Cardinal Infrastructure Group Inc. Class A Common Stock (CDNL) Earnings

Management highlights

### Strategic Growth & M&A - Announced the accretive acquisition of Atlanta-based Allied Paving, the company's ninth acquisition since 2021, completed immediately following a successful follow-on equity offering. The deal was sourced, negotiated and closed by the local ALGC leadership team using the corporate M&A playbook, demonstrating successful integration of the ALGC acquisition and validating the company's decentralized growth model. - Allied Paving adds an experienced crew and complementary paving equipment to North Atlanta operations, enabling fully in-house turnkey delivery of grading, site work and paving projects, which compresses project timelines and retains more margin internally rather than paying third-party subcontractors. Allied Paving generates $108 million in annual revenue at a 20.3% adjusted EBITDA margin, acquired at an approximately 5.5x EBITDA multiple. - Three acquisitions completed in 2026 to date, with the Piedmont Pipe acquisition in Charlotte adding density and wet utility capabilities to that market, moving it closer to full turnkey service capability. - The company maintains a robust M&A pipeline focused on bolt-on acquisitions that add local density, expand geographic footprint, and complete full turnkey service offerings across new markets. ### Vertical Integration & Operational Progress - Completed construction of the first Asphalt manufacturing facility (under the Aviator brand) near Raleigh, which is ramping up as expected. The facility reduces reliance on third-party asphalt suppliers and will eventually enable third-party material sales to external customers. Land is already secured for a second asphalt facility, which has received zoning and air quality permits. - Ongoing investments in fleet deployment, equipment management systems, and a new company-wide CRM/financial reporting system, which improves real-time operational and financial visibility and ensures SOX 4 compliance as the company matures as a public firm. ### End Market & Demographic Tailwinds - Strong, sustained demand driven by rapid population growth across the Southeast U.S. North Carolina and Georgia rank among the fastest growing U.S. states, with North Carolina leading the nation in population additions in the year ended July 2025. Severe structural housing shortages exist in core markets (e.g. a 37,000 unit shortage in Raleigh, with Wake and Mecklenburg counties projected to face over 110,000 unit shortfalls each by 2029), supporting ongoing residential development demand. - Noted a genuine recovery in commercial retail and retail distribution project activity, alongside growing opportunity in larger, more complex commercial and industrial projects including data centers and large-scale distribution facilities. ### Safety & Human Capital - Over 9,000 documented safety activities completed in Q2, a 60% year-over-year increase. Across 57,800 individually inspected safety items, over 99% met company standards, with proactive identification of deficiencies triggering immediate corrective action. The company maintains a policy that does not accept sacrificing safety for speed or project delivery timelines. - Expanded recruiting and training investment to build bench strength for project managers and field crews, supporting the execution of larger, more complex projects and continued scaling.

Guidance

- Full-year 2026 revenue guidance was significantly raised from a previous midpoint of $680 million to a new range of $880 million to $900 million, representing 95% year-over-year growth at the midpoint of $890 million. $28 million of revenue from the newly acquired Allied Paving is included in this guidance, with contributions expected to begin in the fourth quarter of 2026. - Full-year 2026 adjusted EBITDA margin guidance was revised to 16% to 18%, down from prior expectations of over 20%. This revision reflects one-time Q2 2026 cost pressures, higher planned general and administrative investments to scale corporate infrastructure for a larger public business, and investments in people and resources to meet robust customer demand. Even with the lower margin range, midpoint full-year adjusted EBITDA is projected to exceed $150 million, up from the prior guidance of ~$136 million, driven by the large revenue increase. - Management reaffirmed its unchanged medium-term adjusted EBITDA margin target for the business of the low 20s. Margins are expected to improve as vertical integration is completed in newer markets, deployment mismatches are resolved, synergies across the platform are realized, and the cost structure right-sizes as the business scales, with localized weather disruptions expected to have a smaller overall impact as geographic diversification increases. - Management expects second half 2026 margins to improve to the ~19% range, driven by the resolution of Q2 delays, higher revenue volume, alignment of crew deployment to the new diversified project mix, and stabilization of new market costs.

