What changed in this filing

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Item 1. Financial Statements

2022-08-05 compared with 2022-05-06 · 134 added, 122 removed, 572 unchanged (31% of the section changed)

3 unchanged sentences

(in thousands, except share data)

March 31, September 30,

June 30, September 30,

Current assets:

32 unchanged sentences

Preferred stock, par value $ 0.001 ;

10,000,000 shares authorized at March 31, 2022 and September 30, 2021 and no shares issued and outstanding

10,000,000 shares authorized and no shares issued and outstanding at June 30, 2022 and September 30, 2021

Class A common stock, par value $ 0.001 ;

400,000,000 shares authorized, 41,193,222 shares issued and 41,192,039 outstanding at March 31, 2022 and 36,600,639 issued and outstanding at September 30, 2021

400,000,000 shares authorized, 41,195,730 issued and 41,193,887 outstanding at June 30, 2022 and 36,600,639 issued and outstanding at September 30, 2021

Class B common stock, par value $ 0.001 ;

100,000,000 shares authorized, 14,275,867 shares issued and 11,352,915 outstanding at March 31, 2022 and 18,614,791 shares issued and 15,691,839 outstanding at September 30, 2021

100,000,000 shares authorized, 14,275,867 issued and 11,352,915 outstanding at June 30, 2022 and 18,614,791 issued and 15,691,839 outstanding at September 30, 2021

Additional paid-in capital 253,665 248,571

10 unchanged sentences

(unaudited in thousands, except share and per share data)

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2022 2021 2022 2021

4 unchanged sentences

Gain on sale of equipment, net 333 835 1,788 1,177

Operating income (loss) ( 11,489 ) ( 6,394 ) ( 3,030 ) 4,449

Operating income 17,999 14,257 14,969 18,706

Interest expense, net ( 2,054 ) ( 568 ) ( 4,177 ) ( 1,334 )

Other income 178 252 337 661

Income (loss) before provision for income taxes and earnings from investment in joint venture ( 12,305 ) ( 6,448 ) ( 4,994 ) 4,092

Income before provision for income taxes and earnings from investment in joint venture 16,123 13,941 11,129 18,033

Provision for income taxes 3,955 4,600 2,868 5,767

Earnings from investment in joint venture — ( 1 ) — 10

Net income (loss) ( 9,418 ) ( 4,935 ) ( 3,907 ) 2,936

Net income 12,168 9,340 8,261 12,276

Other comprehensive income, net of tax

2 unchanged sentences

Other comprehensive income 1,575 — 8,478 —

Comprehensive income (loss) $ ( 3,960 ) $ ( 4,935 ) $ 2,996 $ 2,936

Net income (loss) per share attributable to common stockholders:

Comprehensive income $ 13,743 $ 9,340 $ 16,739 $ 12,276

Net income per share attributable to common stockholders:

Basic $ 0.23 $ 0.18 $ 0.16 $ 0.24

7 unchanged sentences

(unaudited in thousands, except share data)

For the six months ended March 31, 2022

For the nine months ended June 30, 2022

Class A Common Stock Class B Common Stock Additional

14 unchanged sentences

March 31, 2022 41,193,222 $ 41 14,275,867 $ 15 $ 251,817 $ ( 15,642 ) $ 171,991 $ 6,880 $ 415,102

For the six months ended March 31, 2021

Net income — — — — — — 12,168 — 12,168

Equity-based compensation expense — — — — 1,848 — — — 1,848

Issuance of stock awards 2,508 — — — — — — — —

Other comprehensive income — — — — — — — 1,575 1,575

June 30, 2022 41,195,730 $ 41 14,275,867 $ 15 $ 253,665 $ ( 15,642 ) $ 184,159 $ 8,455 $ 430,693

For the nine months ended June 30, 2021

Class A Common Stock Class B Common Stock Additional

8 unchanged sentences

December 31, 2020 33,875,884 $ 34 20,828,813 $ 21 $ 245,417 $ ( 15,603 ) $ 163,592 $ — $ 393,461

Net income — — — — — — ( 4,935 ) — ( 4,935 )

Net income (loss) — — — — — — ( 4,935 ) — ( 4,935 )

Conversion of Class B common stock to Class A common stock 1,332,952 1 ( 1,332,952 ) ( 1 ) — — — — —

2 unchanged sentences

March 31, 2021 35,719,569 $ 35 19,495,861 $ 20 $ 245,877 $ ( 15,603 ) $ 158,657 $ — $ 388,986

Net income — — — — — — 9,340 — 9,340

Conversion of Class B common stock to Class A common stock

787,001 1 ( 787,001 ) ( 1 ) — — — — —

Equity-based compensation expense — — — — 1,347 — — — 1,347

June 30, 2021 36,506,570 $ 36 18,708,860 $ 19 $ 247,224 $ ( 15,603 ) $ 167,997 $ — $ 399,673

See notes to consolidated financial statements (unaudited).

