Prepared remarks
Good morning, ladies and gentlemen, and welcome to Cardinal Infrastructure Group's Second Quarter 2026 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a Q&A session. To ask a question during this session, you would need to press 1-1 on your telephone. You would then hear an automated message that your hand is raised. To withdraw your question, please press 1-1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Emily Lear, Cardinal's Director of Investor Relations. Please go ahead.
Good morning, everyone, and welcome to Cardinal Infrastructure Group's Second Quarter 2026 Earnings Conference Call and Webcast. I am pleased to be here today to discuss our results with Jeremy Spivey, Cardinal's Chairman and Chief Executive Officer, Benjie Wood, Chief Operating Officer, and Mike Rowe, Chief Financial Officer. Please note there are accompanying slides available on the Events and Presentations section of our website. Today's call will present certain non-GAAP financial measures including adjusted EBITDA, adjusted EBITDA margin, and adjusted gross profit. For more information about those non-GAAP financial measures and a reconciliation of the most comparable GAAP measure, please see our earnings release, the accompanying slides posted on our website, and the current Form 10-K filed with the SEC. This information is also available on the Investor Relations section of the Cardinal website. Today's call will also include forward-looking statements as defined by U.S. securities laws. These statements relate to future events, operating results, or financial performance and are subject to risks and uncertainties that could cause actual results to differ materially. Cardinal Infrastructure Group takes no obligation to publicly update or revise any forward-looking statements except as legally required, whether due to new information, future developments, or otherwise. Information regarding these factors that may cause actual results to differ materially from these forward-looking statements is available in the company's SEC filings. With that, I will now turn the call over to Jeremy.
Thank you, Emily. Good morning, everyone, and thank you for joining us today. Before I get into our second quarter results, I wanted to start by covering this morning's acquisition announcement. Today, we announced the acquisition of Allied Paving, based in Atlanta. Our ninth acquisition since our 2021 IPO. We closed our follow-on equity offering just weeks ago, and we are already putting that capital to work—quickly and on accretive terms. I will let Benjie cover the specifics of the transaction, but importantly, this deal was sourced and executed by the ALGC leadership team, with guidance and a playbook from Cardinal. It has been a little over five months since we closed the ALGC acquisition, and the team in Atlanta has absorbed how we operate. They sat with us through Piedmont Pipe to see how we onboard and integrate, and now they have gone out and found, negotiated, and closed a deal themselves. That is the best proof point we could ask for. It is what frees me and the rest of the leadership team to pursue additional organic and M&A opportunities. Now let's get into the quarterly results, starting on Slide 4. This was a record quarter for Cardinal, building on an already strong start to the year. Revenue increased 114% from the prior year, driven by continued strength across commercial and industrial (C&I) and residential end markets. Our ability to flex crews and equipment across our established markets and to build out full turnkey capability as we enter new ones is exactly why we are winning larger, more complex projects, expanding with the customers we already serve, and bringing new logo customers onto the platform. Cardinal is increasingly becoming the contractor these developers call first, and I am excited by the continued momentum across our footprint, which positions us well for further strength in the coming quarters. Total backlog at the end of the second quarter was $866 million, up 35% from the same period last year, with balanced growth across both C&I and residential. Commercial retail and retail distribution additions in the quarter were meaningful—a sign of recovery in a relatively slower-moving part of the broader C&I space. Adjusted EBITDA margins came in below where we expected them to be for the second quarter. While adjusted EBITDA dollars grew 43% year-over-year on higher volumes, the cost of meeting customer demand at this level plus intense weather-related impacts in Georgia ran ahead of plan. Mike will cover the specifics in a few minutes. Given the strong performance and the vibrancy across our end markets, we are raising the midpoint of our full-year revenue guidance from $680 million to $890 million—just shy of 100% year-over-year growth from where we ended 2025. We are gaining share, diversifying our end markets, and seeing strong demand signals across the board. Along that raise, we are updating our adjusted EBITDA margin expectation to a range of 16% to 18% for the year. That reflects the one-time cost from this quarter as well as an expected step-up in general and administrative expense through the back half. The demand in front of us right now means we have to invest in the people and resources to keep pace, for our customers as much as for ourselves. This opportunity