Cardinal Infrastructure drops 36% as law firms probe CDNL disclosures

Cardinal Infrastructure Group Inc. shares plunged 36% to $38.27 on Aug. 11 after second-quarter margins collapsed, prompting securities fraud investigations from two law firms.

"Our investigation focuses on whether Cardinal was obligated to disclose cost pressures and equipment dependencies at the time it was emphasizing its expanding backlog," Reed Kathrein, partner at Hagens Berman, said.

The heavy construction services company reported adjusted earnings of $0.26 per share, down 51% year over year and missing consensus estimates of $0.47. Adjusted gross margin fell to 15.9% from 21.3% a year earlier, while adjusted EBITDA margin dropped to 12.4% from 18.6%. Management cut its full-year 2026 adjusted EBITDA margin target to 16%-18% from prior guidance above 20%, blaming labor shortages, costly third-party equipment, and high subcontractor expenses tied to its $866 million backlog.

The single-session decline erased $21.73 per share from the $60.00 close on Aug. 10. Bleichmar Fonti & Auld LLP is separately investigating whether Cardinal misled investors about the performance of its A.L. Grading Contractors acquisition, which management cited as a driver of the margin compression and scalability issues.

Cardinal, which went public in December 2025 and has grown through acquisitions, completed a secondary offering of 4.6 million shares at $73.00 each on June 24, raising more than $318 million in net proceeds. In offering materials and May investor updates, the company emphasized its growing project backlog, which reached $866 million as of June 30, as evidence of strong execution and accelerating demand.

Both firms are urging investors with losses to come forward. Hagens Berman is also seeking whistleblowers with non-public information, noting the SEC program can award up to 30 percent of any successful recovery. BFA Law is representing shareholders on a contingency basis with no out-of-pocket costs.

The investigations compound pressure on a stock already trading well below its June offering price of $73.00. Investors will watch for any formal class-action filing and for Cardinal's next earnings report to see whether management can restore margins toward its revised 16%-18% target.

This article is for informational purposes only and does not constitute investment advice.