CDNL 10-K & 10-Q changes, risk factors and insider trading

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and accompanying notes included elsewhere in this Quarterly Report on Form 10-Q for the three and six months ended MarchJune 31,30, 2026. In addition, this Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the U.S. Securities and Exchange Commission (“SEC”) on March 23, 2025.2026.

The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences are discussed elsewhere in this Report,Report includingand in “Part II.I. Item 1A. Risk Factors” in our 2025 Form 10-K all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed may not occur. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

This Report contains forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words “may,” “could,” “plan,” “project,” “budget,” “predict,” “pursue,” “target,” “seek,” “objective,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “will,” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Our forward-looking statements include statements about our business strategy, our industry, our future profitability, our expected capital expenditures and the impact of such expenditures on our performance, the costs of being a publicly traded corporation and our capital programs.

As described in “Part I. Item 2. BusinessManagement’s Discussion and Analysis of Financial Condition and Results of Operations — Initial Public Offering and Reorganization,” Cardinal Group is a holding company that conducts no operations and our principal asset is the LLC units of Cardinal acquired in connection with the completion of our IPO on December 11, 2025 and the Reorganization made prior to the IPO, including with respect to our operating entities Cardinal and Cardinal NC. Prior to the IPO, all of our business was conducted through Cardinal NC.

Because the IPO and the Reorganization resulted in a change to our organizational structure, the historical financial statements, which do not reflect certain items that affect our results of operations and financial position since the IPO and the Reorganization, may not give you an accurate indication of what our actual results would have been if the transactions had been completed at the beginning of the periods presented or of what our future results of operations are likely to be. This section of this Report on Form 10-Q generally discusses fiscal quarters ended MarchJune 31,30, 2026 and 2025 items and year-to-year comparisons between fiscalthe quarterssix months ended MarchJune 31,30, 2026 and 2025. The comparison of the consolidated financial results for the fiscal quarter and six months ended MarchJune 31,30, 2025 refers only to Cardinal and its subsidiaries.

Cardinal Infrastructure Group,Group Inc. ("Cardinal," the "Company," "we," "us," or "our") is a full-service, turnkey infrastructure services company operating in the Southeastern United States, specifically North Carolina, South Carolina and Georgia. We provide a comprehensive suite of infrastructure services to the residential, commercial, industrial, municipal, and state infrastructure markets, including wet utility installations, grading, site clearing, erosion control, drilling and blasting, paving, and related site services. We deliver these services primarily through in-house crews and a fleet of specialized equipment, which enables us to maintain quality control, schedule certainty, and cost efficiency across our project portfolio.

On February 18, 2026, we acquired Sugar Hill, Georgia-based A.L. Grading Contractors (“ALGC”). A fourth-generation, high-growth market leader, ALGC provides comprehensive site development solutions, including grading, underground utilities, erosion control, and clearing, supporting large-scale commercial, industrial, and residential construction in Georgia and South Carolina. See Note 3 – Business Combinations to our Unaudited Condensed Consolidated Financial Statements for further information.

ThisThese acquisitionacquisitions isare consistent with our strategy of acquiring either a tuck-in acquisition in core markets, or a platform acquisition in a new geography and represents a further step in Cardinal's expansion into the Southeast.

As discussed above under Note 1 – Organization and Description of Business to our Unaudited Condensed Consolidated Financial Statements, we completed our IPO of 11,500,000 shares of our Class A Common Stock at a price to the public of $21.00 per share on December 11, 2025, and on December 12, 2025, pursuant to the exercise in full of the underwriters’ option, Cardinal Infrastructure Group Inc. completed the sale of an additional 1,725,000 shares of its Class A Common Stock at a price to the public of $21.00 per share. The gross proceeds from the IPO, including the exercise in full of the sale of the additional shares, were approximately $277.7 million, before deducting underwriting discounts and commissions. We used the net proceeds from the IPO to purchase 14,943,750 newly issued LLC UnitUnits from Cardinal for approximately $258.3 million in aggregate and became the sole managing member of Cardinal. In connection with the IPO, we also issued 23,387,813 shares of our Class B Common Stock to the Continuing Equity Holders, which is equal to the number of LLC units held by such Continuing Equity Holders, at the time of such issuance of Class B Common Stock, for nominal consideration. As a result of the above, Cardinal Group is a holding company with no direct operations and our principal asset is our equity interest in Cardinal. Prior to the IPO, all of our business was conducted through Cardinal NC. See Note 1 – Organization and Description of Business to our Unaudited Condensed Consolidated Financial Statements included under “Item 1. Financial Statements” of this Report for further discussion of the Reorganization made prior to and in connection with the IPO.

