What is the cash conversion rate from the reported EBITDA growth and does it affect the balance sheet strength?

Short answer:

The press release you’ve referenced does not include the numbers needed to compute a cash‑conversion rate (i.e., cash flow from operations versus EBITDA) for the quarter, nor does it provide any balance‑sheet metrics (cash balances, debt levels, etc.) that would let us assess how the EBITDA growth is translating into financial‑strength changes. Consequently, we can’t calculate a precise cash‑conversion ratio from this announcement, nor can we directly evaluate its impact on the company’s balance‑sheet strength.

Why the Cash‑Conversion Rate Can’t Be Determined from the Release

Because the press release only gives relative changes (percentage growth) and no absolute dollar figures for either EBITDA or cash flow, a meaningful cash‑conversion ratio cannot be calculated.

Similarly, without explicit cash‑flow or balance‑sheet numbers we cannot say whether the 80 % EBITDA growth is being fully “converted” into cash or whether it is being offset by higher working‑capital requirements, debt repayments, or other cash‑outflows that could erode balance‑sheet strength.

What the Cash‑Conversion Rate Would Tell Us (If the Data Were Available)

1. Definition
   
   [
   \text{Cash‑Conversion Rate} = \frac{\text{Cash Flow from Operating Activities (CFO)}}{\text{Adjusted EBITDA}}
   ]

   • A high ratio (close to 1.0 or higher) suggests that most of the earnings before interest, tax, depreciation, and amortization are turning into actual cash—indicative of strong cash generation and potentially a more resilient balance sheet.
   • A low ratio (significantly < 1.0) can imply that earnings are being consumed by working‑capital demands (e.g., inventory, receivables), cap‑ex spending, or other cash drains—potentially weakening the balance sheet despite high EBITDA.

2. Why It Matters for Balance‑Sheet Strength

   • Liquidity: Higher cash conversion means more cash to service debt, fund growth, and weather downturns.
     
   • Debt Capacity: Strong cash conversion improves debt‑service coverage ratios, which can bolster borrowing capacity.
     
   • Working‑Capital Management: If EBITDA is high but cash conversion is low, the company may be building up receivables or inventory, which could be a warning sign.
     

3. Typical Benchmark for Construction‑Industry Companies

   • In the civil‑construction sector, cash‑conversion ratios typically range 0.8 – 1.3, depending on project timing and billing cycles. A value outside this range warrants deeper analysis.

How to Estimate the Rate (If You Obtain the Missing Numbers)

1. Locate the Quarterly Form 10‑Q (or 8‑K) filed with the SEC for FY 2025 Q3.

   • Look for “Net cash provided by operating activities” in the cash‑flow statement.
     
   • Look for “Adjusted EBITDA” in the earnings release or the Management Discussion & Analysis (MD&A) section.

2. Calculate the Ratio using the formula above.

3. Compare the resulting ratio to:

   • Historical CPI cash‑conversion rates (e.g., FY 2024 Q3).
     
   • Industry peers (e.g., other civil‑construction firms like Hannon Armstrong, Granite Construction, etc.).

4. Assess Balance‑Sheet Impact

   • If the ratio is high: Expect an improvement in liquidity and possibly a reduction in net debt (if cash is used to pay down debt).
     
   • If the ratio is low: Investigate whether cash is being consumed by increased cap‑ex, working‑capital strain, or dividend/stock‑based compensation that could erode cash balances.

Bottom Line

• From the information provided: We cannot compute a cash‑conversion rate or directly assess the impact on balance‑sheet strength.
  
• What you need: The actual dollar amounts for Adjusted EBITDA and Cash flow from operations, plus any balance‑sheet details (cash, debt, working‑capital) for FY 2025 Q3.
  

Next step: Review Construction Partners, Inc.’s latest 10‑Q filing (or the full earnings release if it contains a full financial statement) to extract those figures, then apply the cash‑conversion formula and evaluate the balance‑sheet implications accordingly.