Construction Partners, Inc. Acquires Platform Company in Oklahoma

Rhea-AI Summary

Construction Partners (NASDAQ: ROAD) has acquired Overland , an asphalt manufacturing and paving company based in Ardmore, Oklahoma. The acquisition includes eight hot-mix asphalt plants serving southern and western Oklahoma and northern Texas markets, marking CPI's entry into its eighth state.

Overland , founded by Reggie Sullivan and led by President Darren Ratajski, provides paving services for public, commercial, and residential projects. The company is strategically positioned to capitalize on strong asphalt markets in Oklahoma and northern Texas, particularly as the Dallas metro area expands northward.

The acquisition aligns with CPI's strategy to reduce its leverage ratio to approximately 2.5x in the next 4-6 quarters while supporting sustained, profitable growth. The company emphasized the cultural and operational fit of this strategic expansion.

Positive

• Entry into eighth state market expanding geographical footprint
• Addition of 8 hot-mix asphalt plants increasing production capacity
• Strategic positioning to benefit from Dallas metro area expansion
• Alignment with leverage ratio reduction strategy (target 2.5x)

Negative

• Potential increase in short-term leverage from acquisition
• Integration costs and risks associated with new market entry

Insights

M&A Analyst

The acquisition of Overland marks a strategic expansion for Construction Partners into Oklahoma, representing their eighth state of operations. The deal includes 8 hot-mix asphalt plants and significantly enhances ROAD's market presence in the growing Dallas metro corridor. The geographic expansion aligns with infrastructure development trends, particularly as Dallas expands northward.

From a financial perspective, ROAD's commitment to reducing their leverage ratio to 2.5x within 4-6 quarters suggests disciplined capital management alongside growth initiatives. The acquisition's proximity to Dallas positions ROAD to capitalize on both public infrastructure projects and private development opportunities in a high-growth region. The vertical integration model, combining manufacturing and paving services, should drive operational efficiencies and margin expansion.

For retail investors: Think of this like a puzzle piece that perfectly fits into ROAD's expansion strategy - they're not just buying plants, they're buying strategic positions in growing markets where infrastructure spending is likely to increase. The focus on leverage reduction while expanding suggests careful financial planning that could benefit long-term shareholders.

Infrastructure Specialist

This acquisition demonstrates strong market positioning in the infrastructure sector, particularly in the context of increased federal infrastructure spending. Overland's established presence in Oklahoma and northern Texas provides ROAD with immediate market access and operational capabilities in regions experiencing significant development pressure.

The 8 asphalt plant network creates a robust operational footprint that can efficiently serve both public and private sector projects. The strategic value lies in the plants' locations relative to the expanding Dallas metroplex - as urbanization pushes northward, demand for road construction and maintenance will naturally follow. This creates a long-term growth runway for ROAD.

Simple explanation: Imagine buying a chain of ice cream shops just before summer starts in a neighborhood that's quickly growing. That's essentially what ROAD is doing here - they're positioning themselves in areas where they know there will be strong future demand for their services.

Transaction Adds Eight Hot-Mix Asphalt Plants Serving Oklahoma and Northern Texas

DOTHAN, Ala., Jan. 3, 2025 /PRNewswire/ -- Construction Partners, Inc. (NASDAQ: ROAD) ("CPI"), a vertically integrated civil infrastructure company specializing in the construction and maintenance of roadways in local markets across the Sunbelt, today announced that it has acquired Overland Corporation ("Overland"), an asphalt manufacturing and paving company headquartered in Ardmore, Oklahoma. From its eight hot-mix asphalt plants, Overland provides paving services throughout southern and western Oklahoma and northern Texas on a variety of public, commercial and residential projects.  

Fred J. (Jule) Smith, III, CPI's President and Chief Executive Officer, said, "With today's transaction, we are pleased to enter our eighth state and to welcome Overland Corporation to the CPI family of companies. Under the leadership of its founder and owner, Reggie Sullivan, Overland has grown to become one of the top infrastructure contractors in Oklahoma and is well-positioned to benefit from the strong asphalt markets in Oklahoma and northern Texas as the Dallas metro area continues to expand northward. We have known and respected Darren Ratajski, Overland's president, for many years, and we are excited to support the Overland team as they execute on numerous organic and acquisitive growth opportunities in their local markets. This acquisition is an ideal fit from a cultural and operational perspective and is consistent with our strategy of reducing CPI's leverage ratio to approximately 2.5x in the next four to six quarters to support sustained, profitable growth."

About Construction Partners, Inc.

Construction Partners, Inc. is a vertically integrated civil infrastructure company operating in local markets throughout the Sunbelt in Alabama, Florida, Georgia, North Carolina, Oklahoma, South Carolina, Tennessee and Texas. Supported by its hot-mix asphalt plants, aggregate facilities and liquid asphalt terminals, CPI focuses on the construction, repair and maintenance of surface infrastructure. Publicly funded projects make up the majority of its business and include local and state roadways, interstate highways, airport runways and bridges. The company also performs private sector projects that include paving and sitework for office and industrial parks, shopping centers, local businesses and residential developments. To learn more, visit www.constructionpartners.net.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained herein that are not statements of historical or current fact constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934. These statements may be identified by the use of words such as "seek" "continue," "estimate," "predict," "potential," "targeting," "could," "might," "may," "will," "expect," "should," "anticipate," "intend," "project," "outlook," "believe," "plan" and similar expressions or their negative. The forward-looking statements contained in this press release include, without limitation, statements relating to the benefits of a business acquisition and the expected results of the acquired business. These and other forward-looking statements are based on management's current views and assumptions and involve risks and uncertainties that could significantly affect expected results. Important factors that could cause actual results to differ materially from those expressed in the forward-looking statements are set forth in the Company's most recent Annual Report on Form 10-K, its subsequent Quarterly Reports on Form 10-Q, its Current Reports on Form 8-K and other reports the Company files with the SEC. Forward-looking statements speak only as of the date they are made. The Company assumes no obligation to update forward-looking statements to reflect actual results, subsequent events, or circumstances or other changes affecting such statements except to the extent required by applicable law.

Contact:

Rick Black / Ken Dennard
Dennard Lascar Investor Relations
ROAD@DennardLascar.com
(713) 529-6600

 

View original content:https://www.prnewswire.com/news-releases/construction-partners-inc-acquires-platform-company-in-oklahoma-302341466.html

SOURCE Construction Partners, Inc.

FAQ

What assets did Construction Partners (ROAD) acquire in the Oklahoma acquisition?

Construction Partners acquired Overland , which includes eight hot-mix asphalt plants serving Oklahoma and northern Texas markets, providing paving services for public, commercial, and residential projects.

How many states does Construction Partners (ROAD) now operate in after the Overland acquisition?

With the Overland acquisition, Construction Partners now operates in eight states, with Oklahoma being the latest addition to their market presence.

What is Construction Partners' (ROAD) leverage ratio target following the Overland acquisition?

Construction Partners aims to reduce its leverage ratio to approximately 2.5x within the next four to six quarters following the Overland acquisition.

How will the Overland acquisition benefit ROAD's market position in Texas?

The acquisition positions ROAD to benefit from the expanding Dallas metro area northward, strengthening their presence in northern Texas markets through Overland's existing operations.