What changed in this filing

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Item 1. Financial Statements

2023-05-09 compared with 2023-02-09 · 217 added, 166 removed, 536 unchanged (42% of the section changed)

3 unchanged sentences

(in thousands, except share data)

December 31, September 30,

March 31, September 30,

ASSETS (unaudited)

Current assets:

29 unchanged sentences

Total liabilities 688,133 639,642

Commitments and contingencies

Stockholders’ equity:

Preferred stock, par value $ 0.001 ;

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

10,000,000 shares authorized and no shares issued and outstanding at March 31, 2023 and September 30, 2022

Class A common stock, par value $ 0.001 ;

400,000,000 shares authorized, 41,376,528 shares issued and 41,368,094 shares outstanding at December 31, 2022, and 41,195,730 shares issued and 41,193,024 shares outstanding at September 30, 2022

400,000,000 shares authorized, 41,376,528 shares issued and 41,366,691 shares outstanding at March 31, 2023 and 41,195,730 shares issued and 41,193,024 shares outstanding at September 30, 2022

Class B common stock, par value $ 0.001 ;

100,000,000 shares authorized, 14,275,867 shares issued and 11,352,915 shares outstanding at December 31, 2022 and September 30, 2022

100,000,000 shares authorized, 14,275,867 shares issued and 11,352,915 shares outstanding at March 31, 2023 and September 30, 2022

Additional paid-in capital 261,743 256,571

Treasury stock, at cost, 8,434 shares of Class A common stock at December 31, 2022 and 2,706 shares of Class A common stock at September 30, 2022, par value $ 0.001

Treasury stock, at cost, 9,837 shares of Class A common stock at March 31, 2023 and 2,706 shares at September 30, 2022, par value $ 0.001

( 178 ) ( 39 )

Treasury stock, at cost, 2,922,952 shares of Class B common stock at December 31, 2022 and September 30, 2022, par value $ 0.001

Treasury stock, at cost, 2,922,952 shares of Class B common stock at March 31, 2023 and September 30, 2022, par value $ 0.001

( 15,603 ) ( 15,603 )

5 unchanged sentences

CONSTRUCTION PARTNERS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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

For the Three Months Ended December 31,

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

2023 2022 2023 2022

Revenues $ 324,850 $ 243,385 $ 666,629 $ 528,349

4 unchanged sentences

Gain on facility exchange — — 5,389 —

Operating income 6,328 8,459

Operating income (loss) ( 2,551 ) ( 11,489 ) 3,777 ( 3,030 )

Interest expense, net ( 4,802 ) ( 859 ) ( 8,762 ) ( 2,123 )

Other income 398 43 432 159

Income before provision for income taxes 2,402 7,311

Loss before provision for income taxes ( 6,955 ) ( 12,305 ) ( 4,553 ) ( 4,994 )

Provision for income taxes ( 1,474 ) ( 2,887 ) ( 964 ) ( 1,087 )

Net income 1,892 5,511

Other comprehensive (loss) income, net of tax

Unrealized (loss) gain on interest rate swap contract, net ( 1,292 ) 1,445

Unrealized gain on restricted investments, net 36 —

Other comprehensive (loss) income ( 1,256 ) 1,445

Comprehensive income $ 636 $ 6,956

Net income per share attributable to common stockholders:

Net loss ( 5,481 ) ( 9,418 ) ( 3,589 ) ( 3,907 )

Other comprehensive income (loss), net of tax

Unrealized gain (loss) on interest rate swap contract, net ( 3,460 ) 5,580 ( 4,752 ) 7,025

Unrealized gain (loss) on restricted investments, net 81 ( 122 ) 117 ( 122 )

Other comprehensive income (loss) ( 3,379 ) 5,458 ( 4,635 ) 6,903

Comprehensive income (loss) $ ( 8,860 ) $ ( 3,960 ) $ ( 8,224 ) $ 2,996

Net loss per share attributable to common stockholders:

Basic $ ( 0.11 ) $ ( 0.18 ) $ ( 0.07 ) $ ( 0.08 )

7 unchanged sentences

(unaudited in thousands, except share data)

For the Three Months Ended December 31, 2022

For the six months ended March 31, 2023

Class A Common Stock Class B Common Stock Additional

Accumulated Other Comprehensive Income, net Total Stockholders’ Equity

Stock Class A Common Stock

Stock Class B Common Stock

Accumulated Other Comprehensive Income (Loss), net Total Stockholders’ Equity

Shares Amount Shares Amount

2 unchanged sentences

Equity-based compensation expense — — — — 2,480 — — — — 2,480

Issuance of stock grant awards 180,798 — — — — — — — —

Issuance of stock awards 180,798 — — — — — — — — —

Purchase of treasury stock — — — — — ( 139 ) — — — ( 139 )

1 unchanged sentence

December 31, 2022 41,376,528 $ 41 14,275,867 $ 15 $ 259,051 $ ( 178 ) $ ( 15,603 ) $ 199,166 $ 16,364 $ 458,856

For the Three Months Ended December 31, 2021

Net loss — — — — — — — ( 5,481 ) — ( 5,481 )

Equity-based compensation expense — — — — 2,692 — — — — 2,692

Other comprehensive loss — — — — — — — — ( 3,379 ) ( 3,379 )

March 31, 2023 41,376,528 $ 41 14,275,867 $ 15 $ 261,743 $ ( 178 ) $ ( 15,603 ) $ 193,685 $ 12,985 $ 452,688