is bigger than anything we have seen, and we are not going to leave it on the table. Visibility into customers' multiyear capital deployment and investment plans is encouraging, and we are seeing that strength broadly: continued momentum in commercial and industrial site work and, recently, a genuine recovery in commercial retail. In residential, demand across our Southeast markets continues, driven by the migration and population growth into our footprint, even as builder margins compress more broadly nationally. National homebuilders continue to move forward with large multiphase residential communities supported by the persistent structural undersupply of housing in our core markets. The Raleigh market is a clear illustration of the supportive housing fundamentals. Raleigh's mayor recently emphasized that the city is currently facing a severe 37,000-unit housing shortage, declaring that increasing the housing supply is the top policy priority. A recent statewide housing analysis from the North Carolina Home Builders Association shows just how big this gap really is. Wake and Mecklenburg Counties are expected to face housing shortfalls of over 110,000 homes each by 2029 as population growth in Raleigh and Charlotte significantly outpaced new construction. This dynamic is not unique to Raleigh or Charlotte. According to the U.S. Census Bureau's most recent population estimates, North Carolina and Georgia, the two states where we operate today, both ranked among the fastest-growing states in the country over the year ended July 2025, with North Carolina adding the most residents of any state nationally—84,000. That same data shows South Carolina, Tennessee, and Florida among the 10 fastest-growing states. We are not in those markets today, but the same demographic tailwinds driving our growth in the Carolinas and Georgia are building across the broader Southeast, and that is exactly the kind of long-term backdrop we look for as we continue to evaluate where this platform expands next. Let me step back for a moment and reflect on our journey since our IPO. We have consistently focused on our three-part growth strategy: driving vertical integration, diversifying our end markets, and pursuing selective acquisitions that build local density and expand our geographic footprint. These last seven months have been a period of remarkable execution, operational scaling, and strategic expansion for Cardinal Infrastructure Group, reflected in this quarter's 114% year-over-year revenue growth and today's raised full-year revenue guidance. Our performance continues to demonstrate the strength of our self-performing, vertically integrated business model across our high-growth Southeastern footprint. Beyond the strong execution from our crews, we hit several strategic milestones for the broader platform this quarter. In May, we added Piedmont Pipe in Charlotte, building further density in a market we already knew well. We completed construction of our first asphalt manufacturing facility, which will reduce reliance on third-party asphalt suppliers in Raleigh and, in time, will give us the ability to serve outside customers. And in June, we completed a follow-on public offering to strengthen the balance sheet to fund our strategy going forward. With our record backlog, expanding service lines, robust end markets, and an M&A pipeline unlike anything we have seen before, we believe Cardinal is exceptionally well positioned for the second half of 2026 and beyond. With that, I will hand the call over to our Chief Operating Officer, Benjie Wood, to discuss our operational execution and the details of today's acquisition announcement. Benjie, the floor is yours.
Thank you, Jeremy, and good morning, everyone. I will start with Allied Paving and close with a broader operational and safety update across the platform before turning it over to Mike. Let me start with Allied Paving since it is a highlight of the day. Allied brings an experienced paving crew and complementary equipment to the North Atlanta market and it fits neatly alongside ALGC's existing grading and site work capabilities. With Allied Paving crews now part of the platform, we can sequence paving directly behind our own grading and site work teams, which compresses project timelines and keeps that margin in house instead of passing it to a subcontractor. It also takes ALGC a massive step closer to the kind of fully self-performing, full-stack model we have built in Raleigh, where we control a project from start to finish. As Jeremy mentioned, this transaction was sourced and run by the ALGC team using the playbook and capital we built as a platform. We could not be more excited to have Allied join the team, and our confidence in ALGC's ability to find and execute deals like this will become a real differentiator for Cardinal as we keep growing—sourcing and executing bolt-on deals to finish building out the turnkey stack. This is how we would expect future platforms we may acquire to grow going forward, and it is exactly why finding motivated, aligned leaders and retaining them is so core to who we are. Getting to watch my own team be the ones to prove that out is personally very rewarding. Looking beyond Allied, we continue to see strong crew productivity across the Cardinal footprint in the quarter. Charlotte is a good example of what density