Cardinal Infrastructure targets Florida with $520 million deal
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Cardinal Infrastructure Group is expanding its presence in the Southeast US construction market through an agreement to acquire Hughes Brothers Construction, a Central Florida heavy civil contractor, in a transaction that could reach $520 million.
The Raleigh, North Carolina-based company initially announced the $357.5 million acquisition on October 13, 2026, before amending the agreement on October 19 to increase the potential performance-related payment and revise the transaction’s financing structure.
The acquisition would add more than 500 employees, an established equipment fleet and construction capabilities spanning underground utilities, earthwork, site preparation and roadway development.
Hughes Brothers generated approximately $220 million in revenue during the 12 months ended June 30, 2026, reporting an adjusted EBITDA margin of 25% and a project backlog of approximately $350 million.
The proposed transaction represents a substantial expansion of Cardinal’s regional operations, providing access to established customer relationships, experienced construction teams and an existing portfolio of infrastructure projects in Central Florida.
Revised acquisition terms increase the potential deal value
Under the amended agreement announced October 19, Cardinal will retain the original $357.5 million base purchase price but increase the cash component from 50% to 60%, with the remaining 40% payable in Cardinal Class A common stock.
Hughes Brothers’ selling shareholders will receive approximately $214.5 million in cash and 5,255,420 Cardinal shares, calculated at an issue price of $27.21 per share.
The revised agreement increases the maximum performance-related payment from $97.5 million to $162.5 million, raising the potential transaction value from approximately $455 million to $520 million.
Additional consideration will depend on Hughes Brothers’ adjusted EBITDA performance during the 12 months ending June 30, 2027. The original agreement measured performance through December 31, 2026, meaning the amendment extends the assessment period and increases the amount available to the sellers.
Any additional payment will follow the revised 60% cash and 40% stock structure. If the maximum earnout is achieved, Cardinal could issue approximately 2.39 million additional shares at the agreed issue price.
The $520 million figure represents the maximum potential consideration rather than a guaranteed acquisition price, with the final amount dependent on the contractor’s financial performance.
Cardinal expects to finance the cash component through existing cash reserves and borrowings under its current credit facility, replacing the original financing structure that anticipated additional debt arrangements.
Management expects the acquisition to be immediately accretive to adjusted EBITDA per share, although the financial contribution will depend on project execution, profitability and the timing of integration.
The transaction is expected to close during the fourth quarter of 2026, subject to regulatory approvals and customary closing conditions.
Hughes Brothers brings established construction capabilities to Florida operations
Hughes Brothers has developed an established position in Central Florida’s heavy civil construction sector, providing site development and infrastructure services for residential, commercial, industrial and municipal projects.
Its operations encompass underground utilities, site preparation, earthwork, sewer infrastructure, gas main installation and roadway construction, allowing the contractor to undertake multiple stages of infrastructure development within individual projects.
The business has experience delivering developments averaging more than 80 acres, supported by its workforce and substantial equipment fleet.
A distinguishing feature of Hughes Brothers’ operations is its ability to self-perform much of its construction work, using company personnel and machinery rather than relying extensively on external subcontractors.
Its equipment is owned through a dedicated subsidiary, providing direct control over machinery availability and deployment across construction sites. For Cardinal, that operating model could support more predictable scheduling, improved equipment utilization and closer coordination between construction activities.
Hughes Brothers reported approximately $55 million in adjusted EBITDA during the 12 months ended June 30, 2026, alongside its $220 million revenue figure. Its adjusted EBITDA margin of 25% compares with a reported net profit margin of 12.5% for the same period.
The company’s approximately $350 million project backlog provides visibility into future construction activity, although revenue recognition and profitability will depend on project schedules, labor availability and construction costs.
Cardinal intends to retain Hughes Brothers’ leadership, with President and Co-Founder Chad Hughes and Vice President and Co-Founder Justin Hughes continuing to oversee the business.
Maintaining the existing management team could preserve customer relationships and local market expertise during the transition, particularly as Cardinal seeks to expand its operations without disrupting ongoing construction commitments.
Acquisition strengthens Cardinal’s Southeast expansion strategy
The Hughes Brothers agreement follows Cardinal’s recent acquisition of Allied Paving Contractors, an Atlanta-area business purchased for approximately $115 million in a transaction completed on October 1, 2026.
Allied Paving contributes asphalt paving capabilities, personnel and equipment to Cardinal’s existing grading and site development operations, expanding the company’s ability to complete related construction activities through its own workforce.
The Hughes Brothers transaction builds on that acquisition strategy while introducing a significant geographic expansion into Central Florida, where the company will gain an established operating business rather than developing a regional presence entirely through organic growth.
Cardinal has identified further acquisition opportunities in Florida, suggesting that Hughes Brothers could provide a platform for expanding into additional infrastructure services and construction markets across the state.
The company’s financial performance illustrates the pace of its recent expansion. Cardinal reported second-quarter 2026 revenue of $226.9 million, representing year-over-year growth of 114%, including organic growth of 64%.
Its backlog reached $866 million on June 30, 2026, while management raised full-year revenue guidance to between $880 million and $900 million. That guidance preceded the proposed Hughes Brothers acquisition and does not include its potential financial contribution.
For infrastructure contractors, Cardinal’s approach demonstrates how acquiring established regional businesses can accelerate expansion by providing access to equipment, skilled employees, customer relationships and existing project commitments.
The strategy carries financial and operational risks, particularly as additional businesses increase the complexity of managing construction schedules, working capital requirements and regional operations.
The revised Hughes Brothers agreement creates a further consideration through its larger performance-related payment, which places greater importance on the contractor maintaining earnings through June 2027.
Cardinal’s ability to generate returns from the acquisition will depend on maintaining construction margins, retaining experienced personnel and integrating the contractor without weakening its established operating model.
If completed as expected, the transaction will give Cardinal a substantial foothold in Central Florida’s heavy civil construction market, with the company’s longer-term performance dependent on translating its expanding geographic reach into sustained profitability and consistent project delivery.
Source:
Cardinal Infrastructure Group
