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As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rick Black with Investor Relations.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Construction Partners conference call to review first quarter results for fiscal 2025. This call is also being webcast and can be accessed through the audio link on the events and presentations page in the investor relations section at constructionpartners.net. Information recorded on this call speaks only as of today, which is February 7, 2025. Please be advised that any time-sensitive information may no longer be accurate as of the date of any replay listening or transcript reading. I would also like to remind you that statements made in today's discussion that are not historical facts, including statements of expectations, future events, or future performance, are forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. We will be making forward-looking statements as part of today's call that by their nature are uncertain and outside of the company's control. Actual results may differ materially. Please refer to our earnings press release for our disclosure on forward-looking statements. These factors, as well as other risks and uncertainties, are described in detail in the company's filings with the Securities and Exchange Commission. Management will also refer to non-GAAP measures, including adjusted net income, adjusted EBITDA, and adjusted EBITDA margin. Reconciliations to the nearest GAAP measures can be found at the end of our earnings press release. Construction Partners assumes no obligation to publicly update or revise any forward-looking statement. And now I would like to turn this call over to Construction Partners' CEO, Jules Smith. Jules?

Thank you, Rick, and good morning, everyone. Appreciate you joining us on the call today. With me this morning is Greg Hoffman, our Chief Financial Officer, and Ned Fleming, our Executive Chairman. We are pleased to report a strong start to our fiscal year 2025 with record revenue, strong year-over-year growth in margins, and another record quarter of backlog built on continued strong demand for our infrastructure services. I'd like to begin by welcoming two new companies to our CPI family of companies. Oberlin Corporation joined us on January 2 as our platform company in our eighth state as we entered Oklahoma. Headquartered in Ardmore, Oberlin has a strong presence in Southern and Western Oklahoma with eight hot mix asphalt plants creating a wide footprint from Durant all the way west to the Texas Panhandle. Oberlin also participates in the vibrant economic activity occurring in North Texas as Dallas Fort Worth continues to expand northward along I-35 and I-75 toward the Oklahoma line. Oberlin's president, Darren Ratoskie, leads a strong team of managers. They are ready to execute our proven strategy of establishing a platform company in each state with CPI providing resources and support for future growth opportunities. And just this week on Monday, we acquired Mobile Asphalt Company in Mobile, Alabama. They have joined our Alabama platform company, Wiregrass Construction, a branded division retaining their brand and strong recognition built up over many decades. We welcome John Whitman and the talented managers of Mobile Asphalt as we add their large operation of five hot mix asphalt plants and 130 employees to substantially strengthen our market share and establish a much wider operational footprint in Southwest Alabama along the growing Gulf Coast. As our CPI family of companies grows, I want to thank all of our employees for their hard work and dedication to safety this past quarter. At CPI, our first core value is family. And that reminds us that while we are a family of companies, more importantly, we are a company of families. We want to make sure that all of our operations, our policies, and most importantly, our culture are supporting and strengthening almost 6,000 families that count on CPI each day. Turning now to first quarter results. Favorable weather gave us a few more workdays than normal due to dry conditions in October. And we were able to generate a record revenue quarter and grow year-over-year revenue by 42%. Transitioning this growth to profitability, our EBITDA margins grew year-over-year by almost 200 basis points thanks to strong project execution by our construction teams. Our vertical integration strategy continues to enhance margins through both construction services and manufacturing asphalt, as well as contribution at our liquid asphalt terminals both on rail in North Alabama and on water in Florida and Texas. Taking a closer look at market conditions throughout the Sunbelt, within our geographic footprint, local markets are growing and our states remain focused on maintaining and improving the quality of their roads as well as increasing capacity to handle the significant migration to Sunbelt states. The evidence of this continued strong demand for infrastructure services is represented by our project backlog that grew sequentially to a record $2.66 billion. We continue to have strong and steady bidding opportunities in the commercial and private markets, with industrial and corporate facilities throughout the southeast continuing to be developed. In the public infrastructure markets, total lettings for roads and bridges continue to increase year-over-year approximately 16% on average across our eight-state footprint. Last quarter, due to our entry into Texas, focused on the immense infrastructure program in the Lone Star state. This quarter, we highlight Florida, where the Sunshine State's strong population growth led them to pass the Moving Florida Forward program in 2023, providing approximately $4 billion in infrastructure supplemental funding. Funding state, county, and municipal programs already in place. This has led contract awards from all public funding sources in Florida to grow by over 50% in the first half of the current state fiscal year. The IIJA continues to provide our eight states with healthy infrastructure funding and I would highlight that as of the end of calendar year 2024, only about 40% of the designated IIJA funds have been spent in the field. So we are just getting to the middle innings. Turning now to our strategic growth model. Our acquisition pipeline continues to remain active with conversations ongoing both in our current eight states as well as potential new states. When we add a platform company in a new state, it widens the playing field for acquisitive growth to attract the bolt-on opportunities. And we are already seeing that in both Texas and Oklahoma. We will continue to stay patient and focused on adding the best strategic acquisitions to our family of companies. The other half of our strategic growth model is organic growth. And our strong 11% organic growth this quarter demonstrates our continued focus on growing the business in our current markets and building shareholder value. Whether it be from adding crews and capacity at our asphalt plants or strategic greenfield expansion. In conclusion, we are pleased to have begun our new fiscal year with a strong start. During this winter quarter, we are hard at work training our people and preparing our fleet and manufacturing facilities to deliver on the record backlog ahead of us during the spring and summer work season. And in the long term, we remain focused and committed to attracting and retaining the best workforce throughout the Sunbelt. At CPI, we know that investment in human capital is the key to building a durable competitive advantage and delivering to our shareholders years of strong growth that is profitable and sustainable. I'd now like to turn the call over to Greg.