does for us. We already had wet utilities capabilities in that market, and Piedmont Pipe adds meaningful additional density there alongside our existing grading and site work capabilities. That means faster sequencing between scopes and less reliance on subcontracted labor to get a project across the finish line. Charlotte is now nearly turnkey as a result. It is still early in its growth trajectory. Greensboro continues building toward that same turnkey capability. Our Georgia operations, while impacted by weather in the second quarter, are gaining significant momentum with backlog up 10% sequentially since March 31st at ALGC. Our first asphalt processing plant operating under the Aviator brand near Raleigh continues to ramp as expected. With the land already secured for a second facility, we look forward to applying operational lessons from our first plant to our future asphalt plant build. We are also investing heavily in fleet deployment and equipment management using updated systems to make sure we have the right equipment in the right place at the right time across our newer acquisitions. And we are in the process of rolling out a new CRM system that will give us better real-time visibility into both operations and consolidated financials while helping ensure SOX 404 compliance as we continue to mature as a public company. Beyond the equipment and system investments, our people remain the biggest driver of Cardinal's success, and planning for the growth ahead means investing in them now—not just keeping pace with today's demand. As we take on larger, more complex projects and move into new markets, we are expanding our recruiting and training efforts to build the bench strength our crews and project managers need to keep executing at this level. That investment in our people is just as important to sustaining this growth as the equipment and systems we are putting in place. During the quarter, our field teams completed over 9,000 documented safety activities, an increase of over 60% year over year, across more than 57,800 individually inspected safety items. On weekly site inspections, over 99% met our standards, and the deficiencies our crews proactively self-identified triggered same-day automated alerts to safety leadership for corrective action. That shows we do not sacrifice safety for speed—whether on delivery, on integration, or otherwise. With that, I will pass the call over to Mike to cover the financials and our updated outlook.
Thank you, Benjie, and good morning, everyone. I will begin with a review of our second quarter financial results before covering our updated outlook for 2026. In total, second quarter revenue was $227 million, an increase of $115 million from the second quarter of 2025, reflecting organic growth of approximately 56%. Growth accelerated meaningfully as the quarter progressed, with May and June both stepping up significantly over April. In our Raleigh market, sustained demand across our commercial and industrial customer base drove continued share gains and another quarter of 40%+ organic growth. The depth of our crews and equipment led us to win outsized project awards even as competition for skilled labor increased across the region. Our ability to deploy crews and source labor and equipment quickly in areas like Charlotte, which also printed over 40% year-over-year growth, and Greensboro, with strong share gains across a diversified end market mix, contributed to a very high-growth quarter for Cardinal. ALGC continues to build on the momentum as part of the platform and is winning larger and more complex work, reinforcing Atlanta as one of the most attractive growth markets in the Southeast. The costs associated with delivering on this level of growth, specifically in our newer turnkey markets, ran ahead of expectations. As such, margin performance for the quarter was below our expectation. Gross profit was $24.5 million, up 67% from the prior year. Adjusted gross profit was $36 million, a year-over-year increase of 60%. Adjusted gross margins ended the quarter at 15.9%, down 400 basis points from the prior year. This year-over-year variance is a result of three things. First, subcontracted labor and equipment rental costs increased, primarily in newer markets where we do not yet own full turnkey delivery capabilities. Second, we intentionally shifted toward a more diversified end market mix—larger commercial and industrial projects run on a different deployment schedule than the residential work our operations were built around, and that mismatch left us with some underutilized crew capacity as we adjusted our deployment models to the new mix more than we had modeled for. And finally, intense weather events in Georgia slowed our ability to deploy high-margin work at ALGC. General and administrative expenses for the quarter were $9 million, or 4% of revenue, driven largely by the cost of maturing our corporate infrastructure to responsibly support a scaling public platform. As we continue to scale this platform and position Cardinal as the acquirer and contractor of choice across the Southeast, we believe these investments are in the best interest of our employees and our shareholders. Adjusted EBITDA for the quarter was $28.1 million, up 43% year over year, and adjusted EBITDA margins were 12.4%, down from 18.6% in the prior year, reflecting