2 unchanged sentences

(unaudited in thousands)

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Cash flows from operating activities:

Net income (loss) $ ( 3,907 ) $ 2,936

Adjustments to reconcile net income to net cash, cash equivalents and restricted cash provided by operating activities:

Net income $ 8,261 $ 12,276

Adjustments to reconcile net income to net cash, cash equivalents and restricted cash (used by) provided by operating activities:

Depreciation, depletion, accretion and amortization of long-lived assets 50,291 36,011

9 unchanged sentences

Changes in operating assets and liabilities, net of acquisition:

Contracts receivable including retainage ( 3,821 ) 6,263

Contracts receivable including retainage, net ( 71,865 ) ( 32,975 )

Costs and estimated earnings in excess of billings on uncompleted contracts ( 9,487 ) ( 7,897 )

6 unchanged sentences

Other long-term liabilities 3,825 ( 331 )

Net cash provided by operating activities, net of acquisitions 3,294 2,398

Net cash (used by) provided by operating activities, net of acquisitions ( 9,721 ) 9,334

Cash flows from investing activities:

5 unchanged sentences

Cash flows from financing activities:

Proceeds from revolving credit facility 116,000 —

Repayments of long-term debt ( 5,000 ) ( 6,500 )

Proceeds from issuance of long-term debt, net of debt issuance costs and discount 142,300 199,198

Principal payments on long-term debt ( 5,000 ) ( 92,850 )

Purchase of treasury stock ( 39 ) —

Net cash provided by (used in) financing activities 110,961 ( 6,500 )

Net cash provided by financing activities 137,261 106,348

Net change in cash and cash equivalents ( 31,067 ) ( 13,848 )

55 unchanged sentences

Restricted cash represents cash held in a fiduciary capacity by the Captive for the payment of casualty insurance claims for the Company's subsidiaries.

The Company had restricted cash of $ 1.7 million and $ 0.0 million at March 31, 2022 and September 30, 2021, respectively.

The Company had restricted cash of $ 0.1 million and $ 0.0 million at June 30, 2022 and September 30, 2021, respectively.

Restricted Investments

5 unchanged sentences

These securities have been classified as non-current assets, based on their respective maturity dates.

The Company had restricted investments of $ 6.2 million and $ 0.0 million at March 31, 2022 and September 30, 2021, respectively.

The Company had restricted investments of $ 7.3 million and $ 0.0 million at June 30, 2022 and September 30, 2021, respectively.

Contracts Receivable Including Retainage, Net

27 unchanged sentences

The Company generally has the ability to file liens against the property if payments are not made on a timely basis.

No single customer accounted for more than 10% of the Company’s contracts receivable including retainage, net balance at March 31, 2022 or September 30, 2021.

Projects performed for various departments of transportation accounted for 30.8 % and 26.1 % of consolidated revenues for the three months ended March 31, 2022 and 2021, respectively, and for 32.3 % and 27.0 % of consolidated revenues for the six months ended March 31, 2022 and 2021, respectively.

Customers that accounted for more than 10% of consolidated revenues during the three and six months ended March 31, 2022 and 2021 are presented below:

No single customer accounted for more than 10% of the Company’s contracts receivable including retainage, net balance at June 30, 2022 or September 30, 2021.

Projects performed for various departments of transportation accounted for 43.7 % and 35.9 % of consolidated revenues for the three months ended June 30, 2022 and 2021, respectively, and for 37.2 % and 30.7 % of consolidated revenues for the nine months ended June 30, 2022 and 2021, respectively.

Customers that accounted for more than 10% of consolidated revenues during the three and nine months ended June 30, 2022 and 2021 are presented below:

% of Consolidated Revenues

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2022 2021 2022 2021

Alabama Department of Transportation 14.4 % 10.9 % 10.9 % 9.3 %

North Carolina Department of Transportation 13.6 % 12.2 % 10.3 % 8.7 %

Florida Department of Transportation 9.2 % 7.8 % 10.4 % 8.5 %

5 unchanged sentences

% of Consolidated Revenues

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2022 2021 2022 2021

56 unchanged sentences

The Company endeavors to utilize the best available information in measuring fair value.

The Company’s financial instruments include cash and cash equivalents, restricted cash, contracts receivable including retainage, accounts payable and accrued expenses reflected as current assets and current liabilities on its Consolidated Balance Sheets at March 31, 2022 and September 30, 2021.

Due to the short-term nature of these instruments, management considers their carrying value to approximate their fair value.

The Company also has debt securities reflected as restricted investments on its Consolidated Balance Sheets at March 31, 2022 and September 30, 2021.

The Company also has debt securities reflected as restricted investments on its Consolidated Balance Sheets at June 30, 2022 and September 30, 2021.

These investments are adjusted to fair value at each balance sheet date based on quoted prices, which are considered Level 1 inputs.

The Company also has a Term Loan and a Revolving Credit Facility, as defined and further described in Note 8 - Debt.

The carrying value of amounts outstanding under these credit facilities is reflected as long-term debt, net of current maturities and current maturities of long-term debt on the Company’s Consolidated Balance Sheets at March 31, 2022 and September 30, 2021.

Due to the variable rate or short-term nature of these instruments, management considers their carrying value to approximate their fair value.

19 unchanged sentences

The Company adopted this guidance effective October 1, 2021 as required and noted no material impact to the Company's consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848):

Facilitation of Effects of Reference Rate Reform on Financial Reporting,” which provides optional expedients and exceptions for applying GAAP to contract modification and hedging relationships affected by reference rate reform.