Segment performance

Cardinal Infrastructure Group reports total Q2 2026 revenue of $227 million, representing a 114% year-over-year increase, with 56% organic growth. Breakdown by geographic market: 1) Raleigh market: delivered 40% organic year-over-year revenue growth, driven by sustained commercial and industrial demand and ongoing share gains; 2) Charlotte market: also achieved over 40% year-over-year revenue growth, with density improvements following the Piedmont Pipe acquisition; 3) Greensboro market: delivered strong organic share gains across a diversified end market mix, supported by ongoing investments in turnkey service capabilities; 4) ALGC (Atlanta, Georgia): continued strong growth momentum, with backlog increasing 10% quarter-over-quarter since March 31, 2026, but Q2 results were negatively impacted by severe weather events that slowed deployment of high-margin projects. In terms of overall profitability: GAAP gross profit was $24.5 million, up 67% year-over-year; adjusted gross profit was $36 million, up 60% year-over-year; adjusted gross margin was 15.9%, a 540 basis point decline from the prior year; adjusted EBITDA was $28.1 million, growing 43% year-over-year in absolute dollars; general and administrative expenses were $9 million, equal to 4% of total revenue. Total company backlog at quarter-end was a record $866 million, up 35% year-over-year, with balanced growth across commercial/industrial and residential end markets.

Risks & headwinds

- Margin pressure in Q2 2026 from multiple sources: higher-than-expected subcontractor labor and equipment rental costs in newer markets that have not yet achieved full vertical integration, crew underutilization from mismatched deployment timelines as the business shifts to a more diversified mix of larger commercial/industrial projects, severe localized weather disruptions in Georgia that slowed high-margin project deployment, and higher-than-expected general and administrative costs to build mature public company infrastructure and compliance capabilities. - Geographic concentration risk: localized disruptions (such as the Georgia weather event) have an outsized impact on overall results, though this risk is expected to moderate over time as geographic diversification increases. - Municipal approval red tape for capital projects such as new asphalt plants can delay deployment even when all core requirements are met. - National residential builder margin compression has led some residential clients to request pricing concessions from the company, creating pressure on project margins for some residential opportunities. - Longer conception-to-award timelines for commercial/industrial end markets such as data centers require more upfront investment in the bidding process compared to traditional end markets.

Analyst Q&A

• Q: How much of Q2 margin pressure came from one-time/weather factors, was pressure concentrated in Georgia, and what is the visibility for second half margin improvement and the medium-term low 20s margin target? /

  A: Q2 margin pressure came from four main transitional headwinds: one-time higher subcontractor/rental costs to keep pace with rapid demand, deployment mismatches from the shift to a more diversified project mix, severe weather in Georgia slowing ALGC deployment, and higher-than-expected SG&A to scale public company infrastructure. Delays on large Charlotte projects also contributed to temporary underutilization. Management notes all headwinds are transitional, not structural. Resolution of delays, alignment of crew deployment, and incremental vertical integration from acquisitions are driving improvement in July, and margins are expected to rise to ~19% in the second half, hitting the 16%-18% full-year guidance with higher absolute EBITDA than prior guidance. The medium-term low 20s margin target remains unchanged.

• Q: How is the data center end market opportunity progressing, and where are subcontractor/cost utilization challenges concentrated? /

  A: The company's first data center project is progressing well, ahead of schedule with additional scope added by the client, and the customer is satisfied. Bidding cycles for data center projects are much longer than traditional projects, so the sales take longer to close. Subcontractor and utilization challenges were concentrated in Charlotte, driven by project delays that created temporary underutilization and required expedited subcontractor support to get back on schedule. The Piedmont Pipe acquisition will reduce reliance on third-party wet utility subcontractors long-term, and conditions have already improved in July 2026. The company's recent vertical integration in Atlanta allowed it to win a large, complex retail distribution facility similar in scale to a data center at attractive margins, demonstrating the benefit of in-house capabilities.

• Q: How much Allied Paving revenue is included in guidance, what is the sustained SG&A run rate, and why does the shift to non-residential projects create near-term margin pressure? /

  A: $28 million of Allied Paving revenue is baked into full-year 2026 guidance. The Q2 SG&A level of 4% of revenue is expected to be the sustained run rate going forward, which remains ahead of peer levels but is necessary to support compliance and systems for a growing public company. The shift to more non-residential projects creates near-term pressure because larger, more complex commercial/industrial projects have completely different deployment and scheduling timelines than the residential work the company was originally built around. As the business diversifies and scales, this mix shift will smooth out and deployment will align, eliminating this temporary pressure.

• Q: What have you learned from the first asphalt plant, what is the timeline and plan for the second plant, and how turnkey are your core non-Raleigh markets? /

  A: The primary challenge with the first plant has been unexpected municipal entitlement red tape despite meeting all required requirements. The land for the second plant is secured, and all zoning and air quality permits are already in place, but the company will wait 1-2 quarters of operating data from the first plant to finalize size, specifications, and timing. The second plant will support internal paving needs and also enable third-party asphalt sales, an incremental upside not currently included in forecasts. For market maturity: Charlotte is in the 6th/7th inning (nearly fully turnkey), Atlanta is in the 5th inning, Greensboro is in the 2nd/3rd inning. All markets are scaling responsibly, with core wet utility capabilities added first, followed by smaller specialized services to complete the full turnkey offering.