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Item 7. Management’s Discussion and Analysis

2025-11-25 compared with 2024-11-25 · 90 added, 141 removed, 239 unchanged (49% of the section changed)

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Our operations leverage a highly-skilled workforce, strategically located HMA plants, substantial construction assets and select material deposits.

We provide construction products and services to both public and private infrastructure projects, with an emphasis on highways, roads, bridges, airports and commercial and residential sites throughout the Sunbelt in Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee and Texas.

Our public projects are funded by federal, state and local governments and include roads, highways, bridges, airports and other forms of infrastructure.

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We include a construction project in our contract backlog at the time it is awarded and to the extent we believe funding is probable.

Our backlog consists of uncompleted work on contracts in progress and contracts for which we have executed a contract but have not commenced the work.

Our backlog consists of uncompleted work on contracts in progress and projects for which we have executed a contract but have not commenced the work.

For uncompleted work on contracts in progress, we include (i) executed change orders, (ii) pending change orders for which we expect to receive confirmation in the ordinary course of business and (iii) claims that we have made against our customers for which we have determined we have a legal basis under existing contractual arrangements and as to which we consider collection to be probable.

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Low bid/no contract backlog was $0.8 billion at September 30, 2025.

2024 Fiscal Year Business Acquisitions

During the 2024 fiscal year, we completed eight acquisitions across four states, adding to or expanding our operations in Alabama, Georgia, North Carolina and South Carolina.

As a result of these acquisitions, we added eleven asphalt plants and a diverse fleet of equipment and vehicles, as well as skilled construction professionals.

2025 Fiscal Year Acquisitions

During the 2025 fiscal year, we completed five acquisitions across four states, adding to or expanding our operations in Alabama, Oklahoma, Tennessee and Texas.

As a result of these acquisitions, we added 27 asphalt plants, four aggregates facilities, a liquid asphalt terminal and a diverse fleet of equipment and vehicles, as well as skilled construction professionals.

The aggregate transaction consideration for these acquisitions was approximately $1.5 billion.

For further discussion regarding these transactions, see Note 4 - Business Acquisitions to the consolidated financial statements included elsewhere in this report.

Lone Star Paving Acquisition

On November 1, 2024, we acquired all of the outstanding membership units of Asphalt, Inc., LLC (doing business as Lone Star Paving) (“Lone Star Paving” and the acquisition, the “Lone Star Acquisition”), a vertically integrated asphalt manufacturing and paving company headquartered in Austin, Texas, with 10 HMA plants, four aggregate facilities, and one liquid asphalt terminal supporting its operations.

The aggregate consideration delivered at the closing of the Lone Star Acquisition consisted of (i) $654.2 million in cash (as adjusted pursuant to the Unit Purchase Agreement, dated as of October 20, 2024, by and among the Company, Lone Star Paving, the selling unit holders party thereto, and John J.

Wheeler, in his capacity as the selling unit holders’ representative thereunder) and (ii) 3.0 million shares of our Class A common stock.

In addition, we agreed to (i) pay cash to the selling unit holders in

an amount equal to the working capital remaining in Lone Star Paving at closing, as finally determined (subject to adjustments and offsets to satisfy certain indemnification obligations and any purchase price overpayments), to be paid out in quarterly installments over four quarters following the closing, and (ii) purchase from the selling unit holders for $30.0 million in cash an entity that owns certain real property following receipt of specified operational entitlements by such entity.

The cash paid at closing was funded from the proceeds of the Term Loan B (as defined below).

For more information about the Lone Star Acquisition, see Note 27 - Subsequent Events to the consolidated financial statements included elsewhere in this report.

Term Loan B Credit Agreement

On November 1, 2024, we entered into a Term Loan Credit Agreement with Bank of America, N.A., as administrative agent, BofA Securities, Inc., PNC Capital Markets LLC, Regions Capital Markets, a division of Regions Bank, and TD Securities (USA) LLC, each as joint lead arranger and joint bookrunner, and certain other lenders party thereto (the “Term Loan B Credit Agreement”).

The Term Loan B Credit Agreement provides for a senior secured first lien term loan facility in the aggregate principal amount of $850.0 million, which amount was fully drawn on November 1, 2024 (the “Term Loan B”).

A portion of the proceeds of the Term Loan B was used to finance the cash portion of the consideration for the Lone Star Acquisition, including the repayment of certain outstanding indebtedness of Lone Star Paving and its subsidiaries at closing.

The remaining loan proceeds were or will be used (i) to repay the Company’s outstanding borrowings under the revolving credit facility provided by the Term Loan A / Revolver Credit Agreement (as defined below), (ii) to pay fees and expenses incurred in connection with the foregoing debt financing transactions and Lone Star Acquisition and (iii) for working capital and other corporate purposes as permitted by the Term Loan B Credit Agreement.