The guidance only applies to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued as a result of reference rate reform.

This optional guidance was effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022.

The Company does not expect such adoption to have a material impact on the Company’s consolidated financial statements.

Note 4 - Business Acquisitions

8 unchanged sentences

The transaction enhanced the Company’s vertical integration of construction services and supplemented the Company’s capabilities in the greater Pensacola, Florida market area.

These acquisitions were accounted for as business combinations in accordance with FASB Accounting Standards Codification Topic 805 Business Combinations ("ASC").

The Company consulted with independent third parties to assist in the valuation process.

These acquisitions were accounted for as business combinations in accordance with FASB Accounting Standards Codification ("ASC") Topic 805 Business Combinations.

The Company consulted with independent third parties to assist in the valuation of various types and classes of assets.

The Company expects to finalize these values as soon as practicable and no later than one year from the acquisition date.

3 unchanged sentences

Upon finalizing the accounting for these transactions, management expects to ascribe value to other identifiable intangible assets, including customer relationships and customer backlog, which will reduce the provisional amount allocated to goodwill.

Total consideration for these four acquisitions was $ 104.7 million, of which $ 104.1 million has been paid with cash as of March 31, 2022.

Total consideration for these four acquisitions was $ 104.7 million, of which $ 104.1 million has been paid with cash as of June 30, 2022.

These acquisitions were funded with borrowings under the Company's Revolving Credit Facility.

The total consideration has been provisionally allocated as follows:

$ 1.2 million of cash and cash equivalents, $ 8.9 million of contracts receivable including retainage, net, $ 0.1 million of costs and estimated earnings in excess of billings on uncompleted contracts, $ 2.0 million of inventory, $ 0.5 million of prepaid expenses and other current assets, $ 2.8 million of accounts payable, $ 0.4 million of billings in excess of costs and estimated earnings on uncompleted contracts, $ 1.2 million of accrued expenses and other current liabilities, $ 50.0 million of property, plant and equipment and $ 46.4 million of goodwill.

Combined Acquisitions During the Three Months and Six Months Ended March 31, 2022

The Consolidated Statements of Comprehensive Income includes $ 15.2 million of revenue and $ 1.0 million of net loss

attributable to the operations of these acquisitions for the three months ended March 31, 2022 and $ 29.8 million of revenue and $ 1.3 million of net loss attributable to the operations of these acquisitions for the six months ended March 31, 2022 from their respective acquisition dates.

The Company recorded certain costs to effect the acquisitions as they were incurred, which are reflected in general and administrative expenses on the Company’s Consolidated Statements of Comprehensive Income in the amount of $ 0.2 million for the three months ended March 31, 2022 and $ 0.4 million for the six months ended March 31, 2022.

The following presents pro forma revenues and net income as though the acquisitions had occurred on October 1, 2020 (unaudited, in thousands):

For the Three Months Ended March 31,

$ 1.2 million of cash and cash equivalents, $ 8.9 million of contracts receivable including retainage, net, $ 0.1 million of costs and estimated earnings in excess of billings on uncompleted contracts, $ 2.0 million of inventory, $ 1.0 million of prepaid expenses and other current assets, $ 2.8 million of accounts payable, $ 0.4 million of billings in excess of costs and estimated earnings on uncompleted contracts, $ 1.2 million of accrued expenses and other current liabilities, $ 49.5 million of property, plant and equipment, $ 8.2 million of intangible assets and $ 38.2 million of goodwill.

Combined Acquisitions During the Three Months and Nine Months Ended June 30, 2022

The Consolidated Statements of Comprehensive Income include $ 40.5 million of revenue and $ 0.5 million of net income

attributable to the operations of these acquisitions for the three months ended June 30, 2022 and $ 70.3 million of revenue and $ 0.8 million of net loss attributable to the operations of these acquisitions for the nine months ended June 30, 2022 from their respective acquisition dates.

The Company recorded certain costs to effect the acquisitions as they were incurred, which are reflected in general and administrative expenses on the Company’s Consolidated Statements of Comprehensive Income in the amount of $ 0.0 million for the three months ended June 30, 2022 and $ 0.4 million for the nine months ended June 30, 2022.

The following presents actual or pro forma revenues and net income, as applicable, as though the acquisitions had occurred on October 1, 2020 (unaudited, in thousands):

For the Three Months Ended June 30,

Pro forma revenues $ 380,272 $ 314,819

Pro forma net income $ 12,168 $ 11,833

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Pro forma revenues $ 963,572 $ 772,583

1 unchanged sentence

Pro forma financial information is presented as if the acquired operations had been included in the consolidated results of the Company since October 1, 2020, and gives effect to transactions that are directly attributable to the acquisitions, including adjustments to:

(a) Include the pro forma results of operations of the acquisitions for the three and six months ended March 31, 2022 and 2021.

(a) Include the pro forma results of operations of the acquisitions for the three and nine months ended June 30, 2022 and 2021.

(b) Include additional depreciation and depletion expense related to the fair value of acquired property, plant and equipment and reserves at aggregates facilities, as applicable, as if such assets were acquired on October 1, 2020 and consistently applied to the Company’s depreciation and depletion methodologies.