For the six months ended March 31, 2022

Class A Common Stock Class B Common Stock Additional

Accumulated Other Comprehensive Income (Loss), net Total Stockholders’ Equity

Capital Treasury

Stock Class A Common Stock Treasury

Stock Class B Common Stock Retained

Earnings Accumulated Other Comprehensive Income (Loss), net Total

Stockholders’

Shares Amount Shares Amount

2 unchanged sentences

Equity-based compensation expense — — — — 1,504 — — — — 1,504

Issuance of stock grant awards 145,921 — — — — — — — —

Issuance of stock awards 145,921 — — — — — — — — —

Purchase of treasury stock — — — — — ( 39 ) — — — ( 39 )

2 unchanged sentences

December 31, 2021 41,085,484 $ 41 14,275,867 $ 15 $ 250,075 $ ( 39 ) $ ( 15,603 ) $ 181,409 $ 1,422 $ 417,320

Net loss — — — — — — — ( 9,418 ) — ( 9,418 )

Equity-based compensation expense — — — — 1,742 — — — — 1,742

Issuance of stock awards 107,738 — — — — — — — — —

Other comprehensive income — — — — — — — — 5,458 5,458

March 31, 2022 41,193,222 $ 41 14,275,867 $ 15 $ 251,817 $ ( 39 ) $ ( 15,603 ) $ 171,991 $ 6,880 $ 415,102

See notes to consolidated financial statements (unaudited).

2 unchanged sentences

(unaudited in thousands)

For the Three Months Ended December 31,

For the Six Months Ended March 31,

Cash flows from operating activities:

Net income $ 1,892 $ 5,511

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

Depreciation, depletion, accretion and amortization 18,375 15,903

Net loss $ ( 3,589 ) $ ( 3,907 )

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

Depreciation, depletion, accretion and amortization of long-lived assets 38,233 33,047

Amortization of deferred debt issuance costs and debt discount 151 128

3 unchanged sentences

Gain on facility exchange ( 5,389 ) —

Realized loss on sales, calls and maturities of restricted investments 1 —

Realized losses on restricted investments 4 —

Equity-based compensation expense 5,172 3,246

1 unchanged sentence

Other non-cash adjustments ( 69 ) 39

Changes in operating assets and liabilities, net of acquisitions:

Contracts receivable including retainage, net 47,072 776

Changes in operating assets and liabilities, net of acquisition:

Contracts receivable including retainage 34,092 ( 3,821 )

Costs and estimated earnings in excess of billings on uncompleted contracts 743 ( 1,261 )

6 unchanged sentences

Other long-term liabilities 2,784 3,067

Net cash provided by (used in) operating activities, net of acquisitions 28,884 ( 577 )

Net cash provided by operating activities, net of acquisitions 45,696 3,294

Cash flows from investing activities:

2 unchanged sentences

Proceeds from facility exchange 36,987 —

Proceeds from sales, calls and maturities of restricted investments 170 —

Proceeds from restricted investments 866 —

Business acquisitions, net of cash acquired ( 77,842 ) ( 102,893 )

Purchase of restricted investments ( 5,148 ) ( 6,358 )

Net cash used in investing activities ( 97,235 ) ( 140,177 )

Cash flows from financing activities:

Proceeds from revolving credit facility 53,000 70,000

Net proceeds from revolving credit facility 38,000 116,000

Proceeds from issuance of long-term debt, net of debt issuance costs and discount 15,000 —

Repayments of long-term debt ( 6,250 ) ( 5,000 )

7 unchanged sentences

Cash paid for interest $ 9,047 $ 3,375

Cash paid for income taxes $ 626 $ 1,076

Operating lease right-of-use assets obtained in exchange for operating lease liabilities $ 4,062 $ 5,983

Cash paid for operating lease liabilities $ 1,204 $ 1,144

Non-cash items:

Operating lease right-of-use assets obtained in exchange for operating lease liabilities $ 4,361 $ 4,991

Property, plant and equipment financed with accounts payable $ 4,953 $ 6,256

Property, plant and equipment included with accounts payable at period end $ 3,448 $ 1,042

Amounts payable to seller in business combination $ — $ 600

See notes to consolidated financial statements (unaudited).

13 unchanged sentences

The first and second quarters of the Company’s fiscal year typically have lower levels of activity due to less favorable weather conditions.

Warmer and drier weather during our third and fourth fiscal quarters typically result in higher activity and revenues during those quarters.

Warmer and drier weather during the Company’s third and fourth fiscal quarters typically result in higher activity and revenues during those quarters.

Note 2 - Significant Accounting Policies

25 unchanged sentences

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

The Company had restricted cash of $ 0.3 million and $ 0.0 million at December 31, 2022 and September 30, 2022, respectively.

The Company had restricted cash of $ 0.1 million at March 31, 2023 and at September 30, 2022.

Restricted Investments

The Company’s restricted investments consist of debt securities, which are held in a fiduciary capacity by the Captive for the payment

of casualty insurance claims.

The Company’s restricted investments consist of debt securities, which are held in a fiduciary capacity by the Captive for the payment of casualty insurance claims.

The Company determines the classification of its securities at the time of purchase and re-evaluates the determination at each balance sheet date.

4 unchanged sentences

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

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

The Company had restricted investments of $ 6.7 million and $ 6.9 million at December 31, 2022 and September 30, 2022, respectively.

These securities have been classified as non-current assets based on their respective maturity dates and the Company’s intent to reinvest sales proceeds into new restricted investments.

The Company had restricted investments of $ 11.3 million and $ 6.9 million at March 31, 2023 and September 30, 2022, respectively.

The Company evaluates its available-for-sale debt securities quarterly to determine whether there has been a decline in the fair value below the amortized cost due to credit losses or other factors.

