Conestoga Capital Advisors, LLC on Construction Partners, Inc.
Thesis
Construction Partners provides road-building and maintenance services across fast-growing Sunbelt states. Despite bad weather and energy inflation, the company reported solid results and raised its outlook. Record backlog, strong public infrastructure investment and geographic expansion opportunities underpin the growth case. Management expects contract pass-through provisions eventually to offset higher energy input costs.
“The company maintains record backlogs, healthy infrastructure spending and continued opportunities to expand the company's geographic footprint”
Key risks
- Unusually wet weather interfered with project work.
- Higher energy costs create near-term margin pressure before contract price adjustments.
- Timing of U.S. federal transportation funding reauthorization remains uncertain.