(c) Include interest expense under the Term Loan as if the funds borrowed to finance the purchase prices were borrowed on October 1, 2020.

Interest expense calculations further assume that no principal payments were made during the period from October 1, 2020 through March 31, 2022, and that the interest rate in effect on the date the Company made the acquisitions was in effect for the period from October 1, 2020 through March 31, 2022.

(d) Exclude $ 0.4 million of acquisition-related expenses from the three and six months ended March 31, 2022, as though such expenses were incurred prior to the pro forma acquisition date of October 1, 2020.

Interest expense calculations further assume that no principal payments were made during the period from October 1, 2020 through June 30, 2022, and that the interest rate in effect on the date the Company made the acquisitions was in effect for the period from October 1, 2020 through June 30, 2022.

(d) Exclude $ 0.4 million of acquisition-related expenses from the three and nine months ended June 30, 2022, as though such expenses were incurred prior to the pro forma acquisition date of October 1, 2020.

Pro forma information is presented for informational purposes and may not be indicative of revenue or net income that would have been achieved if these acquisitions had occurred on October 1, 2020.

2 unchanged sentences

In August 2021, the Company acquired a crushed stone and aggregates facility located near Goldston, North Carolina.

As of March 31, 2022, there have been no material adjustments to the September 30, 2021 provisional accounting for either acquisition.

As of June 30, 2022, there have been no material adjustments to the September 30, 2021 provisional accounting for either acquisition.

Note 5 - Contracts Receivable Including Retainage, net

Contracts receivable including retainage, net consisted of the following at March 31, 2022 and September 30, 2021 (in thousands):

March 31, 2022 September 30, 2021

Contracts receivable including retainage, net consisted of the following at June 30, 2022 and September 30, 2021 (in thousands):

June 30, 2022 September 30, 2021

Contracts receivable $ 205,092 $ 132,456

5 unchanged sentences

Note 6 - Contract Assets and Liabilities

Costs and estimated earnings compared to billings on uncompleted contracts at March 31, 2022 and September 30, 2021 consisted of the following (in thousands):

March 31, 2022 September 30, 2021

Costs and estimated earnings compared to billings on uncompleted contracts at June 30, 2022 and September 30, 2021 consisted of the following (in thousands):

June 30, 2022 September 30, 2021

Costs on uncompleted contracts $ 1,337,906 $ 1,058,434

3 unchanged sentences

Net billings in excess of costs and estimated earnings on uncompleted contracts $ ( 14,881 ) $ ( 10,696 )

Significant changes to balances of costs and estimated earnings in excess of billings (contract asset) and billings in excess of costs and estimated earnings (contract liability) on uncompleted contracts from September 30, 2021 to March 31, 2022 are presented below (in thousands):

Costs and Estimated Earnings in Excess of Billings on

3 unchanged sentences

Changes in revenue billed, contract price or cost estimates 9,612 ( 13,797 ) ( 4,185 )

March 31, 2022 (unaudited) $ 24,409 $ ( 46,441 ) $ ( 22,032 )

At March 31, 2022, the Company had unsatisfied or partially unsatisfied performance obligations under construction project contracts representing approximately $ 985.9 million in aggregate transaction price.

June 30, 2022 (unaudited) $ 32,635 $ ( 47,516 ) $ ( 14,881 )

At June 30, 2022, the Company had unsatisfied or partially unsatisfied performance obligations under construction project contracts representing approximately $ 958.9 million in aggregate transaction price.

The Company expects to earn revenue as it satisfies its performance obligations under those contracts in the amount of approximately $ 326.8 million during the remainder of the fiscal year ending September 30, 2022 and $ 632.1 million thereafter.

Note 7 - Property, Plant and Equipment

Property, plant and equipment at March 31, 2022 and September 30, 2021 consisted of the following (in thousands):

March 31, 2022 September 30, 2021

Property, plant and equipment at June 30, 2022 and September 30, 2021 consisted of the following (in thousands):

June 30, 2022 September 30, 2021

Construction equipment $ 380,834 $ 333,966

9 unchanged sentences

Total property, plant and equipment, net $ 453,973 $ 404,832

Depreciation, depletion and amortization expense related to property, plant and equipment was $ 17.0 million and $ 12.2 million for the three months ended March 31, 2022 and 2021, respectively, and $ 32.8 million and $ 23.2 million for the six months ended March 31, 2022 and 2021, respectively.

Depreciation, depletion and amortization expense related to property, plant and equipment was $ 17.6 million and $ 12.4 million for the three months ended June 30, 2022 and 2021, respectively, and $ 50.4 million and $ 35.6 million for the nine months ended June 30, 2022 and 2021, respectively.

Note 8 - Debt

Since 2017, the Company and each of its subsidiaries have been parties to a credit agreement with certain lenders party from time to time thereto (as amended and restated, the “Credit Agreement”).

The Credit Agreement has been amended and restated on multiple occasions since its inception in order to provide for changes in the economic terms of the credit facility and developments at the Company.

The Credit Agreement provides for a credit facility consisting of a term loan (the “Term Loan”) and a revolving credit facility (the “Revolving Credit Facility”).