This evaluation process entails judgement by the Company, and considers factors including the issuer’s financial condition and near-term prospects, future economic conditions, interest rate changes and changes in the rating of the security.

When the Company has determined that it intends to sell, or that it is more likely than not that the Company will be required to sell, a security before it recovers its amortized cost basis above fair value, the individual security is written down to fair value, with a corresponding charge to “Other income” within the Consolidated Statements of Comprehensive Income.

For available-for-sale debt securities that do not meet the intent impairment criteria but for which the Company has determined that a credit loss exists, the present value of cash flows expected to be collected from the security is compared to the amortized cost basis of the security.

If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss allowance is recorded for the credit loss, limited by the amount by which the fair value is less than the amortized cost basis.

For the three months ended December 31, 2022 and 2021, the Company had no intent impairments or credit losses.

For the six months ended March 31, 2023 and 2022, the Company had no intent impairments or credit losses.

Contracts Receivable Including Retainage, Net

26 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 December 31, 2022 or September 30, 2022.

Projects performed for various departments of transportation accounted for 33.7 % and 33.5 % of consolidated revenues for the three months ended December 31, 2022 and 2021, respectively.

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

% of Consolidated Revenues for the Three Months Ended December 31,

Alabama Department of Transportation 6.2 % 10.1 %

No single customer accounted for more than 10% of the Company’s contracts receivable including retainage, net balance at March 31, 2023 or September 30, 2022.

Projects performed for various departments of transportation accounted for 29.8 % and 30.8 % of consolidated revenues for the three months ended March 31, 2023 and 2022, respectively, and for 30.9 % and 32.3 % of consolidated revenues for the six months ended March 31, 2023 and 2022, respectively.

Customers that accounted for more than 10% of consolidated revenues during the three and six months ended March 31, 2023 and 2022 are presented below:

% of Consolidated Revenues

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

2023 2022 2023 2022

Florida Department of Transportation 11.3 % 12.5 % 9.6 % 11.2 %

North Carolina Department of Transportation 10.9 % 9.4 %

Revenues from Contracts with Customers

3 unchanged sentences

The following table reflects, for the periods presented, the percentage of (i) revenues generated from public infrastructure construction projects and the sale of construction materials to public customers and (ii) revenues generated from private infrastructure construction projects and the sale of construction materials to private customers.

% of Consolidated Revenues for the Three Months Ended December 31,

Public 61.2 % 61.0 %

% of Consolidated Revenues

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

2023 2022 2023 2022

Private 42.1 % 42.1 % 40.4 % 40.5 %

Public 57.9 % 57.9 % 59.6 % 59.5 %

Revenues derived from construction projects are recognized over time as the Company satisfies its performance obligations by transferring control of the asset created or enhanced by the project to the customer.

54 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 December 31, 2022 and September 30, 2022.

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 December 31, 2022 and September 30, 2022.

The Company also has debt securities reflected as restricted investments on its Consolidated Balance Sheets at March 31, 2023 and September 30, 2022.

These investments are adjusted to fair value at each balance sheet date and are considered Level 2 fair value measurements.

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 deferred debt issuance cost and current maturities of long-term debt on the Company’s Consolidated Balance Sheets at December 31, 2022 and September 30, 2022.

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

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

9 unchanged sentences

Comprehensive Income

The Company reports comprehensive income in its Consolidated Statements of Comprehensive Income and Consolidated Statements of Stockholders’ Equity.

Comprehensive income comprises two subsets:

net income and other comprehensive income (“OCI”).

The Company reports comprehensive income in its Consolidated Statements of Comprehensive Income (Loss) and Consolidated Statements of Stockholders’ Equity.

Comprehensive income (loss) comprises two subsets:

net income and other comprehensive income (loss) (“OCI”).

OCI includes adjustments for changes in fair value of an interest rate swap contract derivative and available-for-sale restricted investments.

For additional information about comprehensive income, see Note 19 - Other Comprehensive Income.

For additional information about comprehensive income, see Note 19 - Other Comprehensive Income (Loss).

Note 3 - Accounting Standards

The Company did not adopt any new accounting standards or updates during the three months ended December 31, 2022.

Note 4 - Business Acquisitions and Disposition

The Company did not adopt any new accounting standards or updates during the six months ended March 31, 2023.

Note 4 - Business Acquisitions

Tennessee Acquisition - Provisional

On November 18, 2022, the Company acquired three HMA manufacturing plants and certain related assets located in the Nashville, Tennessee metro area for $ 9.5 million.

In connection with this transaction, the Company disposed of a quarry located near Goldston, North Carolina, resulting in total cash proceeds of $ 36.4 million and a gain on the facility exchange of $ 5.4 million.

In connection with this transaction, the Company disposed of a quarry in North Carolina, resulting in total cash proceeds of $ 37.0 million and a gain on the facility exchange of $ 5.4 million.

North Carolina Acquisition - Provisional

1 unchanged sentence

The transaction established the Company’s second platform company in North Carolina and added three HMA plants in the greater Charlotte/Rock Hill metro area.

Combined Acquisitions During the Three Months Ended December 31, 2022

Combined Acquisitions During the Six Months Ended March 31, 2023

The foregoing acquisitions were accounted for as business combinations in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“Topic 805”).

As of December 31, 2022, the purchase price allocation has not yet been finalized due to the recent timing of these acquisitions, as certain information was pending on such date to finalize estimates of fair value of certain assets acquired and liabilities assumed.

As of March 31, 2023, the purchase price allocation has not yet been finalized due to the recent timing of these acquisitions, as certain information was pending on such date to finalize estimates of fair value of certain assets acquired and liabilities assumed.

