase: Raised 2026 revenue guidance midpoint from $672 million to $680 million, with adjusted EBITDA margins expected above 20%.
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Risk or Challenges
Weather-related disruptions: Higher-than-average number of winter weather events across the Southeast impacted operations, requiring schedule flexibility and redeployment of crews.
Skilled labor availability: The availability of skilled labor is a primary constraint on growth, though the company has built a workforce ahead of demand.
Integration of acquisitions: Integration of ALGC and other acquisitions is ongoing, with newer markets like Charlotte and Greensboro currently dilutive to consolidated margins.
Market expansion challenges: Building out labor force, density, and equipment in newer markets like Charlotte and Greensboro is still in early stages, impacting margins.
Economic and operational risks: Increased working capital requirements for growth, specifically increased billings not yet collected, and higher G&A expenses in Q1 due to acquisition and public company readiness costs.
Seasonal and timing impacts: Winter weather impacted the ability to deploy higher-margin work during Q1, affecting adjusted EBITDA margins.
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Guidance & Outlook
Revenue Guidance for 2026: The company has raised its full-year 2026 revenue guidance to a midpoint of $680 million, up from the previous midpoint of $672 million. The new range is $675 million to $685 million.
Adjusted EBITDA Margin Guidance: The company continues to expect adjusted EBITDA margins above 20% for the full year 2026, with a clear path to further expansion over the medium term.
Backlog and Future Visibility: Backlog reached an all-time high of $854 million, representing over 12 months of revenue at the current run rate. The bidding environment remains robust, providing increased visibility into the second half of 2026 and into 2027.
Market Diversification and Growth: The company is expanding into new markets, including its first data center contract worth $24 million, expected to be completed in 2027. The company has also diversified its end-market mix, reducing residential focus from 75% pre-IPO to 65%.
Capital Expenditures for 2026: Capital expenditures for 2026 are forecasted at $58 million, unchanged from prior guidance. Investments include the construction of an asphalt manufacturing facility and fleet and equipment upgrades.
Geographic and Operational Expansion: The company is building density in newer markets like Charlotte, Greensboro, and Atlanta, which are currently dilutive to margins but expected to expand meaningfully as these markets mature.
Acquisition Strategy: The company has a robust acquisition pipeline, including tuck-in opportunities in Charlotte, Greensboro, and Atlanta, and platform-style opportunities in adjacent Southeast geographies. Acquisitions are expected to be accretive to or in line with consolidated margin profiles.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How do Cardinal and ALGC as a team make each business stronger? Are there early opportunities to cross-sell services between the North Carolina and the ALGC Georgia markets?
A:Jeremy Spivey explained that the ALGC acquisition allowed them to identify areas for synergy, such as utilizing each other's history, equipment, and services. For example, ALGC previously outsourced drilling and blasting services, which Cardinal can now provide. Similarly, ALGC's grading equipment is being utilized in the Carolinas. These synergies were realized almost immediately.
Q:Has the growth in the Raleigh and Atlanta markets remained in double digits? Do you expect to hit a ceiling in terms of market share gains, or is there further runway to expand in residential and industrial markets?
A:Mike Rowe and Jeremy Spivey expressed confidence in continued growth in Raleigh and Atlanta, with no concerns about market share saturation. They highlighted robust bidding activity and opportunities to integrate and expand services in these markets. ALGC, for instance, has significant potential for market share capture and diversification into new end markets.
Q:What is the status of your data center business? Are you bidding on other data center projects in North Carolina and Georgia? Should investors expect other wins in the next couple of years?
A:Jeremy Spivey stated that their bidding activity is very active, especially with the expansion into the Georgia market, which offers more mission-critical project opportunities. They are focused on executing their current data center project while actively bidding on others. Margins in this sector are favorable compared to their residential and industrial businesses.
Q:How should we think about the split between acquisition contribution and organic growth in your updated revenue guidance? How are you thinking about growth across residential, commercial, and DOT work?
A:Mike Rowe mentioned strong bidding activity and a robust backlog, with organic growth contributing significantly. Organic growth opportunities are driven by building density and integrating vertical services in markets like Charlotte, Greensboro, and Atlanta. Growth across residential, commercial, and DOT work is expected to remain strong.
Q:Can you provide an update on the asphalt plant?
A:Jeremy Spivey reported that the asphalt plant is nearly fully constructed, with some delays in electrical and gas permitting. It is still on track for a Q2 start. The plant will support a large resurfacing project adjacent to it, which was won in Q1.
Q:Review of Unclear Management Responses
A:None of the questions were avoided or lacked clarity. All responses were detailed and addressed the questions directly.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
ALGC
Atlanta
Benji
Cardinal Infrastructure
Cardinal acquisition
Chief Officer
Georgia
Infrastructure Group
Southeast
backlog
blasting
core market
crew
culture
customer
deal
delivery
density
development
end market
expansion
framework
geography
integration
labor
level
model
opportunity
platform
playbook
project
result
schedule
self
service
site
statement
today
utility
work
workforce
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
