The inquiry centers on the discrepancy between Cardinal’s optimistic disclosures in May and June 2026 and the reality revealed on August 11. While the company touted an $866 million project backlog as evidence of robust demand, its Q2 earnings report showed a 51% year-over-year decline in adjusted EPS, which fell to $0.26 per share, significantly missing analyst expectations of $0.47. Profitability metrics also suffered, with gross profit margins dropping to 15.9% from 21.3% the previous year.

Management blamed the shortfall on rising subcontractor costs, labor shortages, and reliance on expensive third-party equipment. Reed Kathrein, the partner leading the investigation, stated the firm is examining whether these financial pressures were known and should have been disclosed to investors at the time of the June 24 secondary offering. Cardinal subsequently lowered its full-year 2026 EBITDA margin guidance to a range of 16% to 18%, down from its previous target of over 20%. Hagens Berman is now calling for investors who suffered significant losses to come forward as the firm assesses potential violations of federal securities laws.