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

10 unchanged sentences

reduce the provisional amount allocated to goodwill.

Total consideration transferred for these acquisitions was $ 77.2 million, which was paid from available cash, proceeds from the exchange of the North Carolina facility and a draw from the Revolving Credit Facility (as defined in Note 8).

Total consideration transferred for these acquisitions was $ 77.8 million, which was paid from available cash, proceeds from the exchange of the North Carolina facility and a draw from the Revolving Credit Facility (as defined in Note 8 - Debt).

The total consideration has been provisionally allocated as follows:

$ 9.0 million of net working capital, $ 35.9 million of property, plant and equipment and $ 32.3 million of goodwill.

The Consolidated Statements of Comprehensive Income include $ 4.2 million of revenue and $ 0.2 million of net loss attributable to the operations of these acquisitions for the three months ended December 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 December 31, 2022.

The following table presents pro forma revenues and net income as though the acquisitions had occurred on October 1, 2021 (unaudited, in thousands):

For the Three Months Ended December 31,

$ 9.3 million of net working capital, $ 35.3 million of property, plant and equipment, $ 32.2 million of goodwill and a $ 1.0 million working capital receivable.

The Consolidated Statements of Comprehensive Income (Loss) includes $ 17.8 million of revenue and $ 0.6 million of net loss attributable to the operations of these acquisitions for the three months ended March 31, 2023 and $ 22.0 million of revenue and $ 0.9 million of net loss attributable to the operations of these acquisitions for the six months ended March 31, 2023 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 (Loss) in the amount of $ 0.0 million for the three months ended March 31, 2023 and $ 0.2 million for the six months ended March 31, 2023.

The following presents pro forma revenues and net income as though the acquisitions had occurred on October 1, 2021 (unaudited, in thousands):

For the Three Months Ended March 31,

Pro forma revenues $ 324,850 $ 261,160

Pro forma net income $ 2,797 $ 6,052

Pro forma net loss $ ( 5,481 ) $ ( 10,053 )

For the Six Months Ended March 31,

Pro forma revenues $ 678,011 $ 561,864

Pro forma net loss $ ( 2,684 ) $ ( 4,001 )

Pro forma financial information is presented as if the operations of the acquisitions had been included in the consolidated results of the Company since October 1, 2021, 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 months ended December 31, 2022 and 2021;

(a) include the pro forma results of operations of the acquisitions for the three and six months ended March 31, 2023 and 2022;

(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, 2021 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, 2021 (interest expense calculations further assume that no principal payments were made during the period from October 1, 2021 through December 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, 2021 through December 31, 2022);

(d) exclude $ 0.2 million of acquisition-related expenses from the three months ended December 31, 2022, as though such expenses were incurred prior to the pro forma acquisition date of October 1, 2021.

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, 2022.

Provisional Accounting

In March 2022, the Company acquired an HMA paving company headquartered in Burgaw, North Carolina.

In August 2022, the Company acquired an HMA paving, grading and sitework company headquartered in Conway, South Carolina.

As of December 31, 2022, there had been no material adjustments to the September 30, 2022 provisional accounting for either acquisition as reported in the 2022 Form 10-K.

(c) include interest expense as if the funds borrowed to finance the purchase prices were borrowed on October 1, 2021 (interest expense calculations further assume that no principal payments were made during the period from October 1, 2021 through March 31, 2023, and that the interest rate in effect on the date the Company made the acquisitions was in effect for the period from October 1, 2021 through March 31, 2023);

(d) exclude $ 0.2 million of acquisition-related expenses from the three and six months ended March 31, 2023, as though such expenses were incurred prior to the pro forma acquisition date of October 1, 2021.

Pro forma information is presented for informational purposes and may not be indicative of revenue or net loss that would have been recorded if these acquisitions had occurred on October 1, 2022.

Measurement Period Adjustments

During the six months ended March 31, 2023, the Company made measurement period adjustments to previous year acquisitions, which resulted in a corresponding net increase to goodwill of $ 4.0 million.

Note 5 - Contracts Receivable Including Retainage, Net

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

December 31, 2022 September 30, 2022

Contracts receivable including retainage, net consisted of the following at March 31, 2023 and September 30, 2022 (in thousands):

March 31, 2023 September 30, 2022

Contracts receivable $ 198,876 $ 221,566

5 unchanged sentences

Note 6 - Contract Assets and Liabilities

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

December 31, 2022 September 30, 2022

Costs and estimated earnings compared to billings on uncompleted contracts at March 31, 2023 and September 30, 2022 consisted of the following (in thousands):

March 31, 2023 September 30, 2022

Costs on uncompleted contracts $ 1,436,139 $ 1,520,510

3 unchanged sentences

Net billings in excess of costs and estimated earnings on uncompleted contracts $ ( 32,878 ) $ ( 23,206 )

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, 2022 to December 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 ( 145 ) ( 9,527 ) ( 9,672 )

December 31, 2022 (unaudited) $ 32,395 $ ( 57,147 ) $ ( 24,752 )

At December 31, 2022, the Company had unsatisfied or partially unsatisfied performance obligations under construction project contracts representing approximately $ 1.2 billion in aggregate transaction price.

The Company expects to earn revenue as it satisfies its performance obligations under such contracts in the amount of approximately $ 791.1 million during the remainder of the fiscal year ending September 30, 2023 and $ 368.4 million thereafter.