Thank you, Jules. Good morning, everyone. I'll begin with a review of our key performance metrics for the first quarter of fiscal 2025, compared to the first quarter a year ago. I'll then discuss our revised outlook for fiscal 2025. Revenue was $561.6 million, an increase of 41.6% compared to the same quarter a year ago. The mix of our total revenue growth for the year was 11.2% organic revenue and 30.4% from recent acquisitions. Beginning this quarter, we are presenting acquisition-related expenses separately from general and administrative expenses on our income statement. General and administrative expenses will now be presented in a manner that differentiates spend incurred to support day-to-day operations, and separately, those expenses associated with acquisitive activity within the quarter. The prior year quarter also reflects this presentation. Reflecting these changes, general and administrative expenses as a percentage of total revenue in the first quarter of fiscal 2025 was 7.9% compared to 8.9% in the first quarter last year. Net loss was $3.1 million during the quarter. This is due to non-recurring expenses related to a transformative acquisition that were incurred during the first quarter of fiscal 2025 and therefore not comparable to the same quarter a year ago. Adjusted net income, we believe, more accurately reflects our first quarter results which exclude any one-time expenses related to the Lone Star paving acquisition. Adjusted net income was $13.3 million and diluted earnings per share using adjusted net income would have been $0.25 in the first quarter of fiscal 2025. This represents an increase of 35% compared to the first quarter last year. Adjusted EBITDA was $68.8 million, an increase of 68% compared to the first quarter of fiscal 2024. Adjusted EBITDA margin for the first quarter was 12.3% compared to 10.3% in the first quarter of last year. You can find GAAP to non-GAAP reconciliations of net income to adjusted net income, adjusted EBITDA, and adjusted EBITDA margin financial measures at the end of today's earnings release. In addition, as Jules mentioned, we are reporting a record project backlog of $2.66 billion as of December 31, 2024. Turning now to the balance sheet. We had $132.5 million of cash and cash equivalents, and $393.4 million available under our credit facility at quarter-end net of a reduction for outstanding letters of credit. As a reminder, in connection with the Lone Star acquisition, on November 1, we entered into an agreement for an $850 million term loan B credit facility. The proceeds of the Term Loan B were used to finance the acquisition and related expenses and to pay down the balance of our revolving credit facility. This availability on our credit facility and cash generation will continue to provide flexibility and capacity to allow for near-term acquisitions and high-value growth opportunities in 2025. The company continues to benefit from an interest rate swap agreement that fixes SOFR at 1.85% which results in an interest rate on $300 million of term debt of 3.6%. The maturity date of this swap is June 30, 2027. As of the end of the quarter, our debt to trailing twelve months EBITDA ratio was 2.88 times. We remain on pace with our strategy of reducing the leverage ratio to approximately 2.0 times within the next four to five quarters to support sustained profitable growth. Cash provided by operating activities was $40.7 million compared to $60 million in the same quarter a year ago. The decrease year-over-year is related to a change in the weather that occurred from Q4 to Q1. This quarter had exceptional weather following the poor weather that finished fiscal 2024. This relationship increased outflows and reduced cash collections in Q1. We had the inverse of this dynamic in Q1 last year, which resulted in decreased outflows and increased collections during the comparable quarter. A higher than expected level of billings and revenue in Q1 will be realized as improved cash flow in later quarters. We remain on pace for FY 2025 to convert 80% to 85% of EBITDA to cash flow from operations. Capital expenditures for the first quarter were $26.8 million. We continue to expect total capital expenditures for fiscal 2025 to be in the range of $130 million to $140 million. This includes maintenance CapEx of approximately 3.25% of revenue, with the remaining amount invested in new growth initiatives. Turning now to our revised outlook, which reflects our latest expectations for fiscal year 2025 results, including the recent acquisitions of Overland Corporation and Mobile Asphalt. The increased ranges are as follows: Revenue in the range of $2.66 billion to $2.74 billion, net income in the range of $93 million to $105.6 million, adjusted net income in the range of $109.5 million to $122.1 million, adjusted EBITDA in the range of $335 million, and adjusted EBITDA margin in the range of 14.1% to 14.6%. And with that, we will open the call to questions. Operator?