The obligations of the Company and its subsidiaries under the Credit Agreement are secured by a first priority security interest in substantially all of the Company’s assets.

In June 2021, the Credit Agreement was amended and restated to provide for a Term Loan in an initial aggregate principal amount of $ 200 million and a Revolving Credit Facility in an initial aggregate principal amount of $ 225 million.

Among other things, the proceeds of the Term Loan were used to refinance indebtedness of the Company that was outstanding immediately prior to the restatement.

The Term Loan, inclusive of any incremental borrowings made in the form of a term loan, will amortize in quarterly installments commencing on September 30, 2021 in an amount (subject, in each case, to adjustments for prior mandatory and voluntary prepayments of principal) equal to:

(a) 1.25 % of the original principal amount of the Term Loan on September 30, 2021 and on each of the following eleven quarter-end payment dates, and (b) 1.875 % of the original principal amount of the Term Loan on each of the next seven quarter-end payment dates.

The annual interest rates applicable to advances will be calculated, at the Company’s option, by using either a base rate or LIBOR, in each case plus an applicable margin percentage that corresponds to the Company’s consolidated net leverage ratio.

Upon the occurrence of certain triggering events relating to the end of the LIBOR reference rate, a different benchmark rate will be selected to replace LIBOR as the reference rate for interest accruing on certain advances.

All outstanding advances under the Term Loan and Revolving Credit Facility are due and payable in full on June 24, 2026.

Subject to various requirements, the Company generally may (and, under certain circumstances, must), prepay all or a portion of the outstanding balance of the advances, together with accrued interest thereon, prior to their contractual maturity.

The Company maintains credit facilities to finance acquisitions, to fund the purchase of real estate, construction equipment, plants and other fixed assets, and for general working capital purposes.

Debt at March 31, 2022 and September 30, 2021 consisted of the following (in thousands):

March 31, 2022 September 30, 2021

Debt at June 30, 2022 and September 30, 2021 consisted of the following (in thousands):

June 30, 2022 September 30, 2021

Long-term debt:

5 unchanged sentences

Long-term debt, net of current maturities $ 341,173 $ 206,175

On June 30, 2022, the Company and each of its subsidiaries entered into a Third Amended and Restated Credit Agreement with PNC Bank, National Association, as administrative agent and lender, PNC Capital Markets LLC, as joint lead arranger and sole bookrunner, Regions Bank and BofA Securities, Inc., each as a joint arranger, and certain other lenders (as amended and restated, the “Credit Agreement”).

The Credit Agreement provides for (i) a term loan facility in an initial aggregate principal amount of $ 250.0 million (the “Term Loan”) the full amount of which was drawn at closing, (ii) a revolving credit facility in an initial aggregate principal amount of $ 325.0 million, (the “Revolving Credit Facility”), and (iii) a delayed draw term loan facility in an initial aggregate principal amount of $ 50.0 million.

Among other things, the proceeds of the Term Loan were used to refinance indebtedness of the Company and its subsidiaries under its prior credit facility.

The Term Loan, inclusive of any incremental borrowings made in the form of a term loan, will amortize in quarterly installments commencing on September 30, 2022 in an amount (subject, in each case, to adjustments for prior mandatory and voluntary prepayments of principal) equal to:

(i) 1.25 % of the original principal amount of the Term Loan on September 30, 2022 and on each of the following eleven quarter-end payment dates, and (ii) 1 .875 % of the original principal amount of the Term Loan on each of the next eight quarter-end payment dates.

All outstanding advances under the Term Loan and Revolving Credit Facility are due and payable in full on June 30, 2027.

The annual interest rates applicable to advances will be calculated, at the Company’s option, by using either a base rate, Daily Simple SOFR plus 0.10 %, or Term SOFR plus 0.10 %, and in each case, plus an applicable margin percentage that corresponds to the Company’s consolidated net leverage ratio.

The obligations of the Company and its subsidiaries under the Credit Agreement are secured by a first priority security interest in substantially all of the Company’s assets.

Note 9 - Equity

7 unchanged sentences

Conversion of Class B Common Stock to Class A Common Stock

During the six months ended March 31, 2022, certain stockholders of the Company converted a total of 4,338,924 shares of Class B common stock into shares of Class A common stock on a one -for-one basis.

As of March 31, 2022, there were 41,192,039 shares of Class A common stock and 11,352,915 shares of Class B common stock outstanding.

During the nine months ended June 30, 2022, certain stockholders of the Company converted a total of 4,338,924 shares of Class B common stock into shares of Class A common stock on a one -for-one basis.

As of June 30, 2022, there were 41,193,887 shares of Class A common stock and 11,352,915 shares of Class B common stock outstanding.

Treasury Stock

During the six months ended March 31, 2022, the Company received a total of 1,183 shares of Class A common stock from employees for reimbursement of income taxes paid by the Company on behalf of these employees related to the vesting of restricted stock awards.

During the nine months ended June 30, 2022, the Company received a total of 1,843 shares of Class A common stock from employees for reimbursement of income taxes paid by the Company on behalf of these employees related to the vesting of restricted stock awards.

Restricted Stock Awards

During the six months ended March 31, 2022, the Company awarded a total of 253,659 restricted shares of Class A common stock to certain directors, officers and employees of the Company under the Construction Partners, Inc.