March 31, 2023 (unaudited) $ 29,126 $ ( 62,004 ) $ ( 32,878 )

Note 7 - Property, Plant and Equipment

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

December 31, 2022 September 30, 2022

Property, plant and equipment at March 31, 2023 and September 30, 2022 consisted of the following (in thousands):

March 31, 2023 September 30, 2022

Construction equipment $ 444,027 $ 402,581

9 unchanged sentences

Total property, plant and equipment, net $ 502,985 $ 481,412

Depreciation, depletion, and amortization expense related to property, plant and equipment for the three months ended December 31, 2022 and 2021 was $ 19.3 million and $ 15.8 million, respectively.

Depreciation, depletion and amortization expense related to property, plant and equipment was $ 20.4 million and $ 17.0 million for the three months ended March 31, 2023 and 2022, respectively, and $ 39.7 million and $ 32.8 million for the six months ended March 31, 2023 and 2022, respectively.

Note 8 - Debt

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 December 31, 2022 and September 30, 2022 consisted of the following (in thousands):

December 31, 2022 September 30, 2022

Debt at March 31, 2023 and September 30, 2022 consisted of the following (in thousands):

March 31, 2023 September 30, 2022

Long-term debt:

4 unchanged sentences

Current maturities of long-term debt ( 13,500 ) ( 12,500 )

Long-term debt, net of current maturities and deferred debt issuance costs $ 413,018 $ 363,066

Long-term debt, net of current maturities $ 408,967 $ 363,066

Since 2017, the Company and each of its subsidiaries have been parties to a credit agreement with PNC Bank, National Association (successor in interest to BBVA USA) and certain other lenders party from time to time thereto.

4 unchanged sentences

All outstanding advances under the Term Loan and Revolving Credit Facility are due and payable in full on June 30, 2027 (the “Maturity Date”).

The Term Loan (commencing on September 30, 2022) and the Delayed Draw Term Loan (commencing with the earliest of (i) December 31, 2023, or (ii) the last day of the fiscal quarter in which the commitments under the Delayed Draw Term Loan are fully drawn or terminated, as applicable) will amortize in quarterly installments in an amount (subject, in each case, to adjustments for prior mandatory and voluntary prepayments of principal) equal to:

The Term Loan (commencing on September 30, 2022) and the Delayed Draw Term Loan (commencing on the earliest of (i) December 31, 2023, or (ii) the last day of the fiscal quarter in which the commitments under the Delayed Draw Term Loan are fully drawn or terminated, as applicable) will amortize in quarterly installments 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 (and, to the extent any Delayed Draw Term Loans are then outstanding, the original principal amount of such loans) and continuing on each of the following eleven quarter-end payment dates;

4 unchanged sentences

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.

At December 31, 2022 and September 30, 2022, there was $ 268.8 million and $ 271.9 million, respectively, of principal outstanding under the Term Loan, $ 158.1 million and $ 105.1 million, respectively, of principal outstanding under the Revolving Credit Facility, and availability of $ 156.9 million and $ 208.6 million, respectively, under the Revolving Credit Facility, including a reduction for outstanding letters of credit.

The Company also had $ 25.0 million available under the Delayed Draw Term Loan at December 31, 2022 and September 30, 2022.

At March 31, 2023 and September 30, 2022, there was $ 280.6 million and $ 271.9 million, respectively, of principal outstanding under the Term Loan, $ 143.1 million and $ 105.1 million, respectively, of principal outstanding under the Revolving Credit Facility, and availability of $ 171.9 million and $ 208.6 million, respectively, under the Revolving Credit Facility, including a reduction for outstanding letters of credit.

The Company also had $ 10.0 million and $ 25.0 million available under the Delayed Draw Term Loan at March 31, 2023 and September 30, 2022, respectively.

The Credit Agreement contains customary negative covenants for agreements of this type, including, but not limited to, restrictions on

3 unchanged sentences

to-1.00 and a maximum consolidated leverage ratio of 3.50 -to-1.00, subject to certain adjustments.

At December 31, 2022 and September 30, 2022, the Company’s fixed charge coverage ratio was 1.87 -to-1.00 and 2.56 -to-1.00, respectively, and the Company’s

consolidated leverage ratio was 2.96 -to-1.00 and 2.79 -to-1.00, respectively.

At both December 31, 2022 and September 30, 2022, the Company was in compliance with all covenants under the Credit Agreement.

At March 31, 2023 and September 30, 2022, the Company’s fixed charge coverage ratio was 1.47 -to-1.00 and 2.56 -to-1.00, respectively, and the Company’s consolidated leverage ratio was 2.92 -to-1.00 and 2.79 -to-1.00, respectively.

At both March 31, 2022 and September 30, 2022, the Company was in compliance with all covenants under the Credit Agreement.

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

both December 31, 2022 and September 30, 2022, the aggregate notional value of these interest rate swap agreements was $ 300.0 million, and the fair value was $ 23.4 million and $ 24.7 million, respectively, which is included within other assets on the Company’s Consolidated Balance Sheets.

At March 31, 2023 and September 30, 2022, the aggregate notional value of these interest rate swap agreements was $ 300.0 million, and the fair value was $ 18.9 million and $ 24.7 million, respectively, which is included within other assets on the Company’s Consolidated Balance Sheets.

Note 9 - Equity

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Treasury Stock

During the three months ended December 31, 2022, the Company received a total of 5,267 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 and 461 shares of Class A common stock through forfeitures of restricted stock awards by terminated employees.

During the six months ended March 31, 2023, the Company received a total of 5,267 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 and 1,864 shares of Class A common stock through forfeitures of restricted stock awards by terminated employees.

Restricted Stock Awards

During the three months ended December 31, 2022, the Company awarded a total of 180,798 restricted shares of Class A common stock to certain directors, officers and employees of the Company under the Construction Partners, Inc.

