Construction Partners amends credit agreement, increases facilities to $500 million

Construction Partners, Inc. (NASDAQ:ROAD), a $5.87 billion market cap infrastructure company that has delivered an impressive 96.71% return over the past year, announced Wednesday it has amended its existing credit agreement, increasing its revolving credit facility from $400 million to $500 million and its term loan facility from $400 million to $600 million. The changes were made on June 30, according to a statement based on a SEC filing. According to InvestingPro analysis, the company operates with a moderate level of debt, maintaining a healthy current ratio of 1.42.

The amendment, referred to as the Fifth Amendment to the Third Amended and Restated Credit Agreement, also allows the company and its subsidiaries to request additional incremental term loans or increases in the revolving credit facility. The aggregate principal amount for these incremental facilities can be up to the greater of $400 million or the company’s consolidated adjusted EBITDA for the previous four fiscal quarters.

The maturity date for all outstanding borrowings under the amended agreement has been extended to June 28, 2030. The amendment also modifies certain negative covenants and replaces a financial covenant that previously required a minimum fixed charge coverage ratio with a new covenant requiring a consolidated interest coverage ratio of at least 3.00 to 1.00.

Additionally, the maximum consolidated net leverage ratio permitted under the agreement will decrease over time, starting at 4.50 to 1.00 through December 31, 2025, and declining to 3.75 to 1.00 for fiscal quarters ending September 30, 2027 and thereafter.

The amendment removes a 0.10% adjustment to SOFR-based interest rates, allowing annual interest rates to be calculated using a base rate, Term SOFR, or Daily Simple SOFR, plus an applicable margin percentage based on the company’s consolidated net leverage ratio.

TD Bank, N.A. and City National Bank have joined as joint lead arrangers, and certain additional subsidiaries of Construction Partners were added as borrowers. Proceeds from the increased term loan were used to pay off the outstanding principal balance under the revolving credit facility, resulting in $600 million outstanding under the term loan and no amounts outstanding under the revolving facility as of June 30.

This summary is based on a statement from the company’s SEC filing.

In other recent news, Construction Partners Inc reported impressive second-quarter earnings for 2025, surpassing market expectations. The company achieved an earnings per share of $0.08, outperforming the projected loss of $0.05, and recorded revenue of $571.7 million, a significant 54% increase from the previous year. This strong performance is attributed to both organic growth and strategic acquisitions, with adjusted EBITDA reaching $69.3 million, marking a 135% year-over-year increase. The company also reported a record backlog of $2.84 billion, indicating a robust pipeline of future projects.

Additionally, analysts have shown optimism towards Construction Partners Inc, with Raymond (NSE:RYMD) James raising the stock’s price target to $111 and maintaining a Strong Buy rating. The analyst highlighted the company’s expansion into new markets, such as Texas, Oklahoma, and Tennessee, as a key driver of future growth. Meanwhile, BofA Securities also increased the price target to $107, emphasizing the company’s strong fiscal second-quarter performance and increased full-year guidance.

These developments reflect the company’s strategic growth initiatives and the favorable market conditions supported by federal and state infrastructure funding. Construction Partners Inc’s focus on public construction projects, driven by recurring paving services, is expected to provide a stable revenue stream, further bolstering investor confidence.

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