What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-09 compared with 2023-02-09 · 130 added, 62 removed, 144 unchanged (57% of the section changed)

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In addition to public infrastructure projects, we provide a wide range of large sitework construction and HMA paving services to private construction customers, including commercial and residential developers and local businesses.

Contract Backlog

At March 31, 2023, our contract backlog was $1.52 billion.

Contract backlog is a financial measure that generally reflects the dollar value of work that the Company expects to perform in the future.

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

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

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

Backlog of uncompleted work on contracts under which work was either in progress or had not yet begun was $1.25 billion at March 31, 2023.

Our contract backlog also includes low bid/no contract jobs, which consist of (i) public bid jobs for which we were the low bidder and no contract has been executed and (ii) private work jobs for which we have been notified that we are the low bidder or have been given a notice to proceed, but no contract has been executed.

Low bid/no contract backlog was $0.27 billion at March 31, 2023.

Recent Developments

Inflationary and Supply Chain Trends

During the three months ended December 31, 2022, we continued to experience an upward trend in several inflation-sensitive inputs that we use to provide our products and services, including upward pressure on wages and increases in the cost of raw materials used to produce HMA and other items that are critical to our business, including fuel, concrete and steel.

Inflation and Supply Chain Constraints

During the three and six months ended March 31, 2023, we continued to experience an upward trend in several inflation-sensitive inputs that we use to provide our products and services, including upward pressure on wages and increases in the cost of certain raw materials used to produce HMA and other items that are critical to our business.

In addition, we continued to experience some disruptions from various participants in our supply chain, including subcontractors, materials suppliers and equipment manufacturers, who provide the raw materials, equipment, vehicles, construction supplies and other services we require in order to manufacture HMA and perform our construction projects.

Although these issues have improved, intermittent stresses continued, particularly in regard to our older backlog.

To date, we have been able to mitigate some of the effects of inflation, supply chain disruptions and labor constraints on our business by increasing prices for our products and including the anticipated cost increases in the construction projects on which we bid.

However, we are limited in our ability to pass through increased costs for projects already in our backlog and, under those circumstances, may be unable to recoup losses or diminished profit margins by passing these costs through to our customers.

Tennessee Acquisition

Tennessee and North Carolina Acquisitions

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

As part of this transaction, we 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.

For further discussion regarding this transaction, see Note 4 - Business Acquisitions and Disposition to the unaudited consolidated financial statements included elsewhere in this report.

North Carolina Acquisition

On December 1, 2022, we acquired all of the capital stock of the Ferebee Corporation, an HMA manufacturing and paving company headquartered in Charlotte, North Carolina.

In connection with this transaction, we 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.

On December 1, 2022, we acquired all of the capital stock of Ferebee Corporation, an HMA manufacturing and paving company headquartered in Charlotte, North Carolina for $68.3 million.

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

For further discussion regarding this transaction, see Note 4 - Business Acquisitions and Disposition to the unaudited consolidated financial statements included elsewhere in this report.

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

Chief Financial Officer Appointment

Effective following the close of business on March 31, 2023, Gregory A.

Hoffman was appointed as our Chief Financial Officer.

Prior to his appointment, Mr.

Hoffman served as our Senior Vice President of Finance from April 2021 until March 2023 and as Chief Financial Officer of Wiregrass Construction Company, our Alabama subsidiary, from 2009 to 2021.

Before joining our Company, Mr.

Hoffman served in various roles of increasing responsibility at Corporate Express, Inc., a Staples company, including as Division Controller and Vice President, Operations, and also as Division Controller for APAC-Georgia, Inc., a heavy civil infrastructure company.

Prior to APAC, he was a Manager at Ernst & Young LLP, where he directed audit engagement teams serving a variety of industries, including construction.

Hoffman holds a Bachelor of Science in Accounting from the University of Alabama.

How We Assess Performance of Our Business

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Other Key Performance Indicators - Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA represents net income before, as applicable from time to time, (i) interest expense, net, (ii) provision (benefit) for income taxes, (iii) depreciation, depletion, accretion and amortization, (iv) equity-based compensation expense, (v) loss on the extinguishment of debt, (vi) certain management fees and expenses and (vii) nonrecurring legal settlement costs and associated legal expenses unrelated to the Company’s core operations.