the impacts I just covered. Capital expenditures for the quarter were $24.7 million, reflecting completion of the asphalt manufacturing facility and continued fleet investments across the markets. For the full year of 2026, we are reiterating our capital expenditure guidance of $58 million, excluding acquisitions. We ended the quarter with $195 million outstanding on our term loan and nothing drawn on our $75 million revolving credit facility. With $339 million of cash on hand, we ended the quarter in a net cash position, giving us substantial capacity to keep funding both organic investments and our acquisition pipeline thanks to our successful follow-on offering. As you heard, that capacity is already being put to work with the acquisition of Allied Paving, which brings $108 million of annual revenue at a 20.3% adjusted EBITDA margin onto the platform at roughly 5.5x EBITDA—a meaningfully accretive multiple and exactly the kind of disciplined use of our follow-on proceeds we said we would pursue. Turning to our updated outlook for 2026, given the strong top-line performance—up 114% year-to-date—we are raising revenue to a range of $880 million to $900 million, reflecting total year-over-year growth of roughly 95% at the midpoint. That raise is built on real broad-based customer demand and the visibility we have into the remainder of 2026 and beyond. Our backlog stands at a record $866 million and our close relationship with customers across our footprint gives us strong conviction in both the timing and the profitability of that pipeline as it converts to revenue. We are bidding on and winning larger and more complex commercial and industrial work than we have historically, including work that is bringing in new logo customers into the platform. While first-half adjusted EBITDA sits at $55 million—ahead of plan—we are adjusting our adjusted gross margin guidance to a range of 16% to 18% for the full year. It is worth noting even at this updated rate, the size of our revenue raise means full-year adjusted EBITDA is increasing versus our original guidance from roughly $136 million to over $150 million at the midpoint of today's range. We recognized one-time costs for the second quarter, a portion of which we expect to recover as the year progresses. The remainder of the shift reflects the pace and scale of our growth. We are investing in systems and processes that will give us better visibility into cost trends going forward. This corporate infrastructure investment reflects the reality of running a business growing at this pace, and we expect it to moderate as a percentage of revenue as we grow into it. Similarly, as we continue to build out this platform across the Southeast and reduce our concentration in any single market, we expect the impact from localized disruptions like weather in a single region to become more muted on our overall results over time. Our conviction in the near-term profitability of this platform in the low twenties is unchanged. And as we look ahead—without getting into 2027 guidance specifically—that trajectory only strengthens as we recognize synergies across the platform, finalize vertical integration into our newer markets, and right-size our cost structure as we scale. Separately, we have also been extremely active on the M&A front: three acquisitions this year alone, each at a different stage of integration. That is a lot happening across the platform at once, and we are staying disciplined about how we bring each one in. As you heard from Jeremy and Benjie, we are incredibly optimistic about the road ahead. We have record backlog, strong and strengthening customer relationships, some of the best crews in the company, and the opportunity set ahead of us that we believe is unmatched. We are delivering on the strategy that we built this business around: incredible, strong organic growth, solid and improving margins, a stronger balance sheet, and an acquisition pipeline that gives us multiple paths to compound from here. With that, I will turn the call over to Jeremy for some quick remarks before Q&A. Jeremy?
Thanks, Mike. Just a quick word before we open it up. This was a record quarter for Cardinal: record revenue, record backlog, and our ninth acquisition since our 2021 IPO, sourced this time by our own team in Atlanta. Real proof that our platforms can grow their own businesses and free up the rest of us to keep executing. We are growing faster than we planned and gaining share in every market and customer segment we serve. Our balance sheet is strong, our acquisition pipeline is as deep as it has ever been, and we are going to keep moving. I have never felt better about where this platform is headed because we are just getting started. With that, let's turn it over to questions. Operator?
Questions and answers
And to withdraw your question, please press 1-1 again. We ask that you please limit to one question and one follow-up. The first question will come from Louie Dipalma with William Blair. Your line is now open.
Jeremy, Benjie, Mike, and Emily, good afternoon. The revenue growth was exceptional, though the margin was disappointing. Can you discuss how much of the margin pressure was related to the one-time costs and the weather? Was the margin pressure focused in Georgia, or was it generally distributed across Georgia and the North Carolina markets?
