TimesSquare Capital Management, LLC on Construction Partners, Inc.
Thesis
TimesSquare initiated Construction Partners after meeting management and identifying benefits from consolidation and vertical integration. The business builds and maintains highways, roads, bridges, airports and other public and private infrastructure. Its integrated model should structurally lift margins as it grows. Approximately 80% of contracts cover liquid-asphalt inflation and remaining price adjustments generally flow through over six to nine months, helping protect the economics of roadbuilding against input-price shocks.
“the company’s continued consolidation and vertical integration, which should structurally lift margins over time”
Key risks
- Liquid-asphalt inflation affects the portion of contracts without explicit protection.
- Contracts can take six to nine months to reprice after cost increases.