Thank you. If you would like to ask a question, you may press star two if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question is from Andy Wittmann with Robert W. Baird. Please proceed.

Oh, great. Thanks for taking my questions, and good morning, everyone. Good morning. Morning, Andy. Hey. Let's see here. Where do I want to start? I guess maybe, I guess, the acquisitions that you have done is probably where I want to start. Anything that you can do here, Jules or Greg, to help us understand the contribution of these two acquisitions or close subsequent to the quarter to guidance. I think would be helpful as it relates to their revenue contribution maybe for the fiscal year or their backlog contribution that we should expect to see next quarter, I think, would all be helpful. Cash outflow, maybe in total. I know you probably do not want to disclose individually, but maybe in total, we can get an order of magnitude. Those are the types of things that I think some investors are wondering about this morning.

Yeah. Sure. That sounds good, Andy. Yeah. For the combined two acquisitions, we are looking at revenue for the remainder of the year in the $120 million to $130 million range. And so backlog, just to make sure we understand that none of that backlog for those two acquisitions is in our 12/31/24 backlog. That backlog is going to be in the $90 million to $100 million range.

Okay. Super helpful. Any comments on purchase price? Are you going to wait for the disclosure that we see later maybe?

Andy, I would just say we are excited about Oberlin and Mobile Asphalt. Both of these were just two strategic opportunities that are not going to come along that often. I would say from a purchase price standpoint, they were the multiples that, you know, that had been historically what we have paid. And so they are very much our typical acquisition multiples and one of them was a platform company, and one of them was a bolt-on. And so very much just in keeping with our acquisition strategy.

Yep. Okay. And then just maybe strategically here, Jules, you have done I mean, these are what it's pretty big bolt-on five plants, you know, new platform, Oklahoma, new platform recently, Texas. Do you just need I'm just kind of curious as how thinking about it. Does because you have done some larger M&A here in the last few months, Jules, do you need to kind of digest and slow down? Maybe get the balance sheet a little healthier or is it kind of full steam ahead and you'll figure it out when you do not want to pass up an opportunity to find a good company. I'm just kind of curious in terms of the operational impact. Well as the financial impact in terms of just kind of sorting this out and making sure the company's on steady footing to keep moving ahead.