Adjusted EBITDA represents net income (loss) before, as applicable from time to time, (i) interest expense, net, (ii) provision (benefit) for income taxes, (iii) depreciation, depletion, accretion and amortization, (iv) equity-based compensation expense, (v) loss on the extinguishment of debt, (vi) certain management fees and expenses and (vii) nonrecurring legal settlement costs and associated legal expenses unrelated to the Company’s core operations.

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

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

The following table presents a reconciliation of net income, the most directly comparable measure calculated in accordance with GAAP, to Adjusted EBITDA and the calculation of Adjusted EBITDA Margin for the periods presented (unaudited, in thousands, except percentages):

For the Three Months Ended December 31,

Net income $ 1,892 $ 5,511

The following table presents a reconciliation of net income (loss), the most directly comparable measure calculated in accordance with GAAP, to Adjusted EBITDA and the calculation of Adjusted EBITDA Margin for the periods presented (unaudited, in thousands, except percentages):

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

2023 2022 2023 2022

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

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

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Management fees and expenses (1)

359 384 726 759

Adjusted EBITDA $ 20,756 $ 7,824 $ 48,340 $ 34,181

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Results of Operations

Three Months Ended December 31, 2022 Compared to Three Months Ended December 31, 2021

The following table sets forth selected financial data for the three months ended December 31, 2022 and 2021 (unaudited in thousands, except percentages):

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

The following table sets forth selected financial data for the three months ended March 31, 2023 and 2022 (unaudited in thousands, except percentages):

Change From the Three Months Ended

For the Three Months Ended December 31, December 31, 2021

For the Three Months Ended March 31, March 31, 2022

to the Three Months Ended

2022 2021 December 31, 2022

2023 2022 March 31, 2023

Revenues Dollars % of

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Gain on facility exchange — — % — — % — — %

Operating income 6,328 1.9 % 8,459 3.0 % (2,131) (25.2) %

Operating loss (2,551) (0.8) % (11,489) (4.7) % 8,938 (77.8) %

Interest expense, net (4,802) (1.5) % (859) (0.4) % (3,943) 459.0 %

Other income 398 0.1 % 43 — % 355 825.6 %

Income before provision for income taxes 2,402 0.7 % 7,311 2.6 % (4,909) (67.1) %

Loss before provision for income taxes (6,955) (2.2) % (12,305) (5.1) % 5,350 (43.5) %

Provision for income taxes (1,474) (0.5) % (2,887) (1.2) % 1,413 (48.9) %

Net income $ 1,892 0.6 % $ 5,511 1.9 % $ (3,619) (65.7) %

Net loss $ (5,481) (1.7) % $ (9,418) (3.9) % $ 3,937 (41.8) %

Adjusted EBITDA $ 20,756 6.4 % $ 7,824 3.2 % $ 12,932 165.3 %

Revenues for the three months ended December 31, 2022 increased $56.8 million, or 19.9%, to $341.8 million from $285.0 million for the three months ended December 31, 2021.

The increase included $32.1 million of revenues attributable to acquisitions completed subsequent to December 31, 2021 and an increase of $24.7 million of revenues in our existing markets from contract work and sales of HMA and aggregates to third parties.

Revenues for the three months ended March 31, 2023 increased $81.5 million, or 33.5%, to $324.9 million from $243.4 million for the three months ended March 31, 2022.

The increase included $40.0 million of revenues attributable to acquisitions completed subsequent to March 31, 2022 and $41.5 million of revenues in our existing markets from contract work and sales of HMA and aggregates to third parties.

The 17.1% increase in revenues in our existing markets compared to the prior year period was due to strong demand in both public and private work.

Gross Profit.

Gross profit for the three months ended December 31, 2022 decreased $2.5 million, or 7.5%, to $30.5 million from $33.0 million for the three months ended December 31, 2021.

The decrease in gross profit was primarily due to (i) increases in the costs of raw materials, fuel, labor and trucking and (ii) supply chain disruptions resulting in project delays and the need to use alternative suppliers and vendors.

Gross profit for the three months ended March 31, 2023 increased $13.8 million, or 110.3%, to $26.3 million from $12.5 million for the three months ended March 31, 2022.

The increase in gross profit was primarily the result of a 33.5% increase in revenues for the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

The higher gross profit margin was due to (i) efficient utilization of our plants and equipment fleet, (ii) lower energy costs for diesel fuel, liquid asphalt and other petroleum-based resources and (iii) completion of new backlog with more favorable margins.

General and Administrative Expenses.

General and administrative expenses for the three months ended December 31, 2022 increased $4.8 million, or 19.2%, to $29.7 million from $24.9 million for the three months ended December 31, 2021.

