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  "documentTitle": "Construction Partners, Inc. (ROAD)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Spruce Point Capital Management",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2025-01-23 00:00:00",
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  "pageNumber": 6,
  "pageCount": 70,
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  "notes": "The slide uses a red-bordered callout box for the primary thesis and a two-row table for supporting arguments.",
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      "kind": "callout",
      "text": "After conducting a forensic financial and accounting review of Construction Partners, Inc (Nasdaq: ROAD or “the Company”), a $6 billion roll-up acquiror of construction materials and asphalt paving operations, we have significant concerns about the sustainability of its recent financial performance, quality of its backlog and aggregate reserves, and market positioning. ROAD’s single biggest customer is the Florida Department of Transportation (DOT), which is ~14% of sales for highway improvement projects. We obtained ROAD’s contracts through a Freedom of Information Act (FOIA) request and are concerned by an apparent -22% decline in contract awards in 2024, none of which appears to be captured in the market consensus. We believe ROAD’s recent levered acquisition of Lone Star Paving (“LSP”) in Texas for ~$1 billion in late 2024 is potentially an attempt to deflect investor attention away from Florida where a major headwind and financial gap is likely to be exposed. Our FOIA request with the Texas DOT, which we believe is LSP’s top customer at 25% of sales, also revealed no prime contracts in the past 24 months, indicating the potential for severe revenue recognition issues or the reality that it is just a lower value-added subcontractor. Equally problematic, we find multiple state and federal agency citations and reprimands at LSP’s largest aggregates operation, calling into question LSP’s superior margins. When adjusting for the market’s incorrect valuation for the LSP acquisition, ROAD trades at a premium valuation and is precariously levered at 3.4x Net Debt/EBITDA. We estimate 35%-50% long-term potential downside risk to ROAD’s share price.",
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      "kind": "callout",
      "text": "ROAD’s single biggest customer is the Florida Department of Transportation (DOT), which is ~14% of sales for highway improvement projects. We obtained ROAD’s contracts through a Freedom of Information Act (FOIA) request and are concerned by an apparent -22% decline in contract awards in 2024, none of which appears to be captured in the market consensus.",
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      "text": "downside risk: 35% - 50%",
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      "text": "ROAD is dependent on state projects, notably Florida where we obtained contracts. ROAD’s transparency is poor and we think it is under more pressure than the market realizes.",
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      "kind": "title",
      "text": "Spruce Point Issues “Strong Sell” Opinion On Construction Partners (ROAD) And Sees 35% - 50% Long-Term Downside Risk",
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      "arcSlug": "problem-agitate-solution",
      "beatName": "Problem & Complication",
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      "evidence": "The deck highlights several contradictions and challenges facing ROAD, including weakening market share and deteriorating contract mix.",
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