Yeah. Andy, I think it's a little bit of all that. I mean, we clearly saw these two strategic opportunities as ones that we could not pass up. But we are also committed to having a strong balance sheet. And as Greg said, you know, deleveraging over the next four to five quarters to get in our range that we like to be in. So we are going to continue to have conversations and develop our acquisition pipeline, but we are also committed to, you know, integrating the companies well and we never want to go faster than we can organizationally integrate and we want to be healthy on the balance sheet.

Fair enough. And just maybe for a finer point on that one, Greg, can you talk about where you see pro forma leverage today after the two subsequent to quarter-end deals just so that investors have a sense of where you're standing.

Yeah. I think it'll tick up slightly, maybe closer to three. But okay. I think, again, still, we are looking to bring that down four or five over the next four or five quarters.

Got it. Alright. I'll leave it there. You have the floor, and thanks for your time, guys.

Thanks, Andy.

Our next question is from Catherine Thompson with Thompson Research Group. Please proceed.

Hi. Thank you very much for taking my questions today. Just pulling string a little bit more on the newly acquired companies Lone Star certainly changed the gross margin and profile in particular. But when looked combined for the three acquisitions, the two new ones in Lone Star, how should we think about gross margins and SG&A once integrated as we look into the full year? For their this is really on a percentage basis. Terms of how we should think about modeling.

Yeah. Catherine, I'll give the just a big picture of the margins and acquisitions, and then let Greg talk about maybe the SG&A and the scale. You know, obviously, as we talked about last fall, Lone Star was a transformative acquisition and moved us almost two years ahead on a road map to 2027. And they're, you know, it started just as you would expect. They're doing a great job. The management team in Austin is just doing wonderfully. These two new acquisitions, Mobile Asphalt and Oberlin, have margins that are typical of what you would expect and they're baked into our new guidance. And so but the one thing that is true is what we our strategy is to for every acquisition, to give them the tools to bid smarter, to bid more patiently, to allow them to bid more work. And so not only are they going to grow organically over time, but margins are going to trend upwards. And so we fully envision that for both Oberlin and Mobile Asphalt.

Great. Yeah. And so I would just follow-up to that with that and say that, you know, they are built into the new guidance. So if we think about what Andy just asked me a minute ago, that $120 million, $130 million revenue and then backing into the EBITDA think that'll give you some pretty good information as to what we think those companies are going to do in the short and long term.

Okay. Great. In could you talk a little bit more about just your cost inflation outlook and price cost spread as you look into this year, it will be tailwind, headwind. We, you know, had some commentary yesterday. From earnings as seeing that, too, in particular, could be a potential tailwind.

Yeah. You know, Catherine, right now, we are expecting a pretty typical year from a construction inflation standpoint. You know, we've said that we think inflation could be anywhere from 4% to 5% if you look across our total cost structure. And we, every day at the estimating table, we're putting those in our bids and passing those through. Clearly, from a few years ago, we learned to be nimble. And so if we see inflation spike up, we're going to react quickly. But right now, we're seeing a pretty stable environment in our cost structure for materials, aggregates, concrete, pipe, labor, energy costs are pretty steady. Natural gas spiked up this quarter a little more than diesel. And, you know, both through hedging and through adjusting our input costs, we just learned to pass those increased costs through.

Great. And have you seen just as you it's a great color on IIJA, and you also gave some good color prepared commentary talking about Florida, in particular, for funding. Any other updates or changes you want to say from a state DOT funding for the states that are important to you? And along with that, have you seen any meaningful change in terms of how we should think about funding going forward post-election? Thank you.