During the nine months ended June 30, 2022, the Company awarded a total of 256,167 restricted shares of Class A common stock to certain directors, officers and employees of the Company under the Construction Partners, Inc.

2018 Equity Incentive Plan (the “Equity Incentive Plan”).

4 unchanged sentences

The following table summarizes the weighted-average number of basic common shares outstanding and the calculation of basic earnings per share for the periods presented (unaudited in thousands, except share and per share amounts):

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2022 2021 2022 2021

3 unchanged sentences

The following table summarizes the calculation of the weighted-average number of diluted common shares outstanding and the calculation of diluted earnings per share for the periods presented (unaudited in thousands, except share and per share amounts):

For the Three Months Ended March 31, For the Six Months Ended March 31,

For the Three Months Ended June 30, For the Nine Months Ended June 30,

2022 2021 2022 2021

8 unchanged sentences

Management evaluated the Company’s tax positions based on appropriate provisions of applicable tax laws and regulations and believes that they are supportable based on their specific technical merits and the facts and circumstances of the respective transactions.

The Company’s effective income tax rate for the three months ended March 31, 2022 and 2021 was 23.5 % and 23.5 %, respectively.

The Company’s effective tax rate for the six months ended March 31, 2022 and 2021 was 21.8 % and 28.4 %, respectively.

The changes in the Company's effective rates are due to differences in state tax rates at its operating subsidiaries.

The Company’s effective income tax rate for the three months ended June 30, 2022 and 2021 was 24.5 % and 33.0 %, respectively.

The Company’s effective tax rate for the nine months ended June 30, 2022 and 2021 was 25.8 % and 32.0 %, respectively.

The changes in the Company's effective rates are due to differences in state tax rates at its operating subsidiaries and an unfavorable impact of a non-deductible legal settlement incurred in the three months ended June 30, 2021.

Note 12 - Related Parties

On December 31, 2017, the Company sold an indirect wholly owned subsidiary to an immediate family member of an executive officer of the Company (“Purchaser of Subsidiary”) in consideration for a note receivable in the amount of $ 1.0 million, which approximated the net book value of the disposed entity.

At March 31, 2022, $ 0.1 million and $ 0.4 million was reflected on the Company’s Consolidated Balance Sheets within other current assets and other assets, respectively, representing the remaining balances on this note receivable.

At June 30, 2022, $ 0.1 million and $ 0.4 million was reflected on the Company’s Consolidated Balance Sheets within other current assets and other assets, respectively, representing the remaining balances on this note receivable.

In connection with this transaction, the Company also received a note receivable from the disposed entity (“Disposed Entity”) on December 31, 2017 in the amount of $ 1.0 million representing certain accounts payable of the Disposed Entity that were paid by the Company.

At March 31, 2022, $ 0.1 million and $ 0.2 million was reflected on the Company’s Consolidated Balance Sheets within other current assets and other assets, respectively, representing the remaining balances on this note receivable.

The notes do not bear interest, and are scheduled to be made in periodic installments during fiscal year 2022 through fiscal year 2026.

At June 30, 2022, $ 0.1 million and $ 0.2 million was reflected on the Company’s Consolidated Balance Sheets within other current assets and other assets, respectively, representing the remaining balances on this note receivable.

The notes do not bear interest and are scheduled to be repaid in periodic installments during fiscal year 2022 through fiscal year 2026.

Prior to its acquisition by the Company, a current subsidiary of the Company advanced funds to an entity owned by an immediate family member of an officer of the Company in connection with a land development project.

14 unchanged sentences

• The Company is party to a management services agreement with SunTx, under which the Company pays SunTx $ 0.27 million per fiscal quarter and reimburses certain travel and other out-of-pocket expenses associated with services rendered under the management services agreement.

The following table presents revenues earned and expenses incurred by the Company during the three and six months ended March 31, 2022 and 2021, and accounts receivable and payable balances at March 31, 2022 and September 30, 2021, related to transactions with the related parties described above (in thousands):

The following table presents revenues earned and expenses incurred by the Company during the three and nine months ended June 30, 2022 and 2021, and accounts receivable and payable balances at June 30, 2022 and September 30, 2021, related to transactions with the related parties described above (in thousands):

Revenue Earned (Expense Incurred) Accounts Receivable (Payable)

For the Three Months Ended March 31, For the Six Months Ended March 31, March 31, September 30,

For the Three Months Ended June 30, For the Nine Months Ended June 30, June 30, September 30,

2022 2021 2022 2021 2022 2021

14 unchanged sentences

Restricted Stock Awards

Compensation expense in connection with the Equity Incentive Plan, is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income.

Compensation expense was $ 1.7 million and $ 0.4 million for the three months ended March 31, 2022 and 2021, respectively, and $ 3.2 million and $ 0.9 million for the six months ended March 31, 2022 and 2021, respectively.

At March 31, 2022, there was approximately $ 16.5 million of unrecognized compensation expense related to these awards.

Compensation expense was $ 1.8 million and $ 1.3 million for the three months ended June 30, 2022 and 2021, respectively, and $ 5.1 million and $ 2.2 million for the nine months ended June 30, 2022 and 2021, respectively.