The following table sets forth our statements of income for the quartersthree and six months ended MarchJune 31,30, 2026, and 2025, along with certain data in percentages:

Quarter Ended MarchJune 31,30, 2026, Compared to Quarter Ended MarchJune 31,30, 2025

Revenues were $167.5$226.9 million for the three months ended MarchJune 31,30, 2026, an increase of $85.7$120.8 million or 104.8%,114%, compared to $81.8106.1 million for the three monthsquarter ended MarchJune 31,30, 2025. The increase in Revenues was driven by approximately $52.1$68.1 million of organic growth and $33.6$52.7 million of acquisition-related revenue growth. Organic growth reflects higher volume from increased residential demand across Norththe CarolinaCompany's footprint and contributions from ongoing end use market/customer diversification initiatives.

Cost of revenues were $133.3$190.9 million for the quarter ended MarchJune 31,30 2026, an increase of $68.0$107.4 million or 104.2%129% compared to $65.3$83.5 million for the quarter ended MarchJune 31,30, 2025. The increase was primarily associated with organic and acquisition-related growth, partiallyincluding offsetincreased bysubcontracted efficiencylabor gains.and equipment rental costs to support significant customer demand. The increase also reflects a shift in end-market mix toward larger commercial and industrial projects, which carry different labor and equipment deployment requirements than the Company's historical residential-weighted project base.

Gross Profit was $24.924.5 million for the three months ended MarchJune 31,30, 2026, an increase of $15.0$9.8 million or 151.1%,67% compared to $9.914.7 million for the three months ended MarchJune 31,30, 2025. The increase in Gross Profit was primarily driven by both strong organic and acquisition-related revenue growth, partially offset by an increase in cost of revenues associated with overall business growth.

General and administrative expenses were $10.1$9.0 million, or 6%4% of revenue, for the three months ended MarchJune 31,30, 2026, compared to $2.1$3.0 million, or 3.4%2.8% of revenue, for the three months ended MarchJune 31,30, 2025. The increase was primarily attributable to non-recurring acquisition-related costs as well as the Company's transition to operating as a public company, including increased compliance, governance, and reporting costs. The Company also increased headcount withinacross its estimatingoperations functionand incorporate anticipationfunctions, ofincluding estimating, to support continued growth.growth and the Company's maturation as a public company. Excluding non-recurring impacts, continuing general and administrative expenses were 4% of revenue for the three months ended MarchJune 31,30, 2026.

Depreciation and amortization was $9.3$11.6 million for the three months ended MarchJune 31,30, 2026, compared to $6.6$7.9 million for the three months ended MarchJune 31,30, 2025. The increase was primarily driven by intangible assets recognized as part of purchase accounting and equipment purchased through 2025 and early 2026 acquisitions, followedas bywell as increased depreciation related to recent capital expenditures for the Company’s legacy operations. The increase was partially offset by a change in the Company's depreciation method for fixed assets from the accelerated method to straight-line, effective January 1, 2026, which resulted in a reduction of depreciation expense of approximately $0.6$2.4 million for the three months ended MarchJune 31,30, 2026.

Interest expense, net was $2.2$3.5 million for the three months ended MarchJune 31,30, 2026, compared to $1.0$1.6 million for the three months ended MarchJune 31,30, 2025. The increase was primarily attributable to higher outstanding debt primarily to finance our acquisitions completed in 2025 and early 2026, partially offset by an increase in interest income of $0.6$0.9 million.

Changes in other expenses, net for the three months ended MarchJune 31,30, 2026 werereflect immaterial.an increase in the tax receivable agreement liability of $2.0 million related to changes in estimated tax attributes.

Total income tax expense was $1.1($1.0) million for the three months ended MarchJune 31,30, 2026 as compared with $0.0$0.7 million for the three months ended MarchJune 31,30, 2025. In 2025, subsequent to the first quarter, the Company elected to pay the North Carolina Pass-Through Entity tax on behalf of its members, with a statutory rate of 4.5% in 2024 and 4.25% in 2025. Following the Reorganization, the Company is subject to U.S. federal, state, and local income taxes on its share of Cardinal's taxable income. Accordingly, income tax expense for the quarter ended MarchJune 31,30, 2026 reflects a fundamentally different tax profile than in prior years. Changes in estimates related to the Company's deferred tax agreement are also reflected in income tax expense for the quarter ended June 30, 2026.

Total net income attributable to noncontrolling interest was $8.1$6.5 million for the three months ended MarchJune 31,30, 2026, a 592.2%183.6% increase compared to $1.2$2.3 million for the three months ended MarchJune 31,30, 2025. The $6.9$4.2 million increase primarily reflects the share of net income allocated to Continuing Equity Holders of LLC units following the IPO. This was partially offset by lower income attributed to minority interest after the Company acquired the remaining ownership interests as a result of the Reorganization transactions in September 2025. As the Company operates under an Up-C arrangement, the ownership attributed to OpCo units held by Continuing Equity Holders is presented as noncontrolling interests on the condensed consolidated balance sheets and income attributable to those units is recognized in proportion to their ownership as an increase to net income attributable to noncontrolling interests in the Condensed Consolidated Statements of Operations.