Oh, well, I would say, Catherine, all of our states have healthy funding mechanisms. Clearly, Texas, which we talked about last quarter, is just in a whole different stratosphere from an infrastructure funding standpoint. Florida is right behind it in terms of that, and we wanted to highlight that this quarter. But when you look at Alabama, Tennessee, North Carolina, Georgia, South Carolina, all have really good funding programs. They're all up year-over-year on contract awards. And so you know, we feel blessed to be in states that take infrastructure seriously. And have passed supplemental funding because they're growing. As far as IIJA, you know, the heart of it is really just the five-year surface transportation bill. It's not some unique bill that the federal government passed. We think that, you know, we're in the middle innings. There's still a lot of spending that's got to come through on that bill, but I can, you know, I can tell you I was just in Washington last week, and they're already starting to talk about the reauthorization. That's coming up here in the next year and a half. And so we fully expect that they'll have another five-year reauthorization. And then it'll go up like it always has. So I feel like that, you know, the roads need repair. And I think our state and our federal governments get that. And I think the new administration, which I'd like just to ask Ned to speak a little bit about the new administration, but we're excited about just some of the things we're hearing out of Washington. Ned?

Catherine, did that answer your question?

Yes. It did.

You know, from an administration standpoint after 25 years, I think if there's anything we've learned regardless of political affiliation, the leaders of both parties understand that the roads need work. They're graded very poorly throughout the country. The demand is high. Voters do not want to sit in congestion anymore. And so not just the federal government, the states, the municipalities, the cities, the counties continue to find more and more capital to be able to put into the roads. And for us, it's a wonderful thing because it gives us an opportunity to continue to acquire the businesses to move closer to more vertically integrated to improve efficiencies and increase margins. And we say the thing on the acquisitions in Mobile, this is our second acquisition within a year. And that's an important thing to note because it allows us to have a whole lot more great people, and assets in a territory that's one of the fastest-growing territories in Alabama. As far as this administration or any administration, our job is to be the best bidder to provide efficient, effective, road work.

Perfect. Thank you so much.

Thanks, Cassie. Yep.

Our next question is from Tyler Brown with Raymond James. Please proceed.

Hey. Good morning, guys.

Morning, Tyler.

Hey. Greg. I want to come at the guidance. It's maybe a little bit different, but how much revenue from M&A that we know of what is that incremental dollar contribution or could you give it as a percentage growth? It's for fiscal 2025.

Yeah. Yeah. So total growth from acquisitions for the year is going to be somewhere in the $730 million, $740 million, $750 million range. So that puts, you know, requisite acquisitive revenue for the remainder of the year somewhere at $610 million, $630 million. Somewhere around in there.

Okay. And then can you get I know it's early, but I would assume some of that rolls into 2026. So the first half of 2026 also has a little bit of a benefit.

It certainly will. Yeah.

Okay. Okay. Jules, there's, you know, call it maybe some concerns out there that you're moving Texas and Oklahoma where a function would be running out of let's call it, space, M&A space on your in your heritage southeastern market. I mean, I think the Mobile acquisition since maybe counter that, but can you just talk about that M&A pipeline maybe in the more heritage markets.

Yeah. Tyler, good question. You know? And I would just say, last year, we grew 17%. About half of it was acquisitive and half of it was organic. Clearly, this year with Lone Star, it's going to be, you know, much larger. But, you know, we're going to continue in the long term to be a growth company. You're right. There's a lot of white space in the states we were in, the six states we were in before Texas and Oklahoma. And, you know, as Mobile showed last year, we did eight acquisitions. So there's a lot of runway and a lot of room in the states we're in. So Ned?

Hey, Tyler. We just I just had this conversation with Charles Owens, and we were speaking at the last board meeting and commenting that after 25 years of doing this, I would say there is more acquisition opportunity today than we've ever seen. The fragmentation continues to be large. The patriarchs and matriarchs and families are getting older and they want to sell. So interestingly enough, even after all this time, this market is still a large, highly fragmented market. And we're seeing more opportunity, not just in Texas and Oklahoma, but in Alabama and Georgia, South Carolina, North Carolina, and Florida. So we would anticipate being pretty picky seeing so many acquisitions. Tyler, one more thing just to add to that. As you know, when we add a platform acquisition, it's more of it's more of a function of finding the right management team to be the face of our business in that state. And those the timing of those is really when we can meet the right the right group that's ready to join our family of companies. And so you know, with Lone Star and Oberlin, we feel blessed to have found those management teams. But that's really the key with a platform acquisition. And those that's the key to timing of that.