During the six months ended March 31, 2023, the Company awarded a total of 180,798 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 December 31,

Net income attributable to common shareholders $ 1,892 $ 5,511

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

2023 2022 2023 2022

Net loss attributable to common stockholders $ ( 5,481 ) $ ( 9,418 ) $ ( 3,589 ) $ ( 3,907 )

Weighted average number of common shares outstanding, basic 51,827,365 51,793,443 51,826,143 51,744,052

Net income per common share attributable to common shareholders, basic $ 0.04 $ 0.11

Net loss per common share attributable to common stockholders, basic $ ( 0.11 ) $ ( 0.18 ) $ ( 0.07 ) $ ( 0.08 )

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 December 31,

Net income attributable to common stockholders $ 1,892 $ 5,511

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

2023 2022 2023 2022

Net loss attributable to common stockholders $ ( 5,481 ) $ ( 9,418 ) $ ( 3,589 ) $ ( 3,907 )

Weighted average number of basic common shares outstanding, basic 51,827,365 51,793,443 51,826,143 51,744,052

2 unchanged sentences

Weighted average number of diluted common shares outstanding 51,827,365 51,793,443 51,826,143 51,744,052

52,120,584 51,977,974

Net income per diluted common share attributable to common stockholders $ 0.04 $ 0.11

Net loss per diluted common share attributable to common stockholders $ ( 0.11 ) $ ( 0.18 ) $ ( 0.07 ) $ ( 0.08 )

Note 11 - Provision for Income Taxes

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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 December 31, 2022 and 2021 was 21.2 % and 24.6 %, respectively.

The Company’s effective income tax rate for the three months ended March 31, 2023 and 2022 was 21.1 % and 23.5 %, respectively.

The Company’s effective tax rate for the six months ended March 31, 2023 and 2022 was 21.1 % and 21.8 %, respectively.

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

1 unchanged sentence

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 December 31, 2022, $ 0.1 million and $ 0.3 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 March 31, 2023, $ 0.1 million and $ 0.3 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 December 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 repaid in periodic installments during fiscal year 2023 through fiscal year 2026.

At March 31, 2023, $ 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 repayments are scheduled to be made in periodic installments during fiscal year 2023 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.

10 unchanged sentences

• Since June 1, 2014, the Company has been a party to an access agreement with Island Pond Corporate Services, LLC, which provides a location for the Company to conduct business development activities from time to time on a property owned by the Executive Chairman of the Company’s Board of Directors (“Island Pond”).

• The Company is party to a management services agreement with SunTx, under which the Company pays SunTx $ 0.29 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 months ended December 31, 2022 and 2021, and accounts receivable and payable balances at December 31, 2022 and September 30, 2022, related to transactions with the related parties described above (in thousands):

• The Company is party to a management services agreement with SunTx, under which the Company pays SunTx Capital Management Corp.

(“SunTx”) $ 0.31 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, 2023 and 2022, and accounts receivable and payable balances at March 31, 2023 and September 30, 2022, related to transactions with the related parties described above (in thousands):

Revenue Earned (Expense Incurred) Accounts Receivable (Payable)

For the Three Months Ended December 31, December 31, September 30,

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

2023 2022 2023 2022 2023 2022

(unaudited) (unaudited) (unaudited)

(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)

Purchaser of Subsidiary $ — $ — $ — $ — $ 414 $ 414

2 unchanged sentences

Subcontracting Services ( 1,173 ) (1) ( 853 ) (1) ( 2,992 ) (1) ( 3,092 ) (1) ( 120 ) ( 695 )

( 2,239 ) (1)

( 568 ) ( 695 )

Island Pond ( 80 ) (2) ( 80 ) (2) ( 160 ) (2) ( 160 ) (2) — —

6 unchanged sentences

Restricted Stock

During the quarter ended December 31, 2022, the Company awarded a total of 180,798 restricted shares of Class A common stock to certain members of Company management under the Equity Incentive Plan.

The grants are classified as equity awards.

The aggregate grant date fair value of these restricted awards was $ 5.4 million.

During the quarter ended December 31, 2022, the Company recorded compensation expense in connection with these grants in the amount of $ 0.4 million, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income.

At December 30, 2022, there was approximately $ 5.0 million of unrecognized compensation expense related to these awards, which will be recognized over a remaining weighted-average period of 2.8 years.

During the three months ended March 31, 2023 and 2022, the Company recorded $ 2.2 million and $ 1.8 million, respectively, of compensation expense in connection with restricted stock awards.

During the six months ended March 31, 2023 and 2022, the Company recorded $ 4.2 million and $ 3.2 million, respectively, of compensation expense in connection with restricted stock awards.

At March 31, 2023, there was approximately $ 14.1 million of unrecognized compensation expense related to restricted stock awards.

Performance Stock Units

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The Company recognizes expense, net of estimated forfeitures, for PSUs based on the forecasted level of achievement of the applicable performance metrics, multiplied by the fair value of the total number of shares of Class A common stock underlying the PSUs that the Company anticipates will be delivered upon vesting based on such achievement.

During the quarter ended December 31, 2022, the Company awarded PSUs representing a potential vesting of 84,371 shares and forecasted vesting of 63,278 shares of Class A common stock to certain members of Company management.

The grants are classified as equity awards.

The aggregate grant date fair value of these awards was $ 2.1 million.

During the quarter ended December 31, 2022, the Company recorded compensation expense in connection with these awards in the amount of $ 0.1 million, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income.

At December 31, 2022, there was approximately $ 2.0 million of unrecognized compensation expense related to these awards.

During the three months ended March 31, 2023 and 2022, the Company recorded $ 0.5 million and $ 0.0 million , respectively, of compensation expense in connection with PSUs.