The increase was the result of (i) a $1.0 million increase in equity-based compensation expense, (ii) a $1.4 million increase attributable to general and administrative expenses associated with the businesses acquired subsequent to December 31, 2021, (iii) a $1.4 million increase in management personnel payroll and benefits, and (iv) a $1.0 million increase in other professional fees, primarily driven by expenses incurred in support of acquisition activities, information technology expenses and increased accounting and consulting fees.

General and administrative expenses for the three months ended March 31, 2023 increased $7.0 million, or 28.0%, to $32.0 million from $25.0 million for the three months ended March 31, 2022.

The increase was primarily the result of (i) a $1.0 million increase in equity-based compensation expense, (ii) a $1.7 million increase attributable to general and administrative expenses associated with the businesses acquired subsequent to March 31, 2022, and (iii) a $5.2 million increase in management personnel payroll and benefits.

Gain on Sale of Property, Plant and Equipment .

Gain on sale of property, plant and equipment for the three months ended March 31, 2023 increased $2.1 million, or 211.4%, to $3.2 million from $1.0 million for the three months ended March 31, 2022.

The increase was primarily the result of $1.3 million gain on the sale of an excess office building in North Carolina that was no longer needed in our operations and additional sales of equipment and components during the three months ended March 31, 2023.

Interest Expense, Net.

Interest expense, net for the three months ended March 31, 2023 increased $3.9 million, or 459.0%, to $4.8 million compared to $0.9 million for the three months ended March 31, 2022.

The increase in interest expense was due to a $118.5 million increase in the average principal debt balance outstanding and higher interest rates during the three months ended March 31, 2023 compared to the corresponding period in 2022.

Provision for Income Taxes.

Our effective tax rate decreased to 21.1% for the three months ended March 31, 2023, from 23.5% for the three months ended March 31, 2022.

Our lower effective tax rate during the three months ended March 31, 2023 was due to differences in state tax rates at our operating subsidiaries.

Net loss decreased $3.9 million to a net loss of $5.5 million for the three months ended March 31, 2023, compared to net loss of $9.4 million for the three months ended March 31, 2022.

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

Adjusted EBITDA and Adjusted EBITDA Margin.

Adjusted EBITDA and Adjusted EBITDA Margin were $20.8 million and 6.4%, respectively, for the three months ended March 31, 2023, compared to $7.8 million and 3.2%, respectively, for the three months ended March 31, 2022.

The increase in Adjusted EBITDA and Adjusted EBITDA Margin primarily resulted from an increase in gross profit and depreciation, depletion, accretion and amortization, partially offset by higher general and administrative expenses and interest expense, net, all as described above.

See the description of Adjusted EBITDA and Adjusted EBITDA Margin, as well as a reconciliation of Adjusted EBITDA to net loss and the calculation of Adjusted EBITDA Margin, under the heading “How We Assess Performance of Our Business” above.

Six Months Ended March 31, 2023 Compared to Six Months Ended March 31, 2022

The following table sets forth selected financial data for the six months ended March 31, 2023 and 2022 (unaudited in thousands, except percentages):

Change From the Six Months Ended

For the Six Months Ended March 31, March 31, 2022

to the Six Months Ended

2023 2022 March 31, 2023

Revenues Dollars % of

Revenues $ 666,629 100.0 % $ 528,349 100.0 % $ 138,280 26.2 %

Cost of revenues 609,853 91.5 % 482,888 91.4 % 126,965 26.3 %

Gross profit 56,776 8.5 % 45,461 8.6 % 11,315 24.9 %

General and administrative expenses (61,714) (9.2) % (49,946) (9.5) % (11,768) 23.6 %

Gain on sale of property, plant and equipment 3,326 0.5 % 1,455 0.3 % 1,871 128.6 %

Gain on facility exchange 5,389 0.8 % — — % 5,389 — %

Gain on facility exchange for the three months ended December 31, 2022 was $5.4 million compared to $0.0 million for the three months ended December 31, 2021.

The gain was the result of the disposition of a quarry located near Goldston, North Carolina.

