Construction Partners reported second-quarter calendar 2026 revenue of $999.4 million, a 28.2% increase from the prior-year period, completing an acquisition in the same window and lifting full-year guidance on stronger-than-modeled demand from data center site preparation work. The Nashville-based civil infrastructure contractor attributed the beat to faster closeouts on hyperscale campus projects in the Southeast and a bolt-on purchase that added $47 million in trailing twelve-month revenue to the consolidated base.
The company's guidance raise follows three consecutive quarters in which backlog conversion rates exceeded internal forecasts by 190 basis points on average, driven by clients pulling forward schedules to meet power delivery deadlines tied to AI infrastructure builds. Management flagged $1.8 billion in awarded but not yet recognized contracts as of quarter-end, with 62% of that figure tied to private-sector work compared to 41% a year earlier. The mix shift reflects hyperscale operators prioritizing speed over cost, a dynamic that has allowed Construction Partners to secure higher margins on expedited timelines while traditional municipal contracts face elongated permitting cycles.
The acquisition, closed in late March, brought 840 employees and 290 pieces of heavy equipment into the Construction Partners fleet, expanding the company's footprint in North Carolina and Virginia markets where zoning for large-scale industrial sites has accelerated under revised state utility frameworks. The deal was funded with a combination of cash on hand and a $220 million draw on the company's revolver, leaving the business at 2.1x net debt to trailing EBITDA, within the 2.5x covenant threshold but tighter than the 1.7x leverage ratio the company carried six months prior. CFO commentary on the earnings call emphasized that deleveraging remains the priority through the back half of the year, with free cash flow conversion targeted at 85% of adjusted EBITDA as equipment purchases moderate and working capital unwinds on completed projects.
Allocators tracking infrastructure exposure should note that Construction Partners now derives 38% of revenue from data center and industrial site work, up from 22% in calendar 2024, a faster shift than peers like Sterling Infrastructure or Granite Construction have reported. The company's Southeast concentration positions it in states where power availability and fiber proximity have attracted $19 billion in announced hyperscale investments since January 2025, though that same geographic clustering introduces execution risk if permitting bottlenecks or grid connection delays push schedules into 2027. The raised guidance assumes 95% on-time starts for projects in backlog, a figure that has held through the first half but remains vulnerable to utility coordination lapses.
Operators should watch for two near-term catalysts: the company's investor day scheduled for late June, where management is expected to provide updated three-year margin targets reflecting the higher private-sector mix, and the Federal Highway Administration's final allocation of $48 billion in Infrastructure Investment and Jobs Act funds for fiscal 2027, due by August. Early indications suggest $6.2 billion of that total will flow to states within Construction Partners' operating footprint, offering a hedge against any slowdown in private demand. The company has $340 million in municipal bids outstanding, with decisions expected by September.
Revenue guidance now stands at $3.78 billion to $3.92 billion for the full year, implying second-half growth of 22% to 28% even as comps toughen. The Street had been modeling $3.65 billion prior to the print.