During the six months ended March 31, 2023 and 2022, the Company recorded $ 1.0 million and $ 0.0 million , respectively, of compensation expense in connection with PSUs.

At March 31, 2023, there was approximately $ 3.1 million of unrecognized compensation expense related to PSUs.

Note 14 - Leases

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

As of December 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 $ 17.7 million, $ 2.3 million and $ 15.7 million, respectively.

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

As of March 31, 2023, 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 $ 16.8 million, $ 2.2 million and $ 15.0 million, respectively.

As of March 31, 2023, 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 December 31,

For the Three Months Ended March 31,

Operating lease cost $ 788 $ 637

1 unchanged sentence

Total lease expense $ 5,521 $ 4,751

For the Six Months Ended March 31,

Operating lease cost $ 1,514 $ 1,234

Short-term lease cost 10,768 8,207

Total lease expense $ 12,282 $ 9,441

Short-term leases (those with terms of 12 months or less) are not capitalized but are expensed on a straight-line basis over the lease term.

The majority of our short-term leases relate to equipment used on construction projects.

The majority of the Company’s short-term leases relate to equipment used on construction projects.

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

As of December 31, 2022, the weighted-average remaining term of the Company’s leases was 11.1 years, and the weighted-average discount rate was 3.08 %.

As of December 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 December 31, 2022 (unaudited, in thousands):

As of March 31, 2023, the weighted-average remaining term of the Company’s leases was 10.8 years, and the weighted-average discount rate was 3.42 %.

As of March 31, 2023, 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, 2023 (unaudited, in thousands):

Fiscal Year Amount

12 unchanged sentences

(i) a hedge of a forecasted transaction or the variability of cash flows to be paid (“cash flow hedge”) or (ii) a hedge of the fair value of a recognized asset or liability (“fair value hedge”).

Changes in the fair value of a derivative that is qualified and designated as a cash flow hedge or net investment hedge are recorded in other comprehensive income (loss) in the Company’s Consolidated Statements of Comprehensive Income until they are reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

Changes in the fair value of a derivative that is qualified and designated as a cash flow hedge or net investment hedge are recorded in other comprehensive income (loss) in the Company’s Consolidated Statements of Comprehensive Income (Loss) until they are reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

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.

12 unchanged sentences

Changes in 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 months ended December 31, 2022 and 2021 and the fair value of these derivatives as of December 31, 2022 and September 30, 2022 (in thousands):

For the Three Months Ended December 31,

The following table represents the approximate amount of realized and unrealized gains (losses) and changes in fair value recognized in earnings on interest and commodity derivative contracts for the three and six months ended March 31, 2023 and 2022 and the fair value of these derivatives as of March 31, 2023 and September 30, 2022 (in thousands):

For the Three Months Ended March 31,

(unaudited) (unaudited)

4 unchanged sentences

Total $ 2,463 $ ( 1,279 ) $ 1,184 $ ( 67 ) $ 1,994 $ 1,927

December 31, 2022 September 30, 2022

For the Six Months Ended March 31,

(unaudited) (unaudited)

Change in Change in

Income Statement Classification Realized Gain (Loss) Unrealized Gain (Loss) Total Gain (Loss) Realized Gain (Loss) Unrealized Gain (Loss) Total Gain (Loss)

Cost of revenues $ 1,057 $ ( 2,286 ) $ ( 1,229 ) $ 857 $ 778 $ 1,635

Interest expense, net 3,342 — 3,342 ( 909 ) 1,352 443

Total $ 4,399 $ ( 2,286 ) $ 2,113 $ ( 52 ) $ 2,130 $ 2,078

March 31, 2023 September 30, 2022

Balance Sheet Classification (unaudited)

6 unchanged sentences

Net unrealized gain position $ 17,122 $ 25,245

(1) Includes designated cash flow hedge of $ 23,382 and $ 24,719 as of December 31, 2022 and September 30, 2022, respectively.

(1) Includes designated cash flow hedge of $ 18,882 and $ 24,719 as of March 31, 2023 and September 30, 2022, respectively.

Note 16 - Fair Value Measurements

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

December 31, 2022 September 30, 2022

The following table presents the Company’s liabilities measured at fair value on a recurring basis as of March 31, 2023 and September 30, 2022 under ASC 820, Fair Value Measurements (in thousands):

March 31, 2023 September 30, 2022

Level 2 Level 2

17 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 December 31, 2022, the Company had aggregate letters of credit outstanding in the amount of $ 10.0 million, primarily related to certain insurance policies as described in Note 2 - Significant Accounting Policies.

At March 31, 2023, the Company had aggregate letters of credit outstanding in the amount of $ 10.0 million, primarily related to certain insurance policies as described in Note 2 - Significant Accounting Policies.

Purchase Commitments

As of December 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 $ 5.9 million.

As of March 31, 2023, the Company had unconditional purchase commitments for diesel fuel and natural gas in the normal course of business in the aggregate amount of $ 4.7 million.

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 December 31, 2022, the Company’s purchase commitments for the remainder of 2023 and annually thereafter were as follows (unaudited, in thousands):

As of March 31, 2023, the Company’s purchase commitments annually thereafter were as follows (unaudited, in thousands):

Fiscal Year Amount

6 unchanged sentences

however, certain agreements have minimum annual payments.

The Company had commitments in the form of minimum royalties as of December 31, 2022 in the amount of $ 2.7 million, due as follows (unaudited, in thousands):

The Company had commitments in the form of minimum royalties as of March 31, 2023 in the amount of $ 2.5 million, due as follows (unaudited, in thousands):

Fiscal Year Amount

2 unchanged sentences

Total $ 2,485

Royalty expense recorded in cost of revenue during the three months ended December 31, 2022 and 2021 was $ 0.4 million and $ 0.3 million, respectively.