Right. And back on Oberlin, I mean, this is a true platform. So I get it that South Oklahoma into North Dallas is growing, but we should see you springboard ultimately maybe into OKC, Tulsa eventually. That'd be the idea.

Yeah. I think we've got a proven track record once we get a platform and an entrepreneurial management team they're going to with CPI behind them, they're going to start looking around for greenfield opportunities, organic growth, but also bolt-on acquisitions and we've got a 20-year proven track record of that model and so I do not see anything different in Texas and Oklahoma. In Tulsa, the growth city is growing in a big way as is many parts of Oklahoma.

Yeah. And my last one here is actually back on with the asphalt. So I think you guys are up to three liquid asphalt terminals with Lone Star. So number one, roughly how much of your of your asphalt are you sourcing through those terminals? And do you think that with the Rola, it's clear desire, those they clearly want to grow you guys maybe in administration, it's going to be a little bit easier on some permitting. I mean, could we see some additional investments organically on that side over the next couple of years?

Tyler, I do think that liquid asphalt terminals are a key part of our vertical integration strategy. You know, in our legacy states before we added the terminal in Houston, I would say we were probably a third of our liquid asphalt was internally sourced from our terminals in Florida, in North Alabama. Lone Star supplies most of their liquid asphalt from their terminals. So it's a much higher percentage. You know, clearly, as we build a density in a certain area, it makes sense to look at vertically integrated into the liquid asphalt space. We're already buying the liquid asphalt. So it just gives us a chance to capture more of the margin along the value chain.

Okay. Perfect. Thank you, guys.

Our next question is from Adam Thalhimer with Thompson, Davis and Company. Please proceed.

Hey. Good morning, guys. Congrats on the strong start to the year.

Thank you, Adam.

Jules, the 200 basis point increase in adjusted EBITDA margin year-over-year in Q1. Was that entirely organic? I mean, you talked about good project execution in your script. Was that pulled up by Lone Star?

Adam, I think it's both. I think Lone Star clearly, as we disclosed last fall, has really good margins. And so adding them into the mix certainly helps. But we also said we expected our business, even without Lone Star, to grow the 50 to 60 basis points that, annually, and so our legacy businesses grew their margins as well. And then finally, when you have good weather, you're going to get more fixed cost recovery. We ran hard this quarter. And so that certainly helps when you can recover your fleet and your manufacturing facilities at the level we did.

Then as you look at DOTs, on how much the spending might grow this year?

I think, Adam, you know, the funding, and it's always important to understand whether you're talking about funding or lettings, because lettings can be a little lumpy. Whereas funding is a little more consistent. But we look at the state funding mechanisms combined with IIJA, we fully expect our the funding to grow, you know, seven mid to high single digits. And then when you look at the lettings, as I said, they're already on average, if you look back on calendar year 2024, was up about 16%. And then finally, you have to look at each state and say what's the total funding vector. And that's why in Florida, we're going to make sure to highlight that get a full picture of Florida, you have to look not only at the Florida DOT, but the counties and the municipalities. When you look at that, it's really up year-over-year. So, you know, I think that we're going to expect overall for the funding to continue to grow like, with IIJA at the mid to high single digits.

That's good. And lastly, curious if you picked up any assets from the three most recent deals that maybe you could monetize. I know I don't know if they have any excess land or aggregates quarries. I know you're not as focused there. Just to help pay down debt and reload for future deals.

Yeah. And we're always looking to monetize whatever we can, whether it's excess equipment, excess land. Certainly, we're wanting to make sure we utilize the cash for the assets that are generating EBITDA. Right? So, yeah, we'd definitely look for that.

Okay. Thanks, guys.

Thanks, Adam.

Our next question is from Michael Feniger with Bank of America. Please proceed.

Yep. Hey, everyone. Thanks for squeezing me in and taking my questions. Appreciate it.

I just was it? Was it?

Yeah. Thanks, guys. Just I just want to be clear and double click on something. There's been some headlines, guys, about some pauses on funding to IRA and even IIJA projects. Now it sounds like that's more tied to maybe green energy. I just want to hear from you guys, like, are you or your customers the DOTs, are they hearing anything about issues accessing funding, delays on payments, if you're hearing of that kind of filtering through to your core work yet.