For more information about the Term Loan B Credit Agreement, see Note 27 - Subsequent Events to the consolidated financial statements included elsewhere in this report.

Credit Agreement Amendments

In May 2024, we and certain of our wholly owned subsidiaries entered into a Third Amendment to our Third Amended and Restated Credit Agreement (as amended from time to time, the “Term Loan A / Revolver Credit Agreement”) to, among other things, (i) increase the aggregate commitments under the revolving credit facility from $325.0 million to $400.0 million, (ii) reallocate $125.0 million of borrowings previously outstanding under the revolving credit facility to our term loan, (iii) add three new banks to our lender syndicate, (iv) provide for an additional incremental credit facility of up to $200.0 million and (v) update certain affirmative and negative covenants thereunder.

Additionally, on October 30, 2024, we entered into a Fourth Amendment to the Term Loan A / Revolver Credit Agreement to, among other things, permit (i) the Lone Star Acquisition, (ii) entry into the Term Loan B Credit Agreement, and (iii) certain liens to be granted to secure the indebtedness incurred under the Term Loan B Credit Agreement on a pari passu basis with the liens securing the Company’s obligations under the Term Loan A / Revolver Credit Agreement.

For further discussion regarding the Term Loan A / Revolver Credit Agreement and the foregoing amendments, see Note 11 - Debt and Note 27 - Subsequent Events to the consolidated financial statements included elsewhere in this report.

Stock Repurchase Program

In April 2024, our board of directors authorized a stock repurchase program under which up to $40 million is available to purchase shares of our outstanding Class A common stock through September 30, 2025.

We utilize the stock repurchase program to minimize the dilutive impact of awards granted under our equity incentive plans and to repurchase shares opportunistically.

Shares of our Class A common stock may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b5-1 plans.

The stock repurchase program does not obligate us to repurchase any shares of Class A common stock, and the stock repurchase program may be modified, suspended, extended or terminated at any time by our board of directors.

The actual timing, number and value of shares of Class A common stock repurchased are determined by a committee of the board of directors at its discretion and depend on a number of factors, including the market price of our Class A common stock, capital allocation alternatives, general market and economic conditions and other corporate considerations.

During fiscal 2024, we repurchased a total of 173,741 shares of Class A common stock for an aggregate purchase price of $10.0 million.

Credit Facility Developments

In November 2024, we entered into the Term Loan B Credit Agreement, providing for a senior secured first lien term loan facility in the aggregate principal amount of $850.0 million, which amount was fully drawn on November 1, 2024.

The Term Loan B proceeds were used to (i) finance the cash portion of the consideration for the Lone Star Acquisition, (ii) repay our outstanding borrowings under our Revolving Credit Facility, and (iii) pay fees and expenses incurred in connection with the foregoing debt financing transactions and the Lone Star Acquisition.

In June 2025, we entered into an amendment to our Term Loan A/ Revolver Credit Agreement to, among other things, (i) increase the Revolving Credit Facility from $400.0 million to $500.0 million, (ii) increase the Term Loan A from

$400.0 million to $600.0 million, and (iii) extend the maturity date for all outstanding borrowings thereunder to June 28, 2030.

For further discussion regarding these agreements and developments, see Note 11 - Debt to the consolidated financial statements included elsewhere in this report.

Acquisitions Subsequent to Fiscal 2025 Year-End

In October 2025, we acquired eight HMA plants and related crews and equipment in the Houston, Texas metro area from affiliates of Vulcan Materials Company, and acquired all of the outstanding equity interests of P&S Paving, LLC, an HMA manufacturing and construction business headquartered in Daytona Beach, Florida, with two HMA plants serving northeast and central Florida.

The aggregate transaction consideration for these acquisitions was approximately $262.1 million.

For more information about these transactions, see Note 27 - Subsequent Events to the consolidated financial statements included elsewhere in this report.

The activity of our business fluctuates due to seasonality because our business is primarily conducted outdoors.

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General and administrative expenses also include acquisition expenses, audit, consulting and professional fees, stock-based compensation expense, travel, insurance, office space rental costs, property taxes and other corporate and overhead expenses.

Acquisition-Related Expenses

Acquisition-related expenses include costs incurred in connection with our business acquisitions.

These expenses typically include legal, accounting, tax, other professional costs and employee transaction bonuses.

Gain on Sale of Property, Plant and Equipment

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The gain or loss on the sale of property, plant and equipment reflects the difference between the carrying value at the date of disposal and the net consideration received from the sale of equipment during the period.

Gain on Facility Exchange

As part of our continued growth strategy, we may exchange or sell facilities in order to generate capital for use in connection with other strategic initiatives.

The gain or loss on the exchange or sale of a facility reflects the difference between the net carrying value of the facility at the date of disposal and the consideration received from the exchange or sale during the period.

Interest Expense, Net

Interest expense, net primarily represents interest incurred on our long-term debt, such as the Term Loan and the Revolving Credit Facility, as well as the changes in fair values of interest swap agreements and amortization of deferred debt issuance costs.

Interest expense, net primarily represents interest incurred on our long-term debt, such as the Term Loans and the Revolving Credit Facility, as well as the changes in fair values of interest swap agreements and amortization of deferred debt issuance costs.

These amounts are partially offset by interest income earned on short-term investments of cash balances in excess of our current operating needs.

Other Key Performance Indicators — Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA represents net income before, as applicable from time to time, (i) interest expense, net, (ii) provision (benefit) for income taxes, (iii) depreciation, depletion, accretion and amortization, (iv) share-based compensation expense, (v) loss on the extinguishment of debt, and (vi) expenses associated with non-routine acquisitions.

Other Key Performance Indicators — Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income

Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of revenues for each period.

Adjusted Net Income represents net income before (i) nonrecurring expenses related to transformative acquisitions, which management considers to include transactions of a size that would require clearance under federal antitrust laws, and (ii) nonrecurring fees associated with financing arrangements incurred in connection with transformative acquisitions.

These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP.

These measures have limitations as analytical tools and should not be considered in isolation or as an alternative to net income or any other performance measure derived in accordance with GAAP as an indicator of our operating performance.

We present Adjusted EBITDA and Adjusted EBITDA Margin because management uses these measures as key performance indicators, and we believe that securities analysts, investors and others use these measures to evaluate companies in our industry.

Our calculation of Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similarly named measures reported by other companies.

We present Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income because management uses these measures as key performance indicators, and we believe that securities analysts, investors and others use these measures to evaluate companies in our industry.

Our calculation of Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income may not be comparable to similarly named measures reported by other companies.

Potential differences may include differences in capital structures, tax positions and the age and book depreciation of intangible and tangible assets.

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Ended September 30,

2024 2023 (2)

Net income $ 101,781 $ 68,935

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Share-based compensation expense 28,783 15,031

Acquisition-related expenses (1)

Transformative acquisition expenses 21,780 1,455

Adjusted EBITDA $ 423,718 $ 220,573

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Adjusted EBITDA Margin 15.1 % 12.1 %

(1) Reflects expenses associated with the Lone Star Acquisition, which management views as a non-routine acquisition.

(2) In periods commencing prior to September 30, 2023, we historically included within the definition of Adjusted EBITDA an adjustment for management fees and expenses related to our management services agreement with an affiliate of SunTx Capital Partners, a member of our control group.

Effective October 1, 2023, the term of the management services agreement was extended to October 1, 2028.

As a result of the term extension, we no longer view the management fees and expenses paid under the management services agreement as a non-recurring expense.

Accordingly, periods commencing subsequent to September 30, 2023 do not include an adjustment for management fees and expenses, and we have recast comparative Adjusted EBITDA and Adjusted EBITDA Margin for the fiscal year ended September 30, 2023 to conform to the current definition.

The following table presents a reconciliation of net income, the most directly comparable measure calculated in accordance with GAAP, to Adjusted Net Income for the periods presented (in thousands):

For the Fiscal Year

Ended September 30,

Net income $ 101,781 $ 68,935

Transformative acquisition expenses 21,780 1,455

Financing fees related to transformative acquisition 4,870 —

Tax impact due to above reconciling items (6,437) —

Adjusted Net Income $ 121,994 $ 70,390

Results of Operations — Fiscal Year Ended September 30, 2025 Compared to Fiscal Year Ended September 30, 2024

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General and administrative expenses (199,290) (7.1) % (147,607) (8.1) % (51,683) 35.0 %

Acquisition-related expenses (25,903) (0.9) % (3,890) (0.2) % (22,013) 565.9 %

Gain on sale of property, plant and equipment 10,911 0.4 % 4,483 0.2 % 6,428 143.4 %

Gain on facility exchange — — % 5,389 0.3 % (5,389) (100.0) %

Operating income 224,811 8.0 % 111,240 6.1 % 113,571 102.1 %

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Provision for income taxes 32,746 1.2 % 23,161 1.3 % 9,585 41.4 %

Loss from investment in

joint venture (3) — % — — % (3) — %

Loss from investment in joint venture (12) — % (3) 0.2 % (9) 300.0 %

Net income $ 101,781 3.6 % $ 68,935 3.8 % $ 32,846 47.6 %

Adjusted EBITDA $ 423,718 15.1 % $ 220,573 12.1 % $ 203,145 92.1 %

Revenues for fiscal 2024 increased $260.3 million, or 16.7%, to $1.8 billion from $1.6 billion for fiscal 2023.

Adjusted Net Income $ 121,994 4.3 % $ 70,390 3.9 % $ 51,604 73.3 %

Revenues for fiscal 2025 increased $1.0 billion, or 54.2%, to $2.8 billion from $1.8 billion for fiscal 2024.

The increase included $835.2 million of revenues attributable to acquisitions completed during or subsequent to fiscal 2024 and an increase of approximately $153.2 million of revenues in our existing markets from contract work and sales of HMA and aggregates to third parties.

The 6.8% increase in revenue in our existing markets was due to strong demand in both public and private work.

The 8.4% increase in revenue in our existing markets was attributable to strong demand in both public and private work.

Gross Profit.

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General and administrative expenses for fiscal 2025 increased $51.7 million, or 35.0%, to $199.3 million from $147.6 million for fiscal 2024.

The increase in general and administrative expenses for fiscal 2024 compared to fiscal 2023 was the result of (i) an $8.1 million increase attributable to general and administrative expenses associated with the operations of businesses acquired subsequent to September 30, 2023, (ii) a $6.6 million increase in management personnel payroll and benefits, (iii) a $4.3 million increase in share-based compensation expense, and (iv) a $5.6 million increase in other general and administrative expenses.

The increase was primarily attributable to general and administrative expenses associated with the operations of businesses acquired subsequent to fiscal 2024 and an increase in share-based compensation expense.

Acquisition-related expenses.

Acquisition-related expenses for fiscal 2025 increased $22.0 million, or 565.9%, to $25.9 million from $3.9 million for fiscal 2024.

The increase in acquisition-related expenses in fiscal 2025 compared to fiscal 2024 was primarily the result of the transformative acquisitions completed during fiscal 2025, including the acquisitions of Lone Star Paving and Durwood Greene Construction Co.

and G&S Asphalt, Inc.

d/b/a American Materials, Inc.

Gain on Sale of Property, Plant and Equipment .

Gain on sale of property, plant and equipment for fiscal 2024 decreased $2.6 million, or 36.4%, to $4.5 million from $7.0 million for fiscal 2023.

The decrease was primarily the result of a $1.3 million gain on the sale of an excess office building and higher disposals of equipment and components during fiscal 2023.

Gain on Facility Exchange .

There was no gain on facility exchange for fiscal 2024 compared to a gain on facility exchange of $5.4 million for fiscal 2023.

The gain in fiscal 2023 was the result of the disposition of a quarry in North Carolina.

In connection with

this transaction, we acquired three HMA manufacturing plants and certain related assets located in the Nashville, Tennessee metro area.

Gain on sale of property, plant and equipment for fiscal 2025 increased $6.4 million, or 143.4%, to $10.9 million from $4.5 million for fiscal 2024.

The increase was primarily the result of higher disposals of equipment and components during fiscal 2025.

Interest Expense, Net.

Interest expense, net for fiscal 2025 increased $71.3 million, or 373.8%, to $90.4 million compared to $19.1 million for fiscal 2024.

The increase in interest expense, net was primarily due to an increase in the average principal debt balance outstanding.

The increase in interest expense, net was primarily related to borrowings under the Term Loan B Credit

Agreement that we entered into on November 1, 2024 and fees associated with amendments to, and additional borrowings under, our Term Loan A/ Revolver Credit Agreement.

Provision for Income Taxes.

Our effective tax rate was 25.1% for fiscal 2024 and fiscal 2023.

Our effective tax rate decreased to 24.3% for fiscal 2025 from 25.1% for fiscal 2024.

Our lower effective tax rate during fiscal 2025 was due to differences in state tax rates at our operating subsidiaries.

Net income increased $32.9 million, or 47.6%, to $101.8 million for fiscal 2025 compared to $68.9 million for fiscal 2024.

The increase in net income was primarily a result of higher gross profit, partially offset by an increase in general and administrative expenses and interest expense and decreased gains from the facility exchange and sales of property, plant and equipment, all as described above.

The increase in net income was primarily a result of higher gross profit and gain on sale of property, plant and equipment, partially offset by an increase in general and administrative expenses, interest expense and provision for income taxes, all as described above.

Adjusted EBITDA and Adjusted EBITDA Margin.

Adjusted EBITDA and Adjusted EBITDA Margin were $423.7 million and 15.1%, respectively, for fiscal 2025, compared to $220.6 million and 12.1%, respectively, for fiscal 2024.

The increase in Adjusted EBITDA and Adjusted EBITDA Margin resulted primarily from a $19.9 million increase in net income and a $13.8 million increase in depreciation, depletion, accretion and amortization.

For a description of Adjusted EBITDA and Adjusted EBITDA Margin, as well as a reconciliation of Adjusted EBITDA to net income, see above under the heading “How We Assess Performance of Our Business — Other Key Performance Indicators — Adjusted EBITDA and Adjusted EBITDA Margin.”

The increase in Adjusted EBITDA and Adjusted EBITDA Margin resulted primarily from a $32.8 million increase in net income, a $55.4 million increase in depreciation, depletion, accretion and amortization, a $71.3 million increase in interest expense, net, a $13.8 million increase in share-based compensation expense and a $20.3 million increase in transformative acquisition expenses.

Adjusted Net Income.

Adjusted net income increased $51.6 million, or 73.3%, to $122.0 million for fiscal 2025 compared to $70.4 million for fiscal 2024.

The increase in adjusted net income was primarily a result of higher gross profit, increase in gain on sale of property, plant and equipment and a $20.3 million increase in transformative acquisition expenses, partially offset by an increase in general and administrative expenses, interest expense under the Term Loan B and provision for income taxes, all as described above.

For a description of Adjusted Net Income, as well as a reconciliation of Adjusted Net Income to net income, see above under the heading “How We Assess Performance of Our Business — Other Key Performance Indicators — Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income.”

Liquidity and Capital Resources

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Net cash used in investing activities (1,280,187) (307,585)

Net cash (used in) provided by financing activities 126,110 (264)

Net cash provided by financing activities 1,071,215 126,110

Net change in cash, cash equivalents and restricted cash $ 82,331 $ 27,604

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• an increase in inventories of $5.2 million due to increased inventories from acquisitions, growth in existing markets, higher inventory costs and normal fluctuations in our inventory cycle;

• an increase in prepaid expenses and other current assets of $13.0 million, primarily due to the timing of payments under our insurance policies and other expenses;

• a decrease in prepaid expenses and other current assets of $7.5 million, primarily due to the timing of payments under our insurance policies and other expenses;

• an increase in accounts payable and accrued expenses and other current liabilities of $57.1 million due to an increase in construction activity;

• a net increase in the difference between billings in excess of costs and estimated earnings on uncompleted contracts and costs and estimated earnings in excess of billings on uncompleted contracts of $30.4 million due to the timing of performing and closing projects.

• a net decrease in the difference between billings in excess of costs and estimated earnings on uncompleted contracts and costs and estimated earnings in excess of billings on uncompleted contracts of $16.4 million due to the timing of performing and closing projects.

During fiscal 2024, cash provided by operating activities, net of acquisitions, was $209.1 million, primarily as a result of:

• net income of $49.0 million, reflecting, among other things, $79.1 million of depreciation, depletion, accretion and amortization, deferred income taxes of $11.2 million, share-based compensation expense of $10.8 million, gain on sale of property, plant and equipment of $7.0 million, and gain on facility exchange of $5.4 million;

• net income of $68.9 million, reflecting, among other things, $92.9 million of depreciation, depletion, accretion and amortization, deferred income taxes of $22.7 million, share-based compensation expense of $14.4 million, and gain on sale of property, plant and equipment of $4.5 million;

• an increase in contracts receivable including retainage of $6.6 million as a result of higher overall revenues due to acquisitions and growth in existing markets;

• an increase in inventories of $15.5 million due to increased inventories from acquisitions, growth in existing markets, higher inventory costs and normal fluctuations in our inventory cycle;

• a decrease in prepaid expenses and other current assets of $3.7 million, primarily due to the timing of payments under our insurance policies and other expenses;

• an increase in prepaid expenses and other current assets of $13.0 million, primarily due to the timing of payments under our insurance policies and other expenses;

• an increase in accounts payable and accrued expenses and other current liabilities of $18.3 million due to an increase in construction activity;

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Investing Activitie s

During fiscal 2024, cash used in investing activities was $307.6 million, of which $231.8 million related to acquisitions completed in the period, $87.9 million was invested in property, plant and equipment and $5.5 million was invested in restricted investments.

During fiscal 2025, cash used in investing activities was $1.28 billion, of which $1.16 billion related to acquisitions completed in the period, $137.9 million was invested in property, plant and equipment and $14.8 million was invested in restricted investments.

These amounts were partially offset by $17.8 million of proceeds from the sale of equipment and $9.9 million of proceeds from the sale of restricted investments.

These amounts were partially offset by $17.7 million of proceeds from the sale of equipment, $37.0 million of proceeds from the facility exchange and $2.9 million of proceeds from the sale of restricted investments.

These amounts were partially offset by $14.1 million of proceeds from the sale of equipment and $3.6 million of proceeds from the sale of restricted investments.

Financing Activities

During fiscal 2025, cash provided by financing activities was $1.07 billion.

We received $1.24 billion in proceeds from the issuance of long-term debt, net of debt issuance costs and discounts, which was partially offset by $147.4 million of principal payments on long-term debt and purchase of treasury stock of $23.5 million.

During fiscal 2024, cash provided by financing activities was $126.1 million.

We received $210.2 million in proceeds from the issuance of long-term debt, net of debt issuance costs and discounts, which was partially offset by $72.8 million of principal payments on long-term debt and purchase of treasury stock of $11.3 million.

During fiscal 2023, cash used in financing activities was $0.3 million.

We received $103.0 million in proceeds from the issuance of long-term debt, net of debt issuance costs and discounts, which was offset by $103.1 million of principal payments on long-term debt and the purchase of treasury stock of $0.2 million.

Term Loan A / Revolver Credit Agreement

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The obligations of our subsidiaries under the Term Loan A and the Revolving Credit Facility are secured by a first priority security interest in substantially all of our assets.

The Term Loan A / Revolver Credit Agreement requires us to satisfy certain financial covenants, including a minimum fixed charge coverage ratio of 1.20-to-1.00 and a maximum consolidated leverage ratio of 3.50-to-1.00, subject to certain adjustments.

At September 30, 2024 and 2023, our fixed charge coverage ratio was 3.15-to-1.00 and 2.56-to-1.00, respectively, and our consolidated leverage ratio was 1.81-to-1.00 and 1.72-to-1.00, respectively.

The Term Loan A / Revolver Credit Agreement requires us to maintain as of the end of each fiscal quarter a minimum consolidated interest coverage ratio of 3.00-to-1.00 and a maximum consolidated leverage ratio of 4.50-to-1.00, stepping down to 4.25-to-1.00 as of March 31, 2026, 4.00-to-1.00 as of December 31, 2026 and 3.75-to-1.00 as of September 30, 2027 and thereafter.

At September 30, 2025 and 2024, our consolidated interest coverage ratio was 5.76-to-1.00 and 11.32-to-1.00, respectively, and our consolidated leverage ratio was 3.10-to-1.00 and 1.81-to-1.00, respectively.

From time to time, we have entered into interest rate swap agreements to hedge against the risk of changes in interest rates.

At September 30, 2025 and 2024, the aggregate notional value of these interest rate swap agreements was $300.0 million, and the fair value was $7.9 million and $11.6 million, respectively, which is included within other assets on our Consolidated Balance Sheets.

For more information about the Term Loan A / Revolver Credit Agreement, see Note 11 - Debt and Note 27 - Subsequent Events to the consolidated financial statements included elsewhere in this report.

For more information about the Term Loan A / Revolver Credit Agreement, see Note 11 - Debt to the consolidated financial statements included elsewhere in this report.

Term Loan B Credit Agreement

On November 1, 2024, we entered into the Term Loan B Credit Agreement, which provides for a senior secured first lien term loan facility in the aggregate principal amount of $850.0 million, which amount was fully drawn on November 1, 2024.

A portion of the proceeds of the Term B Loan was used to finance the cash portion of the consideration for the Lone Star Acquisition, including the repayment of certain outstanding indebtedness of Lone Star Paving and its subsidiaries at closing.

The remaining loan proceeds were or will be used (i) to repay a portion of our outstanding borrowings under the revolving credit facility provided by the Term Loan A / Revolver Credit Agreement, (ii) to pay fees and expenses incurred in connection with the foregoing debt financing transactions and Lone Star Acquisition and (iii) for working capital and other corporate purposes as permitted by the Term Loan B Credit Agreement.

For more information about the Term Loan B Credit Agreement, see Note 27 - Subsequent Events to the consolidated financial statements included elsewhere in this report.

The proceeds of the Term Loan B were used to (i) finance the cash portion of the consideration for the Lone Star Acquisition, (ii) repay a portion of our outstanding borrowings under the Revolving Credit Facility provided by the Term Loan A / Revolver Credit Agreement, and (iii) pay fees and expenses incurred in connection with the foregoing debt financing transactions and the Lone Star Acquisition.

At September 30, 2025, we had $843.6 million of principal outstanding under the Term Loan B Credit Agreement.

For more information about the Term Loan B Credit Agreement, see Note 11 - Debt to the consolidated financial statements included elsewhere in this report.

Capital Requirements and Sources of Liquidity

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At September 30, 2025, our commitments for capital expenditures were not material to our financial condition or results of operations on a consolidated basis.

For fiscal 2025, we expect total capital expenditures to be $130.0 million to $140.0 million.

For fiscal 2026, we expect total capital expenditures to be $165.0 million to $185.0 million, including for both maintenance and growth.

Our capital expenditure budget is an estimate and is subject to change.

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Additional cash requirements resulting from our growth include the costs of additional personnel, production and distribution facilities, enhancements to our information systems, integration costs related to any acquisitions and our compliance with laws and rules applicable to public companies.

Furthermore, on April 12, 2024, we announced that our board of directors authorized a stock repurchase program under which up to $40.0 million is available to purchase shares of our outstanding Class A common stock through September 30, 2025.

We intend to utilize the stock repurchase program to minimize the dilutive impact of awards granted under our equity incentive plans and to repurchase shares opportunistically.

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Our future success will depend on our ability to access outside sources of capital.

We believe that our operating cash flow and available borrowings under the Term Loan A / Revolver Credit Agreement and the Term Loan B Credit Agreement (together, the “Credit Agreements”) will be sufficient to fund our operations and planned capital expenditures for at least the next 12 months.

We believe that our operating cash flow and available borrowings under the Credit Agreements will be sufficient to fund our operations and planned capital expenditures for at least the next 12 months.

However, future cash flows are subject to a number of variables, including the potential impacts of inflation and supply chain constraints, and significant additional capital expenditures will be required to conduct our operations.

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Total $ 1,720,780 $ 63,169 $ 62,270 $ 57,856 $ 51,111 $ 486,808 $ 999,566

In addition to the items set forth in the table above, subsequent to September 30, 2024 and in connection with the Lone Star Acquisition, we entered into a conditional purchase agreement pursuant to which we agreed to purchase from the sellers of Lone Star Paving, upon the receipt of certain permits and governmental entitlements, an entity that owns certain real property located in central Texas for aggregate consideration of $30.0 million.

Critical Accounting Policies and Estimates

In addition to the items set forth in the table above, in connection with the Lone Star Acquisition, we entered into a conditional purchase agreement pursuant to which we agreed to purchase from the sellers of Lone Star Paving, upon the receipt of certain permits and governmental entitlements, an entity that owns certain real property located in central Texas for aggregate consideration of $30.0 million.

As of September 30, 2025, such permits and governmental entitlements had not yet been received.

Critical Accounting Estimates

The discussion of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP.

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The foregoing factors, as well as the stage of completion of contracts in process and the mix of contracts at different margins, may cause fluctuations in gross profit between periods, and these fluctuations may be significant.

Contracts Receivable, Including Retainage, Net

Contracts receivable are generally based on amounts billed to the customer and currently due in accordance with our contracts.

Many of the contracts under which we perform work contain retainage provisions.

Retainage refers to amounts earned by the Company but held by customers until contracts are near completion or fully completed.

Retainage on active contracts is classified as a current asset regardless of the term of the contract and is generally collected within one year of the completion of a contract.

At September 30, 2024 and 2023, contracts receivable included $52.7 million and $53.3 million, respectively, of retainage.

Because the majority of our construction contracts are entered into with federal, state or municipal government customers, credit risk is minimal.

We confirm that funds have been appropriated by the government project owner prior to commencing work on such projects.

While most of our public contracts are subject to termination at the election of the government entity, in the event of any such termination, we are entitled to receive the contract price for completed work and reimbursement of termination-related costs.

Credit risk with private customers is minimized because of statutory mechanic’s liens, which give us high priority in the event of lien foreclosures following financial difficulties of private customers.

We maintain an allowance for credit losses, which has historically been sufficient to cover accounts that are not collected.

Valuation of Long-Lived Assets and Goodwill

Long-lived assets, which include property, plant and equipment and acquired intangible assets, such as goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset, or an asset group, may not be recoverable.

Impairment evaluations involve fair values and management estimates of useful asset lives and future cash flows.

Actual useful lives and cash flows could be different from those estimated by management, and this could have a material effect on our operating results and financial position.

For fiscal 2024 and fiscal 2023, there were no events or changes in circumstances that would indicate a material impairment of our long-lived assets.

Goodwill and indefinite-lived intangible assets must be tested for impairment at least annually.

We performed our most recent annual impairment test on July 1, 2024.

Our test indicated that there was no impairment of goodwill and indefinite-lived intangible assets.

For our goodwill impairment test, we first evaluate our market capitalization compared to the net assets of the Company overall.

Our final determination of valuation is impacted by a number of factors, but the key factors are the price of our common stock, recently completed transactions from both public companies and private transactions and our estimated forecast of future cash flows.

The valuation approaches contain uncertainty regarding the estimates used.

Our market capitalization could be impacted because we are a controlled company, which impacts the control premium we apply to the market price of our common stock.

One of the largest uncertainties relates to federal, state and local government spending, which management expects to continue to increase in the coming years.

There are a number of other uncertainties with respect to our future financial performance that could impact estimated future cash flows, including those discussed under the heading “Risk Factors” elsewhere in this report.

Based on our valuation approaches, we determined that our one reporting unit exceeded its carrying value, and thus concluded that the carrying value of goodwill was not impaired at July 1, 2024 or 2023.

At September 30, 2024 and 2023, we had goodwill with a carrying amount of $231.7 million and $159.3 million, respectively.

For our indefinite-lived intangible asset impairment test, we performed a qualitative impairment assessment.

The qualitative assessment did not identify indicators of impairment, and it was determined that is more likely than not the indefinite-lived name license fair value was more than its carrying amount.

Accordingly, no further analysis was required or performed.

The Company’s inventories are stated at the lower of cost or net realizable value and are accounted for on an average cost basis or a first-in, first-out cost basis.

The cost of inventory includes the cost of material, labor, trucking and other equipment costs associated with procuring and transporting materials to HMA plants for production and delivery to customers.

Inventories consist primarily of construction stone that has been removed from aggregates facilities and processed for future sale or internal use, raw materials including asphalt cement, and aggregates and millings that the Company expects to utilize on construction projects within one year.

Inventories valued on the average cost basis totaled $95.8 million and $75.5 million at September 30, 2024 and 2023, respectively.

Inventories valued on the first-in, first-out cost basis totaled $10.9 million and $8.5 million at September 30, 2024 and 2023, respectively.

Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amounts and the tax basis of assets and liabilities.

We regularly review our deferred tax assets for recoverability and, where necessary, establish a valuation allowance.

Valuation allowances are established to reduce deferred tax assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized in future periods.

To assess this likelihood, we use historical three-year results of operations, estimates and judgments regarding our future taxable income and consider the jurisdiction in which the taxable income is generated to determine whether a valuation allowance is required.

Such evidence can include our current financial position, results of operations, actual and forecasted results, the reversal of deferred tax liabilities, tax planning strategies and the current and forecasted business economics of our industry.

Additionally, we record uncertain tax positions at their net recognizable amount, based on the amount that management deems is more likely than not to be sustained upon ultimate settlement with the tax authorities in jurisdictions in which we operate.

On the basis of our evaluations, at September 30, 2024 and 2023, no valuation allowance was recorded on our net deferred tax assets, and we had no material uncertain tax positions.

If our estimates or assumptions regarding our current and deferred tax items are inaccurate or are modified, these changes could have potentially material impacts on our earnings.

Accrued Insurance Cost

We carry insurance policies to cover various risks, primarily including general liability, automobile liability and workers’ compensation, under which we are liable to reimburse the insurance company for a portion of each claim paid.

Since October 1, 2021, Construction Partners Risk Management, Inc., a captive insurance company and wholly owned subsidiary of the Company, has retained the first $1,000,000 per claim liability for each claim paid.

Also effective October 1, 2021, we became a member of a group captive insurance company that retains the next $550,000 per claim liability for each claim paid.

We utilize various primary and excess insurance companies to cover the liability for claims in excess of the retained amounts.

Changes in loss assumptions caused by changes in actual experience would affect the assessment of the ultimate liability and could have an effect on our operating results and financial position up to $1,000,000 per occurrence for general liability, automobile liability and workers’ compensation claims.

Prior to October 1, 2021, the amount for which we were liable for general liability, automobile liability and workers’ compensation claims ranged from $100,000 to $500,000 per occurrence.

Management accrues insurance costs for probable losses, both reported and unreported, that are reasonably estimable using actuarial methods based on historic trends modified, if necessary, by recent events.

We provide employee medical insurance under policies that are both fixed-premium, fully-insured policies and self-insured policies that are administered by the insurance company.

Under the self-insured policies, we are liable to reimburse the insurance company for actual claims paid plus an administrative fee.

We purchase separate stop-loss insurance, which limits the individual participant claim loss to amounts ranging from $100,000 to $200,000.

Share-Based Payments and Other Equity Transactions

Our equity incentive plans are administered by the Compensation Committee of our board of directors.

We account for awards issued under our equity incentive plan using a fair value-based method of accounting, whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is typically the vesting period.

Business Acquisitions

The Company accounts for business combinations using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“Topic 805”), which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values, other than leases acquired in connection with business combinations, which are recorded based on Topic 842, and contract assets and liabilities acquired in connection with business combinations, which are recorded based on ASC Topic 606, Revenue from Contracts with Customers .

The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Determining the fair values of assets acquired and liabilities assumed requires judgment and often involves the use of significant estimates and assumptions.

The Company engages third-party appraisal firms when appropriate to assist in the fair value determination of assets acquired and liabilities assumed.

Acquisition-related expenses and transaction costs associated with business combinations are expensed as incurred.

The Company may adjust the amounts recognized in an acquisition during a measurement period not to exceed one year from the date of acquisition.

Any such adjustments are the result of subsequently obtaining additional information that existed at the acquisition date regarding the assets acquired or the liabilities assumed.

Measurement period adjustments are generally recorded as increases or decreases to goodwill, if any, recognized in the transaction.

The cumulative impact of measurement period adjustments on depreciation, amortization and other income statement items are recognized in the period the adjustment is determined.

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What changed 10-K

Item 7. Management’s Discussion and Analysis