To the extent our current liquidity is insufficient to fund future activities, we may need to raise additional funds, such as refinancing or securing new secured or unsecured debt, issuing common and preferred equity, disposing of certain assets to fund our operations, and/or other public or private sources of capital. If we raise additional funds by issuing equity securities, the ownership of our existing stockholders will be diluted. The incurrence of additional debt financing would result in debt service obligations, and any future instruments governing such debt could provide for operating and financing covenants that could restrict our operations. We cannot assure you that we could obtain refinancing or additional financing on favorable terms or at all. See “Part I. Item 1A. Risk Factors — Access to financing sources may not be available on favorable terms, or at all, especially in light of current market conditions, which could adversely affect our ability to maximize our returns.” in our 2025 Form 10-K.

Total cash at MarchJune 31,30, 2026 and 2025 were $44.0$339.1 million and $22.8$19.2 million, respectively. The following table presents consolidated information about cash flows:

During the threesix months ended MarchJune 31,30, 2026, net cash provided by operating activities was $9.3$22.0 million compared to net cash provided by operating activities of $12.1$16.3 million for the quartersix months ended MarchJune 31,30, 2025. The $2.8$5.7 million decreaseincrease wasis primarilyattributable drivento higher income net of depreciation and amortization, partially offset by increased working capital requirements consistentassociated with ourcompany growth, specifically increased billings not yet collected for the three months ended March 31, 2026, as well as the Company's transition to operating as a public company, including increased compliance, governance, and reporting costs.growth.

During the threesix months ended MarchJune 31,30, 2026, net cash used in investing activities was $134.8$167.1 million compared to net cash used of $24.2$41.6 million for the threesix months ended MarchJune 31,30, 2025. The $110.6$125.5 million increase was primarily due to the acquisitionacquisitions of ALGC.ALGC and Piedmont.

During the threesix months ended MarchJune 31,30, 2026, net cash provided by financing activities was $72.3$387.0 million compared to net cash usedprovided of $14.0$23.6 million for the threesix months ended MarchJune 31,30, 2025. The $58.3$363.5 million increase was primarily driven by the Company's follow-on offering of Class A Common Stock in the second quarter, as well as increased proceeds from notes payable, primarily to fund the acquisition of ALGC.

On October 1, 2025, Cardinal NC, Cardinal and our wholly owned subsidiaries entered into a credit facility (the “October 2025 Credit Facility”) with Truist Bank, as administrative agent and lender, and the other lenders thereto from time to time, which refinanced the approximately $6.3 million outstanding under the senior secured credit facility dated as of October 18, 2024 with Truist Bank as lender thereto (the “October 2024 Credit Facility”) and refinanced the approximately $74.8 million outstanding under the master equipment security agreement dated as of October 21, 2024, as amended, with Truist Equipment Finance Corp as lender thereto (the “Equipment Facility”). Cardinal Group is not a party to the October 2025 Credit Facility. The October 2025 Credit Facility, among other things, (i) established a revolving credit facility of $75.0 million in aggregate principal amount, including a $10.0 million letter of credit sub-facility and a $10.0 million swingline sub-facility and (ii) established a term loan facility of $120.0 million in aggregate principal amount. The October 2025 Credit Facility has a maturity date of October 1, 2030. The obligations under the October 2025 Credit Facility are secured by substantially all of our assets and the assets of the subsidiary guarantors.

As of DecemberJune 31,30, 2025,2026, outstanding borrowings under the term loan facility of the October 2025 Credit Facility totaled $120.0$195.0 million and we had no outstanding borrowings under the revolving facility of the October 2025 Credit Facility. We used a portion of the net proceeds from the IPO to repay $24.3 million outstanding under the revolving facility of the October 2025 Credit Facility (the “Debt Repayment”). Following the Debt Repayment, and incorporating all transactions up to December 31, 2025, we have $75.0 million of availability. As of MarchJune 31,30, 2026, Cardinal was in compliance with all covenants under the October 2025 Facility.

The October 2025 Credit Facility contains various affirmative and negative covenants that may, subject to certain exceptions, restrict our ability and the ability of our subsidiaries to, among other things, grant liens, incur additional indebtedness, make loans, advances or other investments, make non-ordinary course asset sales, declare or pay dividends or make other distributions with respect to equity interests, purchase, redeem or otherwise acquire or retire capital stock or other equity interests, or merge or consolidate with any other person, among various other things. In addition, Cardinal is required to maintain certain financial covenants, including, among others, requirements commencing with the fiscal quarter ending March 31, 2026 to maintain a maximum leverage ratio of no greater than 2.50x and a minimum consolidated fixed charge coverage ratio of not less than 1.25x, in each case, tested on a quarterly basis. As of December 31, 2025, we were in compliance with all of our restrictive and financial covenants. Our debt is recorded at its carrying amount in the Condensed Consolidated Balance Sheets. Based upon the current market rates for debt with similar credit risk and maturities, at MarchJune 31,30, 2026 the fair value of our debt outstanding approximated the carrying value, as interest is based on Term SOFR (as defined in the October 2025 Credit Agreement) plus an applicable margin.