Operating income (loss) 3,777 0.6 % (3,030) (0.6) % 6,807 (224.7) %

Interest expense, net (8,762) (1.3) % (2,123) (0.4) % (6,639) 312.7 %

Other income 432 — % 159 0.1 % 273 171.7 %

Loss before provision for income taxes (4,553) (0.7) % (4,994) (0.9) % 441 (8.8) %

Provision for income taxes (964) (0.1) % (1,087) (0.2) % 123 (11.3) %

Net loss $ (3,589) (0.6) % $ (3,907) (0.7) % $ 318 (8.1) %

Adjusted EBITDA $ 48,340 7.3 % $ 34,181 6.5 % $ 14,159 41.4 %

Revenues for the six months ended March 31, 2023 increased $138.3 million, or 26.2%, to $666.6 million from $528.3 million for the six months ended March 31, 2022.

The increase included $72.2 million of revenues attributable to acquisitions completed subsequent to March 31, 2022 and $66.1 million of revenues in our existing markets from contract work and sales of HMA and aggregates to third parties.

The 12.5% increase in revenues in our existing markets compared to the prior year period was due to strong demand in both public and private work.

Gross Profit.

Gross profit for the six months ended March 31, 2023 increased $11.3 million, or 24.9%, to $56.8 million from $45.5 million for the six months ended March 31, 2022.

The increase in gross profit was primarily the result of a 26.2% increase in revenues for the six months ended March 31, 2023 compared to the six months ended March 31, 2022.

The lower gross profit margin was due to headwinds from inflation and supply chain constraints on our older backlog primarily completed in the three months ended December 31, 2022, partially offset by more favorable conditions for the three months ended March 31, 2023, as noted above.

General and Administrative Expenses.

General and administrative expenses for the six months ended March 31, 2023 increased $11.8 million, or 23.6%, to $61.7 million from $49.9 million for the six months ended March 31, 2022.

The increase was primarily the result of (i) a $2.0 million increase in equity-based compensation expense, (ii) a $2.7 million increase attributable to general and administrative expenses associated with the businesses acquired subsequent to March 31, 2022, and (iii) a $7.7 million increase in management personnel payroll and benefits.

Gain on Sale of Property, Plant and Equipment .

Gain on sale of property, plant and equipment for the six months ended March 31, 2023 increased $1.9 million, or 128.6%, to $3.3 million from $1.5 million for the six months ended March 31, 2022.

Gain on Facility Exchange .

Gain on facility exchange for the six months ended March 31, 2023 was $5.4 million compared to $0.0 million for the six months ended March 31, 2022.

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

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

Interest Expense, Net.

Interest expense, net for the three months ended December 31, 2022 increased $2.7 million, or 213.3%, to $4.0 million compared to $1.3 million for the three months ended December 31, 2021.

The increase in interest expense was due to a $150.7 million increase in the average principal debt balance outstanding and higher interest rates during the three months ended December 31, 2022 compared to the corresponding period in 2021.

Interest expense, net for the six months ended March 31, 2023 increased $6.6 million, or 312.7%, to $8.8 million compared to $2.1 million for the six months ended March 31, 2022.

The increase in interest expense was due to a $127.4 million increase in the average principal debt balance outstanding and higher interest rates during the six months ended March 31, 2023 compared to the corresponding period in 2022.

Provision for Income Taxes.

Our effective tax rate decreased to 21.2% for the three months ended December 31, 2022, from 24.6% for the three months ended December 31, 2021.

Our lower effective tax rate during the three months ended December 31, 2022 was due to differences in state tax rates at our operating subsidiaries.

Net income decreased $3.6 million, or 65.7%, to $1.9 million for the three months ended December 31, 2022, compared to $5.5 million for the three months ended December 31, 2021.

The decrease in net income was a result of lower gross profit and increases in general and administrative expenses and interest expense, net, partially offset by the gain on facility exchange, all as described above.

Our effective tax rate decreased to 21.1% for the six months ended March 31, 2023, from 21.8% for the six months ended March 31, 2022.

Our lower effective tax rate during the six months ended March 31, 2023 was due to differences in state tax rates at our operating subsidiaries.

Net loss decreased $0.3 million to a net loss of $3.6 million for the six months ended March 31, 2023, compared to net loss of $3.9 million for the six months ended March 31, 2022.

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

Adjusted EBITDA and Adjusted EBITDA Margin.

Adjusted EBITDA and Adjusted EBITDA Margin were $27.6 million and 8.1%, respectively, for the three months ended December 31, 2022, compared to $26.4 million and 9.2%, respectively, for the three months ended December 31, 2021.

The increase in Adjusted EBITDA was the result of higher depreciation, depletion, accretion and amortization and equity-based compensation expense, partially offset by a decrease in net income.