Hey Louie. Great question. I think it kind of leads into our guidance as well. We had four headwinds that hurt us this quarter. First, increased one-time subcontractor labor and rental costs we had to deploy to keep up with customer pace. The operational improvements we are making and the recent acquisitions we are doing are going to help recover some of these one-time costs. Second, deployment shifts from our diversified project mix created underutilized crew capacity as we adjusted deployment models to that new mix. Third, weather in Georgia slowed deployment of our ALGC crews and impacted high-margin work. And fourth, SG&A increased as we mature our corporate infrastructure as a newly public company—those costs are coming in, and while they are starting to level off, they are still higher than we originally expected. For these reasons, we adjusted our margin guidance from 20%+ to a 16% to 18% range. This is transitional and not structural.
Great. And what is the visibility for the second-half margin increase? I think the guidance implies a margin in the high teens range in the second half. Also, what is the visibility for the medium-term target you set in the low twenties?
Both of those are reasons why we increased guidance for the second half. ALGC's contribution for the back half is expected to be strong; their margins should be much higher. Allied will contribute as well—we baked in a portion of Allied's revenue and margins. We also have $1 million to $2 million of one-time costs that can be recovered, some through operational improvements and some through the asphalt plant coming online. Deployment issues from project mix are getting aligned, so we expect fewer of those misses going forward. Taken together, these factors drive the improvement implied by our guidance. Over the medium term, our conviction in low-twenties adjusted EBITDA margins remains unchanged as we realize synergies, finalize vertical integration in newer markets, and right-size costs as we scale.
Louie, we also had some delayed starts in Charlotte. A couple of very large projects had delayed kickoffs, and those delays had an impact. Those projects are starting now, and we will see them run through the second half of the year. That's another reason we are encouraged and have conviction in hitting the 16% to 18% adjusted EBITDA guidance—at the midpoint it implies full-year adjusted EBITDA well above our prior implied amount.
Great. How much are you including from the Allied acquisition and when does that contribution begin—third quarter or fourth quarter? Please clarify if it's modeled in the fourth quarter.
We included Allied's contribution beginning in the fourth quarter in our modeling. And on the demand environment, we continue to see uptake in C&I across all markets we serve. Residential volumes remain at a reasonable pace despite some national homebuilder margin compression. We have seen more requests for pricing concessions from certain clients, and we decide on a case-by-case basis whether to pursue those opportunities if margin can be maintained through schedule compression or additional resources. Because of our involvement in budgetary services for residential clients, we have seen activity in the Triad market—our largest—pick up almost threefold versus six months ago, which gives visibility into a rebound in projects in the next 18 to 24 months. That suggests 2028 could be a year when residential margins begin to normalize. We are also seeing strong retail activity across our footprint. Overall, demand is very strong across our MSAs, and as we expand geographically, it will smooth some of the localized disruptions we have seen.
Our next question will come from Brian Brophy with Stifel. Your line is open.
Yes, thanks. Good morning, everybody. Wondering if you could touch on the data center end market and pipeline. How's execution on that first project going thus far? And just the latest thoughts on that opportunity in that end market. Thanks.
Brian, the project we have underway is going well; we are ahead of schedule. There have been many revisions and scope additions to the first contract as the client prepares for next phases, which has increased work and opportunity on that site. I can't speak too much about specifics, but execution is going well and the client is satisfied. We are active in the Georgia market and the Carolinas looking at other opportunities. From conception to award, data center projects tend to take longer than traditional end markets—they require more effort in bidding and are not awarded quickly. Having ALGC and Allied now integrated and having the additional resources allowed us to bid confidently at good margins and meet aggressive schedules. The opportunity in data centers is real; our first one is going well, and we are looking to capture more opportunities over the next half of the year.
That's great. Following up on the margin conversation, was there a particular geographic market where you saw subcontractor cost increases and utilization challenges? Was it related to one project or multiple projects, and was any end market particularly concentrated?
It was primarily in the Charlotte market. It wasn't concentrated with one customer; multiple customers experienced delays on jobs, and with those delays, we absorbed costs that we couldn't deploy. Now that work has started and we've given it a lot of attention, we feel comfortable we will see improvement. Longer term, we feel really good about Charlotte's trajectory.
