Cardinal Q2 2026 Earnings: Revenue Doubles While Margins Contract

Cardinal Infrastructure Group (NASDAQ: CDNL) reported fiscal Q2 2026 revenue of $226.9 million, up 114% from $106.1 million, while diluted EPS fell to $0.26 from $0.53. The central issue was margin compression: adjusted EBITDA increased 43%, but its margin declined as project-delivery costs and corporate investment rose. Organic growth remained high at 64%, and backlog reached $866 million.

Core financial results

Acquisitions contributed 50 percentage points of quarterly revenue growth, while organic expansion accounted for 64 percentage points. However, profit growth did not keep pace with revenue as gross margin and adjusted EBITDA margin both contracted.

Consolidated net income increased, but income attributable to Cardinal declined because a larger portion was allocated to noncontrolling interests. The higher diluted share count also weighed on EPS.

Adjusted EBITDA is a company-defined non-GAAP measure. EPS and weighted-average share data reflect the periods following Cardinal’s recapitalization transactions and IPO.

Growth, backlog, and acquisition activity

Revenue benefited from acquisitions completed in late 2025 as well as ALGC and Piedmont Pipe. Cardinal also reported continued residential demand and expanding contributions from commercial, industrial, mission-critical, and retail projects, producing a less residential-weighted project mix.

Backlog increased 35% to $866 million as of June 30, 2026. Management attributed the increase to bid activity and project awards across Cardinal’s markets, providing a substantial base of contracted work but not guaranteeing the timing of revenue recognition.

Cardinal also agreed to acquire Atlanta-based Allied Paving for approximately $120 million, comprising about $62 million in cash and $58 million in Class A common stock. Allied generates approximately $108 million in annual revenue at a 20.3% adjusted EBITDA margin, and Cardinal said the purchase price represents 5.5 times adjusted EBITDA.

The transaction is expected to close in early October. It would bring paving capabilities in-house in Atlanta, with the stated goals of capturing additional margin and shortening project timelines. Allied is Cardinal’s third acquisition of 2026 and ninth since 2021.

Rapid expansion pushed margins lower

Adjusted gross profit rose to $36.0 million from $22.6 million, but adjusted gross margin declined to 15.9% from 21.3%. Cardinal cited higher subcontracted labor and equipment rental costs in developing markets, weather-related disruptions in parts of the Southeast, and the shift toward a more diversified project mix.

General and administrative expense increased to $9.0 million from $3.0 million as Cardinal accelerated investment in its corporate functions and expanded operating footprint. Combined with the gross-margin pressure, this reduced adjusted EBITDA margin to 12.4% from 18.6%. Management expects to recover part of the elevated project costs during the second half as deployment schedules progress.

Why EPS fell despite higher consolidated net income

Higher operating income was partly offset by total other expense of $5.3 million, up from $1.6 million, leaving pretax income roughly unchanged at $10.1 million. A $1.0 million income tax benefit helped consolidated net income increase 18%.

However, net income allocated to noncontrolling interests rose to $6.5 million from $2.3 million. As a result, net income attributable to Cardinal fell to $4.7 million from $7.2 million. Weighted-average diluted shares also increased to 43.1 million from 15.4 million, contributing to the decline in diluted EPS.

Cash flow and balance sheet

Quarterly operating cash flow improved to $12.7 million, but capital expenditures increased to $24.7 million from $12.2 million. Capital spending therefore exceeded operating cash flow by approximately $12.0 million during the quarter, excluding acquisitions.

Cash and cash equivalents reached $339.1 million at June 30, up from $97.1 million at the end of 2025. The increase was driven mainly by financing: first-half financing inflows totaled $387.0 million, including $319.0 million of net equity-offering proceeds and $113.0 million of new borrowings before repayments and other financing outflows.

Current and long-term notes payable totaled approximately $197.0 million, compared with $119.3 million at year-end. During the first half, Cardinal also spent $133.4 million on acquisitions and $34.0 million on property and equipment. The pending Allied transaction would use another approximately $62 million of cash on hand.

2026 guidance

Cardinal raised its full-year revenue outlook, increasing the midpoint by $210 million. Management also provided an adjusted EBITDA margin range shaped by the additional corporate investment and project-execution costs discussed in the quarter.

The guidance includes ALGC following its February 18 acquisition close. It excludes future acquisitions and significant weather events, so the pending Allied contribution is not included.

Cardinal’s first-half adjusted EBITDA margin was 13.9%, below the full-year target of 16%-18%. Reaching the guidance range therefore requires a meaningful improvement in second-half profitability as project schedules advance and the company attempts to recover some elevated costs.

Recent insider transactions

The supplied transaction detail lists two purchases and eight director stock grants among the 10 latest entries, all classified as direct ownership. A separate six-month summary reports zero purchase and sale transactions, which conflicts with the itemized records and should be checked against the underlying regulatory filings.

These transactions describe reported activity but do not, by themselves, establish insiders’ views on Cardinal’s valuation or outlook.

Risks investors should watch

• Margin recovery: The full-year adjusted EBITDA margin target is above the first-half result, making second-half cost recovery and operating leverage important to the outlook.
• Execution costs and weather: Subcontracted labor, equipment rental, and Southeast weather disruptions already affected Q2 profitability and could continue to influence project timing and margins.
• Acquisition integration: Cardinal is managing multiple recent acquisitions while preparing to close Allied, increasing the demands on corporate systems, operating teams, and capital.
• Capital intensity and backlog conversion: Quarterly capital expenditures exceeded operating cash flow, while the timing and profitability of the $866 million backlog depend on successful project deployment.
• Regional concentration: Cardinal remains concentrated in the Southeastern United States, making its results sensitive to economic and operating conditions in that region.

Summary

Cardinal’s Q2 2026 results showed rapid organic and acquisition-driven expansion, but the cost of supporting that growth caused margins and EPS to decline. Backlog and higher revenue guidance indicate continued demand, while the main issue for the remainder of 2026 is whether project-cost recovery and corporate scaling can lift profitability enough to reach the full-year margin target.