The lower Adjusted EBITDA Margin was primarily a result of lower gross profit margins, as described above.

See the description of Adjusted EBITDA and Adjusted EBITDA Margin, as well as a reconciliation of Adjusted EBITDA to net income, under the heading “How We Assess Performance of Our Business”.

Inflation and Price Changes

Adjusted EBITDA and Adjusted EBITDA Margin were $48.3 million and 7.3%, respectively, for the six months ended March 31, 2023, compared to $34.2 million and 6.5%, respectively, for the six months ended March 31, 2022.

The increase in Adjusted EBITDA and Adjusted EBITDA Margin primarily resulted from an increase in gross profit, gain on facility exchange and depreciation, depletion, accretion and amortization, partially offset by higher general and administrative expenses and interest expense, net, all as described above.

Liquidity and Capital Resources

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The following table sets forth our cash flows for the periods indicated (unaudited, in thousands):

For the Three Months Ended December 31,

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

For the Six Months Ended March 31,

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

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

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Operating Activities

During the three months ended December 31, 2022, cash provided by operating activities, net of acquisitions, was $28.9 million, primarily as a result of:

• net income of $1.9 million, including $18.4 million of depreciation, depletion, accretion and amortization and $2.5 million of equity-based compensation expense;

During the six months ended March 31, 2023, cash provided by operating activities, net of acquisitions, was $45.7 million, primarily as a result of:

• net loss of $3.6 million, including $38.2 million of depreciation, depletion, accretion and amortization of long-lived assets, unrealized losses on derivative instruments of $2.3 million, gain on sale of facility exchange of $5.4 million and equity-based compensation expense of $5.2 million;

• a decrease in contracts receivable including retainage, net of $34.1 million due to normal fluctuations resulting from the timing of processing transactions in our accounts receivable cycle;

• an increase in prepaid expenses and other current assets of $3.2 million primarily due to overpayment of federal and state income taxes and the timing of payments under our insurance policies;

• an increase in inventories of $10.2 million due to increased inventories from acquisitions, growth in existing markets, higher inventory costs and normal fluctuations in our inventory cycle;

• a decrease in accounts payable and accrued expenses and other current liabilities of $19.1 million due to the timing of processing transactions in our accounts payable cycle;

• a net decrease in the difference between costs and estimated earnings in excess of billings on uncompleted contracts and billings in excess of costs and estimated earnings on uncompleted contracts of $0.2 million due to the timing of performing and closing projects.

During the three months ended December 31, 2021, cash used in operating activities, net of acquisitions, was $0.6 million, primarily as a result of:

• net income of $5.5 million, including $15.9 million of depreciation, depletion, accretion and amortization and $1.5 million of equity-based compensation expense;

• an increase in inventories of $2.5 million due to acquisitions and normal fluctuations in our inventory cycle;

• an increase in prepaid expenses and other current assets of $3.5 million due to the timing of payments for various insurance policies and expenses;

• a net increase of $8.2 million in the difference between costs and estimated earnings in excess of billings on uncompleted contracts and billings in excess of costs and estimated earnings on uncompleted contracts due to the timing of performing and closing projects.

During the six months ended March 31, 2022, cash provided by operating activities, net of acquisitions, was $3.3 million, primarily as a result of:

• net loss of $3.9 million, including $33.0 million of depreciation, depletion, accretion and amortization of long-lived assets, unrealized gains on derivative instruments of $2.1 million and equity-based compensation expense of $3.2 million;

• an increase in contracts receivable including retainage, net of $3.8 million as a result of higher overall revenues due to acquisitions and growth in existing markets;

• an increase in prepaid expenses and other current assets of $8.2 million primarily due to overpayment of federal and state income taxes and the timing of payments under our insurance policies;

• an increase in inventories of $13.7 million due to increased inventories from acquisitions, higher inventory costs and normal fluctuations in our inventory cycle;

• a decrease in accounts payable and accrued expenses and other current liabilities of $14.4 million due to the timing of processing transactions in our accounts payable cycle;

• a net increase in the difference between costs and estimated earnings in excess of billings on uncompleted contracts and billings in excess of costs and estimated earnings on uncompleted contracts of $5.8 million due to the timing of performing and closing projects.

• a net increase of $11.0 million in the difference between costs and estimated earnings in excess of billings on uncompleted contracts and billings in excess of costs and estimated earnings on uncompleted contracts due to the timing of performing and closing projects.