To add to Mike, when you have schedule delays and a deployed workforce, and other projects come online at the same time, it can create the need to partner with former trade partners to expedite work so we don't compromise schedule. Piedmont helps solve that issue by adding wet utility resources we previously subcontracted. As we continue organic growth in Charlotte, it should improve over the next quarter and year.
As you look through July, have you seen a decrease in subcontractor costs and crew utilization bouncing back?
Very much so.
One last question for me: on customers asking for pricing concessions, did you see any impact from that in the quarter, and are you expecting any impact in the back half?
We did not see material impact this quarter. If a request does not meet our margin requirements, we will pass. If there's an opportunity to preserve margin through schedule compression or additional resources, we will consider it. The ask has come from some clients as a corporate mandate; we value relationships, but we will only pursue work that meets our margin and strategic requirements.
The next question is coming from Brent Thielman with Oppenheimer. Your line is open.
Hey, thanks. Good morning. Mike, on the guidance and the increase in revenue, it sounds like you have roughly three months of Allied Paving included. Can you clarify how much revenue you baked in for Allied?
We baked in $28 million of Allied revenue for the period included in our guidance.
You mentioned investments in CRM and other back-office items. Can you level-set on what the new corporate overhead run rate should be, especially as we think about moving into next year?
By the way, I'm glad you asked. Even with the SG&A levels we're at, we still believe we are competitive with peers, and we will ensure we meet public company compliance and information needs. The second-quarter SG&A was 4% of revenue, and that's probably a level we will be looking at in the near future as we normalize corporate overhead.
One last one: you said part of this quarter's margin impact was a shift toward customers outside of residential. What is different about those projects that required the investments you made, and what caused the near-term pressure?
The key issue is deployment schedule. Larger, more complex C&I projects—data centers, large distribution facilities—have different start times and require different sequencing of resources than residential projects. As we shift end-market mix, there are temporary mismatches while we align crews and equipment to those schedules. Over time, as our markets become more mature and vertically integrated, that smooths out and the impact diminishes.
The next question will come from Noah Levitz with William Blair. Your line is open.
Great, thanks. My first question: in the prepared remarks you mentioned you secured land for a second asphalt plant. Given you are a little over a month into having the first one operational, what have you learned so far—what are you liking and not liking? What is the ideal timing for Plant Number 2, and would it be in a different geography than the existing one?
What I don't like is the red tape with municipal approvals; even when you meet requirements, the entitlement process can be burdensome. We will get this plant on plan. The second plant has zoning and air quality approvals in place for the land, but we have not begun site planning or equipment orders. We'll probably give the first plant a quarter or two of run time to fully understand optimal size and model before finalizing plans for Plant Number 2. The land is secured and permits are in place; it's just a matter of completing site-plan and construction approvals. That timing will allow us to incorporate lessons from the first plant into the second.
Would the second plant be a similar margin uplift, and would you sell material to third parties eventually?
It will be both: margin uplift and the ability to serve third parties. We anticipate the first plant will serve Aviator paving in its market and compress schedules, allowing us to do more work and generate more revenue. Once we reach a level where we can support it on our own, we will pull the trigger on the second plant, and additional capacity would enable outside sales to third parties. That outside-sales opportunity is not modeled in our current forecast.
My last question: Raleigh is your only fully turnkey vertically integrated market today. Charlotte has had several acquisitions, Georgia has ALGC plus organic activity and now Allied, and Greensboro is earlier-stage. How turnkey are your markets outside Raleigh, and what inning would you say you are in for Charlotte, Atlanta, and Greensboro?
Greensboro is in the second inning; Charlotte is in the sixth or seventh inning; Atlanta (ALGC) is probably in the fifth inning. We are bringing specialized services in house over time—retaining walls, erosion control, clearing and grubbing, wet utilities—that are necessary to scale and run efficiently. As we elevate wet utilities and other core services, we can layer in smaller specialized services and approach full turnkey capability in those markets.
That concludes our question-and-answer session. I would now like to turn the call back to Jeremy for any closing remarks.
Thank you, operator, and thank you all for joining us this morning. I want to thank the Cardinal team again for everything they have accomplished so far this year. We have a lot of runway ahead of us, and we are going to keep using it. Thank you, and I hope you have a great day.
Ladies and gentlemen, this concludes today's conference call. We thank you for your participation and you may now disconnect. Have a great day.