Mike, we have not heard a thing about any pause on funding for projects or for work that's being let. We have heard, which I think is good for CPI, is the new administration is looking for ways to put more of the funds that they can toward hard infrastructure. And that's what we do. So we feel like that the new Secretary of Transportation, Secretary Duffy, has been very clear. They want to try to move funds to the highest and best use, and President Trump has always prioritized hard infrastructure. So we feel like that could bode well for us.

Helpful. And I just want to ask, Jules, I mean, you guys have a record backlog. How is this kind of informing you guys in the bidding environment right now? I mean, I think you talked about look. There's still some inflation out there. In terms of materials, aggregates, a little bit of energy. I'd you know, it feels like liquid asphalt and diesel has been a good guy, but I'm just curious how that's kind of informing you. You know, could we expect actually the backlog maybe to plateau at some point because you're being more aggressive and you guys are trying to digest? I'm just kind of thinking about that record backlog with inflation, how that's kind of informing what you're seeing in the market. Are you seeing competitors out there? How is it informing their bidding environment if everyone's acting accordingly? Thanks, guys.

Yeah. Mike, good question. You know, as we've said, the key to having a good backlog is to have a good backlog. And to be able to bid patiently. And that's what we've done. We've done it for quite a few quarters now. And the backlog has continued to grow sequentially. I think, Greg, this is the seventeenth quarter. Which is not typical. And we keep saying that. It would not surprise us for the backlog, this busy work season when we're burning off a lot of revenue to go down sequentially and that wouldn't bother us at all because that's been the historical norm before these last few years. I think our competitors are busy. We haven't really seen any change at all in the competitive landscape, but the fact that we're able to win work at good margins means that they're busy and bidding smart as well. So we've still got plenty of bidding opportunities. Our record backlog does allow us to bid patiently and to bid at, you know, good margins.

I'd add one thing to that too. I think 12/31/24 is maybe in as well and that we did have a significantly better revenue quarter than we expected because of the weather. But along with that, we were able to, again, grow the backlog sequentially. So I think that tells you a little bit about demand.

Our next question is from John Ramirez with DA Davidson. Please proceed.

Good morning. Thank you for the time.

Morning, John.

In the past in fiscal 2024, you guys saw a pretty good commercial activity. I just want to know, based on your backlog, what is the level of commercial and private activity versus fiscal 2024, what do you guys expect there? And I just and, like, a second part for a little bit of clarification. Of this backlog, how much of that is organic in the private sector versus, I guess, some contributions from Lone Star. Thank you.

Hey, John. I'll give you a just a high-level picture of the commercial markets and then let Greg sort of give you what he expects in terms of the breakdown. But we are continuing to see very healthy markets throughout the Sunbelt in the commercial and private markets. We certainly feel like in the last few months, there's been an increase in activity in terms of projects getting started. Just to give you a flavor of some of the things we've been on just in the last couple of months, and one North Carolina, Amgen, is building a new pharmaceutical facility in Holly Springs. In Florida, we're working on a new Amazon facility in Palm City. In Texas and all, we're working on an expansion at the Tesla manufacturing facility. And so those are just some examples of the variety of projects that CPI works on and bids in the commercial market. And the amount of commercial activity from a corporate manufacturing standpoint that we're seeing throughout the Sunbelt. Greg, you want to review sort of how you see the numbers?

Yes. So the numbers in terms of how the first quarter of 2025 looked, as it relates to the breakdown between public and private. It was it's very similar to the way it started in 2024. So 58% public, 42% private. What happened last year was that move to by the end of the year, 63% public. 37% private. So we see that same trend happening in 2025, 63% public. It's just still a very strong environment, and our backlog is supporting both of those numbers and will continue to support that.

Thank you. Appreciate the time.

We have reached the end of our question and answer session. I would like to turn the conference back over to management for closing remarks.

We'd like to thank everyone for joining us today, and we look forward to speaking again next quarter.