Investing Activities

During the three months ended December 31, 2022, cash used in investing activities was $70.7 million, of which $77.2 million related to acquisitions completed in the period and $31.7 million was invested in property, plant and equipment, partially offset by $1.6 million of proceeds from the sale of property, plant and equipment and $36.4 million of proceeds from the facility exchange.

During the three months ended December 31, 2021, cash used in investing activities was $80.3 million, of which $65.9 million related to acquisitions completed in the period and $15.1 million was invested in property, plant and equipment, partially offset by $0.7 million of proceeds from the sale of property, plant and equipment.

During the six months ended March 31, 2023, cash used in investing activities was $97.2 million, of which $77.8 million related to acquisitions completed in the period, $60.4 million was invested in property, plant and equipment and $5.1 million was invested in restricted investments by the Captive, partially offset by $8.3 million of proceeds from the sale of property, plant and equipment and $37.0 million of proceeds from the facility exchange.

During the six months ended March 31, 2022, cash used in investing activities was $140.2 million, of which $102.9 million related to acquisitions completed in the period, $34.7 million was invested in property, plant and equipment and $6.4 million was invested in restricted investments by the Captive, partially offset by $3.8 million of proceeds from the sale of property, plant and equipment.

Financing Activities

During the three months ended December 31, 2022, cash provided by financing activities was $49.7 million.

We received $53.0 million of proceeds from our Revolving Credit Facility, which were primarily used for acquisitions completed in the period.

During the six months ended March 31, 2023, cash provided by financing activities was $46.6 million.

We received $53.0 million of proceeds from our Credit Facility, which were primarily used for acquisitions completed in the period.

This cash flow was partially offset by $6.3 million of principal payments on long-term debt.

During the three months ended December 31, 2021, cash provided by financing activities was $67.5 million.

During the six months ended March 31, 2022, cash provided by financing activities was $111.0 million.

We received $116.0 million of proceeds from our Revolving Credit Facility, which were primarily used for acquisitions completed in the period.

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We and each of our subsidiaries are parties to the Credit Agreement, which provides for the Term Loan and the Revolving Credit Facility.

At December 31, 2022 and September 30, 2022, we had $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 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 available under the Delayed Draw Term Loan at March 31, 2023 and September 30, 2022.

The Credit Agreement requires the Company to satisfy certain financial covenants, including a minimum fixed charge coverage ratio of 1.20-to-1.00 and a maximum consolidated leverage ratio of 3.50-to-1.00, subject to certain adjustments.

At December 31, 2022 and September 30, 2022, our fixed charge coverage ratio was 1.87-to-1.00 and 2.56-to-1.00, respectively, and our consolidated leverage ratio was 2.96-to-1.00 and 2.79-to-1.00, respectively.

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

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

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

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

For more information about the Credit Agreement, see Note 8 - Debt to the unaudited consolidated financial statements included elsewhere in this report.

Capital Requirements and Sources of Liquidity

During the three months ended December 31, 2022 and 2021, our capital expenditures were approximately $31.7 million and $15.1 million, respectively.

During the six months ended March 31, 2023 and 2022, our capital expenditures were approximately $60.4 million and $34.7 million, respectively.

Our capital expenditures are typically made during the fiscal year in which they are approved.

At December 31, 2022, our commitments for capital expenditures were not material to our financial condition or results of operations on a consolidated basis.

At March 31, 2023, our commitments for capital expenditures were not material to our financial condition or results of operations on a consolidated basis.

For fiscal 2023, we expect total capital expenditures to be $85.0 million to $90.0 million.

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Contractual Obligations

The following table summarizes our significant obligations outstanding as of December 31, 2022 (unaudited, in thousands):

The following table summarizes our significant obligations outstanding as of March 31, 2023 (unaudited, in thousands):

Payments Due by Fiscal Year

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Off-Balance Sheet Arrangements

As of December 31, 2022, the Company had aggregate letters of credit outstanding in the amount of $10.0 million, future purchase commitments of diesel fuel and natural gas of $5.4 million and $0.5 million, respectively, and $2.7 million of minimum royalty payments related to aggregates facilities.

As of March 31, 2023, we had aggregate letters of credit outstanding in the amount of $10.0 million, future purchase commitments of diesel fuel and natural gas of $4.4 million and $0.3 million, respectively, and $2.5 million of minimum royalty payments related to aggregates facilities.

Other than the letters of credit, future purchase commitments and minimum royalty payments, we do not currently have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, changes in our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

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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 2. Management’s Discussion and Analysis