Cardinal Infrastructure Group Expands Presence with Hughes Brothers Acquisition Amended Agreement

In a strategic move aimed at strengthening its foothold in the Southeast U.S. construction market, Cardinal Infrastructure Group, Inc. (NASDAQ: CDNL) has announced an amendment to its previously disclosed acquisition agreement for Hughes Brothers Construction Inc. This leading contractor based in Central Florida specializes in heavy civil and site development projects, making it an ideal addition to Cardinal's growing portfolio.

Details of the Amended Acquisition Agreement

The new terms maintain the original purchase price of $357.5 million but adjust the payment structure to 60% cash and 40% Cardinal Class A common stock, a shift from the previous 50-50 split. As part of this agreement, Hughes Brothers' owners will receive about $214.5 million in cash along with 5,255,420 shares of Cardinal's stock, valued at an issue price of $27.21 per share.

Additionally, the earnout structure has been revised, allowing the sellers to potentially receive an additional $162.5 million based on the adjusted EBITDA of Hughes Brothers over the 12 months ending June 30, 2027. This earnout will be payable in a mix of 60% cash and 40% stock, which could translate to around 2,388,827 extra shares at the same issue price of $27.21.

Implications for Cardinal Infrastructure Group

Cardinal’s management believes that this acquisition will be accretive to adjusted EBITDA per share almost immediately. For the fiscal year ending June 30, 2026, Hughes Brothers demonstrated strong financial performance with an adjusted EBITDA margin of 25%, generating revenue amounting to $220 million. With a current backlog of roughly $350 million, Hughes Brothers is well-positioned for sustained revenue and profit growth moving forward.

By integrating Hughes Brothers into its operations, Cardinal aims to solidify its reputation as a leading player in the rapidly expanding Central Florida construction sector. This acquisition aligns with Cardinal's strategic goal of creating a premier site development platform in the Southeastern United States.

Expectations for the Close of the Transaction

The acquisition is anticipated to close in the fourth quarter of 2026, contingent upon regulatory approvals and customary closing conditions. Funding for the cash consideration will primarily come from Cardinal's available cash and existing credit facilities, ensuring a smooth transition without unnecessary financial strain.

About Hughes Brothers Construction

Hughes Brothers stands out as a significant player in the heavy civil and site development contracting industry in Central Florida. Their expertise lies in various aspects of construction, including underground utilities, site preparation, earthworks, and infrastructure work. The company services a diverse clientele that includes residential, commercial, industrial, and municipal sectors. Notably, Hughes Brothers performs a considerable portion of its work in-house and possesses a fleet of specialized equipment via its dedicated subsidiary.

About Cardinal Infrastructure Group

Cardinal Infrastructure Group is renowned for its comprehensive suite of infrastructure services that encompass planning, preparation, installation, and development across residential, commercial, industrial, and municipal projects. With a strong team of skilled professionals and a robust fleet of machinery, Cardinal excels in wet utility installations and many other related site services.

Conclusion

The amendment of the acquisition agreement between Cardinal Infrastructure Group and Hughes Brothers marks a significant milestone for both companies. This strategic acquisition not only enhances Cardinal's operational capacity but positions it for long-term growth in a competitive market. Stakeholders and investors can look forward to the fruitful outcomes anticipated from this strategic alignment. For further details regarding this acquisition, Cardinal encourages shareholders to review their Current Report on Form 8-K filed with the Securities and Exchange Commission.