At June 30, 2022, there was approximately $ 14.9 million of unrecognized compensation expense related to these awards.

The underlying shares subject to awards granted under the Equity Incentive Plan will vest, as follows:

3 unchanged sentences

The Company leases certain facilities, office space, vehicles and equipment.

As of March 31, 2022, operating leases under ASC Topic 842, Leases (“Topic 842”) were included in (i) operating lease right-of use assets, (ii) current portion of operating lease liabilities and (iii) operating lease liabilities, net of current portion on the Company’s Consolidated Balance Sheets in the amounts of $ 11.5 million, $ 2.1 million and $ 9.6 million, respectively.

As of March 31, 2022, the Company did not have any lease contracts that had not yet commenced but had created significant rights and obligations.

As of June 30, 2022, operating leases under ASC Topic 842, Leases (“Topic 842”) were included in (i) operating lease right-of use assets, (ii) current portion of operating lease liabilities and (iii) operating lease liabilities, net of current portion on the Company’s Consolidated Balance Sheets in the amounts of $ 11.2 million, $ 2.1 million and $ 9.3 million, respectively.

As of June 30, 2022, the Company did not have any lease contracts that had not yet commenced but had created significant rights and obligations.

The components of lease expense were as follows (unaudited, in thousands):

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Operating lease cost $ 650 $ 593

1 unchanged sentence

Total lease expense $ 6,348 $ 4,325

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Operating lease cost $ 1,884 $ 1,946

4 unchanged sentences

These leases are entered into at periodic rental rates for an unspecified duration and typically have a termination for convenience provision.

As of March 31, 2022, the weighted-average remaining term of the Company’s leases was 7.9 years, and the weighted-average discount rate was 3.29 %.

As of March 31, 2022, the lease liability was equal to the present value of the remaining lease payments, discounted using the incremental borrowing rate on the Company’s secured debt using a single maturity discount rate, as such rate is not materially different from the discount rate applied to each of the leases in the portfolio.

The following table summarizes the Company’s undiscounted lease liabilities outstanding as of March 31, 2022 (unaudited, in thousands):

As of June 30, 2022, the weighted-average remaining term of the Company’s leases was 7.7 years, and the weighted-average discount rate was 3.30 %.

As of June 30, 2022, the lease liability was equal to the present value of the remaining lease payments, discounted using the incremental borrowing rate on the Company’s secured debt using a single maturity discount rate, as such rate is not materially different from the discount rate applied to each of the leases in the portfolio.

The following table summarizes the Company’s undiscounted lease liabilities outstanding as of June 30, 2022 (unaudited, in thousands):

Fiscal Year Amount

14 unchanged sentences

Changes in the fair value of a derivative that is qualified and designated as a fair value hedge, along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings.

If the Company designates a derivative as one of the above, changes in the fair value of the undesignated derivative instrument are reported in current period earnings.

If the Company does not designate a derivative as one of the above, changes in the fair value of the undesignated derivative instrument are reported in current period earnings.

Cash flows from designated derivative financial instruments are classified within the same category as the item being hedged in the Consolidated Statements of Cash Flows, while cash flows from undesignated derivative financial instruments are included as an investing activity.

10 unchanged sentences

Changes in the fair value of commodity swaps are recognized in earnings.

The following table represents the approximate amount of realized and unrealized gains (losses) and changes in fair value recognized in earnings on commodity derivative contracts for the three and six months ended March 31, 2022 and 2021 and the fair value of these derivatives as of March 31, 2022 and September 30, 2021 (in thousands):

For the Three Months Ended March 31,

The following table represents the approximate amount of realized and unrealized gains (losses) and changes in fair value recognized in earnings on commodity derivative contracts for the three and nine months ended June 30, 2022 and 2021 and the fair value of these derivatives as of June 30, 2022 and September 30, 2021 (in thousands):

For the Three Months Ended June 30,

Change in Change in

3 unchanged sentences

Total $ 1,228 $ 459 $ 1,687 $ 139 $ 764 $ 903

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Change in Change in

3 unchanged sentences

Total $ 1,176 $ 2,589 $ 3,765 $ ( 254 ) $ 3,141 $ 2,887

March 31, 2022 September 30, 2021

June 30, 2022 September 30, 2021

Balance Sheet Classification (unaudited)

2 unchanged sentences

Other assets - interest rate swaps (1)

Accrued expense and other current liabilities - commodity swaps ( 3 ) —

Accrued expense and other current liabilities - interest rate swaps — ( 97 )

2 unchanged sentences

Net unrealized gain position $ 15,355 $ 967

(1) Includes designated cash flow hedge of $ 9,437 and $ 0 as of March 31, 2022 and September 30, 2021, respectively.

(2) Includes designated cash flow hedge of $ 0 and $( 31 ) as of March 31, 2022 and September 30, 2021, respectively.

(1) Includes designated cash flow hedge of $ 11,767 and $ 0 as of June 30, 2022 and September 30, 2021, respectively.

(2) Includes designated cash flow hedge of $ 0 and $( 31 ) as of June 30, 2022 and September 30, 2021, respectively.

