Cardinal Infrastructure Group (NASDAQ:CDNL) said it has entered into a definitive agreement to acquire Hughes Brothers, a Central Florida heavy civil and site development contractor, in a transaction designed to give the company immediate scale in a new regional market.
Chief Executive Officer Jeremy Spivey said Hughes Brothers brings more than 500 employees, an owned equipment fleet, wet utility and site development capabilities, and established customer relationships across residential, commercial, industrial and municipal markets. The business handles large and complex work, with an average project exceeding 80 acres, according to Spivey.
Transaction Structure and Financial Profile
Cardinal said the initial consideration for Hughes Brothers is $357.5 million. The transaction will be funded through a combination of Cardinal Class A stock, $156 million of new debt and cash on hand.
At least 40% of the closing consideration will be funded with Cardinal equity. Shares issued to Hughes Brothers’ selling shareholders will be subject to a 180-day lock-up period.
Chief Financial Officer Mike Rowe said the transaction is expected to result in pro forma net leverage of roughly 1.4 times, below Cardinal’s stated maximum leverage target of 2.5 times.
Hughes Brothers generated more than $220 million in revenue during the trailing 12 months ended June 30 and had $350 million in backlog, Cardinal said. Rowe said the acquired business’s adjusted EBITDA margin profile is immediately accretive to Cardinal’s current guided margin range, though the company did not disclose the specific margin.
The selling shareholders may also receive up to $97.5 million in additional consideration based on Hughes Brothers’ 2026 adjusted EBITDA performance. The earn-out would be payable in cash and Cardinal stock.
Rowe said the company views the deal as financially attractive based on Hughes Brothers’ existing operations rather than a large expected synergy target. “We’re not underwriting the deal to a large synergy target or assuming we have to materially change Hughes for the transaction to work,” he said.
Central Florida Expansion
The acquisition marks Cardinal’s entry into Central Florida and represents its fourth acquisition of the year, following ALGC, Piedmont Pipe and Allied Paving. Cardinal previously expanded from Raleigh across the Carolinas and entered Atlanta through its acquisition of ALGC.
Spivey said Chad and Justin Hughes will continue to lead Hughes Brothers after the deal closes. Cardinal’s initial focus will be supporting the existing business while pursuing longer-term opportunities to add capabilities, increase density, bring subcontracted work in-house and consider tuck-in acquisitions around the platform.
Management pointed to its experience with ALGC as an example of its approach. Cardinal acquired the grading and site development business and subsequently began adding services and increasing the amount of work performed internally, Spivey said.
Hughes Brothers has grown entirely organically and has not completed acquisitions, according to management. Cardinal sees potential to pursue tuck-ins as it seeks to vertically integrate operations in Florida.
End Markets and Backlog Trends
Hughes Brothers serves residential, commercial, industrial and municipal customers, though its business is weighted toward residential construction in Central Florida. Spivey said Cardinal conducted diligence on customer concentration and is comfortable with the company’s customer profile.
Backlog at Hughes Brothers has been “substantially moving higher,” Spivey said. He added that Central Florida appears to be operating on a different cycle from other parts of the Southeast, with the company seeing favorable conditions in its local residential market.
Spivey attributed some of that resilience to the area’s buyer profile, describing it as more established and older, with cash buyers rather than a workforce-based buyer pool. He said Hughes Brothers also sees opportunities in commercial and industrial work and has confidence in its 2027 bidding pipeline.
Management said Hughes Brothers’ margins are supported by extensive self-performance, long-term customer relationships, large and complex projects, an experienced workforce and company-owned equipment.
Looking ahead, Cardinal plans to differentiate its Florida operations by integrating more services. Spivey said no competitor in Hughes Brothers’ market currently offers full turnkey capabilities, which Cardinal believes could create opportunities with existing customers as well as support broader expansion across Florida.
About Cardinal Infrastructure Group (NASDAQ:CDNL)
Cardinal Infrastructure Group, Inc (NASDAQ: CDNL) is an infrastructure services company serving customers in the telecommunications and utility industries. The company focuses on the development, construction, installation and maintenance of infrastructure used to support communications networks and essential utility systems.
Its service offerings are centered on communications and utility infrastructure projects, including work associated with fiber-optic and other network deployments.