Royalty expense recorded in cost of revenue was $ 0.4 million and $ 0.5 million for the three months ended March 31, 2023 and 2022, respectively, and $ 0.8 million for each of the six months ended March 31, 2023 and 2022.

Note 18 - Restricted Investments

The following is a summary of the Company’s debt securities as of December 31, 2022 and September 30, 2022 (in thousands):

December 31, 2022

The following is a summary of the Company’s debt securities as of March 31, 2023 and September 30, 2022 (in thousands):

March 31, 2023

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

11 unchanged sentences

Total $ 7,432 $ — $ 566 $ 6,866

The amortized cost and fair value of debt securities classified as available for sale by contractual maturity, as of December 31, 2022, are as follows (unaudited, in thousands):

The amortized cost and fair value of debt securities classified as available for sale by contractual maturity, as of March 31, 2023, were as follows (unaudited, in thousands):

Amortized Cost Fair Value

3 unchanged sentences

Total $ 11,720 $ 11,303

Note 19 - Other Comprehensive Income

Comprehensive income comprises two subsets:

Note 19 - Other Comprehensive Income (Loss)

Comprehensive income (loss) comprises two subsets:

net income and OCI.

The components of OCI are presented in the accompanying Consolidated Statements of Comprehensive Income and Consolidated Statements of Stockholders’ Equity, net of applicable taxes.

The Company’s interest rate swap contract hedge included in other comprehensive income was entered into on July 1, 2022 with an original notional value of $ 300.0 million.

The components of OCI are presented in the accompanying Consolidated Statements of Comprehensive Income (Loss) and Consolidated Statements of Stockholders’ Equity, net of applicable

The Company’s interest rate swap contract hedge included in other comprehensive income (loss) was entered into on July 1, 2022 with an original notional value of $ 300.0 million.

The maturity date of this swap is June 30, 2027.

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.

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

AOCI December 31, 2022 (unaudited) September 30, 2022

Amounts in accumulated other comprehensive income (“AOCI”), net of tax, at March 31, 2023 and September 30, 2022, were as follows (in thousands):

AOCI March 31, 2023 (unaudited) September 30, 2022

Interest rate swap contract, net of blend and extend arrangement $ 17,715 $ 23,761

Unrealized loss on available-for-sale securities ( 417 ) ( 566 )

Less tax effect of other comprehensive income (loss) items ( 5,435 ) ( 5,575 )

Less net tax effect of other comprehensive income items ( 4,313 ) ( 5,575 )

Total $ 12,985 $ 17,620

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

AOCI Interest Rate Hedge

Balance at September 30, 2022 $ 17,620

Net OCI changes ( 4,635 )

Balance at December 31, 2022 (unaudited) $ 16,364

AOCI Interest Rate Hedge

Balance at March 31, 2023 (unaudited) $ 12,985

Balance at September 30, 2021 $ ( 23 )

Net OCI changes 6,903

Balance at December 31, 2021 (unaudited) $ 1,422

Balance at March 31, 2022 (unaudited) $ 6,880

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

For the Three Months Ended December 31,

Interest expense (benefit) $ ( 1,335 ) $ 332

Benefit from income taxes 344 ( 86 )

For the Three Months Ended March 31,

Interest (benefit) expense $ ( 2,007 ) $ 304

Realized loss on restricted investments ( 4 ) —

Expense (benefit) from income taxes 517 ( 78 )

Total reclassifications from AOCI to earnings $ ( 1,494 ) $ 226

For the Six Months Ended March 31,

Interest (benefit) expense $ ( 3,342 ) $ 636

Realized loss on restricted investments ( 4 ) —

Expense (benefit) from income taxes 861 ( 164 )

Total reclassifications from AOCI to earnings $ ( 2,485 ) $ 472

Note 20 - Subsequent Events

South Carolina Acquisition

On April 3, 2023, a subsidiary of the Company acquired substantially all of the assets of Pickens Construction, Inc., an asphalt paving company headquartered in Anderson, South Carolina, for $ 4.8 million.

The transaction added an HMA plant and expanded the Company’s service market in the greater Greenville, South Carolina metro area.

Alabama Acquisition

On May 1, 2023, a subsidiary of the Company acquired certain assets comprising the Huntsville, Alabama operations of Southern Site Contractors, a Tennessee-based excavation, grading and utilities contractor, for $ 1.1 million.

The transaction added skilled employees and construction equipment to drive growth in northeast Alabama.

Restricted Stock Award

On May 4, 2023, the Company awarded a total of 29,614 restricted shares of Class A common stock to certain members of Company management under the Equity Incentive Plan.

The grants are classified as equity awards.

Award of PSUs

On May 4, 2023, the Company awarded PSUs that, if the target metrics for such PSUs are met, would result in the issuance of 8,052 shares of Class A common stock to certain members of Company management.

The grants are classified as equity awards.

Amendment to Management Services Agreement

On May 4, 2023, the Company and entered into an amendment (the “Amendment”) to the Management Services Agreement between the Company and SunTx that extends the end of the term thereof from October 1, 2023 to October 1, 2028.

For more information about the Amendment, see the discussion under Part II, Item 5 included elsewhere in this report.

Chief Financial Officer Employment Agreement

On May 4, 2023, the Company entered into an employment agreement with Gregory A.

Hoffman, the Company’s Senior Vice President and Chief Financial Officer.

For more information about the Employment Agreement, see the discussion under Part II, Item 5 included elsewhere in this report.

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