Note 16 - Fair Value Measurements

The following table presents the Company’s liabilities measured at fair value on a recurring basis as of March 31, 2022 and September 30, 2021 under ASC 820, Fair Value Measurements (in thousands):

March 31, 2022 September 30, 2021

The following table presents the Company’s liabilities measured at fair value on a recurring basis as of June 30, 2022 and September 30, 2021 under ASC 820, Fair Value Measurements (in thousands):

June 30, 2022 September 30, 2021

Level 2 Level 2

12 unchanged sentences

Under the Revolving Credit Facility, the Company has a total capacity of $ 325.0 million that may be used for a combination of cash borrowings and letter of credit issuances.

At March 31, 2022, the Company had aggregate letters of credit outstanding in the amount of $ 11.3 million, primarily related to certain insurance policies.

At June 30, 2022, the Company had aggregate letters of credit outstanding in the amount of $ 11.3 million, primarily related to certain insurance policies.

Purchase Commitments

As of March 31, 2022, the Company had unconditional purchase commitments for diesel fuel and natural gas in the normal course of business in the aggregate amount of $ 5.6 million and $ 2.1 million, respectively.

As of June 30, 2022, the Company had unconditional purchase commitments for diesel fuel and natural gas in the normal course of business in the aggregate amount of $ 6.9 million and $ 1.5 million, respectively.

Management does not expect any significant changes in the market value of these goods during the commitment period that would have a material adverse effect on the financial condition, results of operations and cash flows of the Company.

As of March 31, 2022, our purchase commitments annually thereafter are as follows (in thousands):

As of June 30, 2022, the Company's purchase commitments annually thereafter are as follows (in thousands):

Fiscal Year Amount

6 unchanged sentences

however, certain agreements have minimum annual payments.

The Company has commitments in the form of minimum royalties as of March 31, 2022 in the amount of $ 2.6 million, due as follows (in thousands):

The Company has commitments in the form of minimum royalties as of June 30, 2022 in the amount of $ 2.7 million, due as follows (in thousands):

Fiscal Year Amount

2 unchanged sentences

Total $ 2,688

Royalty expense recorded in cost of revenue was $ 0.5 million and $ 0.3 million for the three months ended March 31, 2022 and 2021, respectively, and $ 0.8 million and $ 0.5 million for the six months ended March 31, 2022 and 2021, respectively.

Royalty expense recorded in cost of revenue was $ 0.4 million and $ 0.3 million for the three months ended June 30 2022 and 2021, respectively, and $ 1.2 million and $ 0.7 million for the nine months ended June 30, 2022 and 2021, respectively.

Note 18 - Other Comprehensive Income

4 unchanged sentences

The maturity date of this swap is June 24, 2026.

In March 2022, the Captive purchased debt securities, which have been classified as available-for-sale as of March 31, 2022.

In March 2022, the Captive purchased debt securities, which have been classified as available-for-sale as of June 30, 2022.

These securities are carried at their fair value based on quoted market prices.

Unrealized gains and losses are reported as components of accumulated other comprehensive income (loss), net.

Amounts in accumulated other comprehensive income (AOCI), net of tax, at March 31, 2022 and September 30, 2021, were as follows (in thousands):

AOCI March 31, 2022 (unaudited) September 30, 2021

Amounts in accumulated other comprehensive income (AOCI), net of tax, at June 30, 2022 and September 30, 2021, were as follows (in thousands):

AOCI June 30, 2022 (unaudited) September 30, 2021

Interest rate swap contract $ 11,767 $ ( 31 )

3 unchanged sentences

Changes in AOCI, net of tax, are as follows (in thousands):

AOCI Interest Rate Hedge

Balance at September 30, 2020 $ —

Net OCI changes —

Balance at March 31, 2021 $ —

AOCI Interest Rate Hedge

Balance at June 30, 2021 $ —

Balance at September 30, 2021 $ ( 23 )

Net OCI changes 8,478

Balance at March 31, 2022 $ 6,880

Balance at June 30, 2022 $ 8,455

Amounts reclassified from AOCI to earnings are as follows (in thousands):

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Interest expense $ 55 $ —

1 unchanged sentence

Total reclassifications from AOCI to earnings $ 41 $ —

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Interest expense $ 691 $ —

1 unchanged sentence

Total reclassifications from AOCI to earnings $ 513 $ —

Note 19 - Subsequent Events

On July 1, 2022, the Company entered into a $ 300.0 million notional interest rate swap agreement to hedge against SOFR interest rate fluctuations on a portion of its variable rate debt.

The agreement provides for a fixed rate of 1.85 % and a term through June 30, 2027.

The agreement was designated as a cash flow hedge.

The Company received a credit of $ 12.6 million under the "blend and extend" arrangement utilizing the fair values of the existing interest rate swap agreements at June 30, 2022.

On August 1, 2022, the Company acquired substantially all of the assets of Southern Asphalt, Inc., an asphalt paving company headquartered in Conway, South Carolina.

The acquisition was funded from borrowings under our delayed draw term loan in the amount of $ 25.2 million.

The final amount of consideration for the acquisition remains subject to post-closing adjustments that are in the process of being completed with respect to inventory and certain assumed liabilities.

The transaction extended the Company's footprint into eastern South Carolina and added two HMA plants in the Myrtle Beach, South Carolina metro area.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements