What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-11-29 compared with 2022-11-22 · 243 added, 308 removed, 1056 unchanged (34% of the section changed)

28 unchanged sentences

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue Recognition – Revenue Recognized Over Time Under Uncompleted Long-Term Construction Contracts

As described in Note 6, the Company has recognized $2,025,866,000 of costs and estimated earnings to date on uncompleted contracts at September 30, 2023.

As described in Note 1 to the consolidated financial statements, the Company recognizes revenue derived from long-term construction contracts over time as the Company satisfies the single performance obligation for each construction contract.

As described in Note 1 to the financial statements, the Company recognizes revenue derived from long-term construction contracts over time as the Company satisfies the single performance obligation for each construction contract.

Progress towards completion of the performance obligation in each long-term construction project is estimated using the input method, which is measured by the relationship of total costs incurred through the measurement date to total estimated costs required to complete the project (cost-to-cost input method).

17 unchanged sentences

We have audited Construction Partners, Inc., and its subsidiaries’ (the Company) internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, the Company has maintained, in all material respects, effective internal control over financial reporting as of September 30, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2023, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2023 and 2022, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended September 30, 2023, and the related notes to the consolidated financial statements and our report dated November 29, 2023, expressed an unqualified opinion.

As described in Management's Report on Internal Control Over Financial Reporting, management has excluded King Asphalt, Inc.

and Southern Asphalt, Inc.

from its assessment of internal control over financial reporting as of September 30, 2022, because they were acquired by the Company on October 1, 2021 and August 1, 2022, respectively.

We have also excluded King Asphalt, Inc.

and Southern Asphalt, Inc.

from our audit of internal control over financial reporting.

King Asphalt, Inc.

and Southern Asphalt, Inc.

are wholly owned subsidiaries whose total assets (excluding goodwill which was included within the scope of management’s assessment), revenues and net income represent approximately 7%, 6% and 3%, respectively, of the related consolidated financial statement amounts as of and for the year ended September 30, 2022.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Ferebee Corporation from its assessment of internal control over financial reporting as of September 30, 2023, because it was acquired by the Company on December 1, 2022.

We have also excluded Ferebee Corporation from our audit of internal control over financial reporting.

Ferebee Corporation is a wholly owned subsidiary whose total assets (excluding goodwill which was included within the scope of management’s assessment), revenues and net income represent approximately 5%, 3% and 2%, respectively, of the related consolidated financial statement amounts as of and for the year ended September 30, 2023.

Basis for Opinion

47 unchanged sentences

Long-term liabilities:

Long-term debt, net of current maturities and debt issuance costs 363,066 206,175

Long-term debt, net of current maturities and deferred debt issuance costs 360,740 363,066

Operating lease liabilities, net of current portion 12,649 12,059

8 unchanged sentences

Class A common stock, par value $ 0.001 ;

400,000,000 shares authorized, 41,195,730 shares issued and 41,193,024 shares outstanding at September 30, 2022, and 36,600,639 shares issued and outstanding at September 30, 2021

400,000,000 shares authorized, 43,760,546 shares issued and 43,727,680 shares outstanding at September 30, 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 ;

1 unchanged sentence

Additional paid-in capital 267,330 256,571

Treasury stock, at cost, 2,706 shares of Class A common stock at September 30, 2022, and no shares at September 30, 2021, par value $ 0.001

Treasury stock, at cost, 2,922,952 shares of Class B common stock, par value $ 0.001

Treasury stock, Class A common stock, par value $ 0.001 , at cost, 32,866 shares at September 30, 2023, and 2,706 shares at September 30, 2022

( 178 ) ( 39 )

Accumulated other comprehensive income (loss), net 17,620 ( 23 )

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

( 15,603 ) ( 15,603 )

Accumulated other comprehensive income, net 18,694 17,620

Retained earnings 246,275 197,274

12 unchanged sentences

General and administrative expenses ( 126,947 ) ( 107,562 ) ( 91,878 )

Gain on sale of equipment, net 3,673 2,043 1,616

Gain on sale of property, plant and equipment 7,048 3,673 2,043

Gain on facility exchange 5,389 — —

Operating income 81,875 35,413 30,101

9 unchanged sentences

Unrealized (loss) on restricted investments, net ( 223 ) ( 448 ) —

Other comprehensive income (loss) 17,643 ( 23 ) —

Other comprehensive income (loss), net 1,074 17,643 ( 23 )

Comprehensive income $ 50,075 $ 39,019 $ 20,154

11 unchanged sentences

Capital Treasury

Stock Accumulated Other Comprehensive (Loss), net Retained

Stock Class A Common Stock

Stock Class B Common Stock

Accumulated Other Comprehensive (Loss), net Retained

Earnings Total

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Conversion of Class B common stock to Class A common stock 2,214,022 2 ( 2,214,022 ) ( 2 ) — — — — — —

Issuance of stock grant awards 510,733 1 — — — — — — — 1

Equity-based compensation expense — — — — 3,549 — — — — 3,549

Effect of adopting ASU Topic 842 — — — — — — — ( 222 ) ( 222 )

Other comprehensive (loss) — — — — — — — ( 23 ) — ( 23 )

Net income — — — — — — — — 20,177 20,177

3 unchanged sentences

Equity-based compensation expense — — — — 8,000 — — — — 8,000

Other comprehensive (loss) — — — — — — ( 23 ) — ( 23 )

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

Other comprehensive income — — — — — — — 17,643 — 17,643

Net income — — — — — — — — 21,376 21,376

4 unchanged sentences

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

Other comprehensive (loss) — — — — — — 17,643 — 17,643

Other comprehensive income — — — — — — — 1,074 — 1,074

Net income — — — — — — — — 49,001 49,001

12 unchanged sentences

Unrealized loss (gain) on derivative instruments 342 ( 382 ) ( 3,209 )

Provision for bad debt ( 947 ) 784 705

Gain on sale of equipment ( 3,673 ) ( 2,043 ) ( 1,616 )

Provision (recovery) for bad debt 456 ( 947 ) 784

Gain on sale of property, plant and equipment ( 7,048 ) ( 3,673 ) ( 2,043 )

Gain on facility exchange ( 5,389 ) — —

Realized losses on restricted investments 30 — —

Equity-based compensation expense 10,759 8,000 3,549

16 unchanged sentences

Purchases of property, plant and equipment ( 97,810 ) ( 68,851 ) ( 56,332 )

Proceeds from sale of equipment 7,525 3,654 3,041

Proceeds from sale of property, plant and equipment 17,698 7,525 3,654

Proceeds from facility exchange 36,987 — —

Business acquisitions, net of cash acquired ( 91,787 ) ( 128,568 ) ( 210,734 )

Purchase of restricted investments ( 7,432 ) — —

Return of investment in joint venture — — 361

Proceeds from the sale of restricted investments 2,900 — —

Purchases of restricted investments ( 11,360 ) ( 7,432 ) —

Net cash used in investing activities ( 143,372 ) ( 197,326 ) ( 263,412 )

Cash flows from financing activities:

Proceeds from issuance of long-term debt, net of debt issuance costs and discount 167,300 219,197 72,299

Proceeds from issuance of long-term debt, net of debt issuance costs 103,000 167,300 219,197

Principal payments of long-term debt ( 103,125 ) ( 8,125 ) ( 95,350 )

Purchase of treasury stock ( 139 ) ( 39 ) —

Net cash provided by financing activities 159,136 123,847 41,887

Net cash (used in) provided by financing activities ( 264 ) 159,136 123,847

Net change in cash, cash equivalents and restricted cash 13,521 ( 21,692 ) ( 91,065 )

16 unchanged sentences

Construction Partners, Inc.

(the “Company”) is a civil infrastructure company that specializes in the construction and maintenance of roadways across Alabama, Florida, Georgia, North Carolina and South Carolina.

(the “Company”) is a civil infrastructure company that specializes in the construction and maintenance of roadways across Alabama, Florida, Georgia, North Carolina, South Carolina and Tennessee.

Through its wholly-owned subsidiaries, the Company provides a variety of products and services to both public and private infrastructure projects, with an emphasis on highways, roads, bridges, airports and commercial and residential developments.

The Company’s primary operations consist of (i) manufacturing and distributing hot mix asphalt (“HMA”) for both internal use and sales to third parties in connection with construction projects, (ii) paving activities, including the construction of roadway base layers and application of asphalt pavement, (iii) site development, including the installation of utility and drainage systems, (iv) mining aggregates, such as sand, gravel and construction stone, that are used as raw materials in the production of HMA and for sales to third parties, and (v) distributing liquid asphalt cement for both internal use and sales to third parties in connection with HMA production.

The Company was formed as a Delaware corporation in 2007 as a holding company to facilitate an acquisition growth strategy in the HMA paving and construction industry.

SunTx Capital Partners (“SunTx”), a private equity firm based in Dallas, Texas, is the Company’s majority investor and has owned a controlling interest in the Company’s stock since the Company’s inception.

On October 1, 2021, Construction Partners Risk Management, Inc.

(the "Captive"), a captive insurance company and wholly-owned subsidiary of the Company, commenced operations.

The purpose of the Captive is to provide general liability, automobile liability and workers’ compensation insurance coverage to the Company and its subsidiaries.

The Company was formed in 2007 by SunTx Capital Partners (“SunTx”), a private equity firm based in Dallas, Texas, as a holding company to facilitate an acquisition growth strategy in the HMA paving and construction industry.

Management’s Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the recorded amounts of assets, liabilities, stockholders’ equity, revenues and expenses during the reporting period, and the disclosure of contingent liabilities at the date of the consolidated financial statements.

Estimates are used in accounting for items such as recognition of revenues and cost of revenues, investments, mineral reserves, goodwill and other intangible assets, business acquisition accounting estimates, valuation of operating lease right-of-use assets, allowance for doubtful accounts, valuation allowances related to income taxes, accruals for potential liabilities related to lawsuits or insurance claims, asset retirement obligations, the fair value of derivative instruments and the fair value of equity-based compensation awards.

Estimates are used in accounting for items such as recognition of revenues and cost of revenues, investments, mineral reserves, goodwill and other intangible assets, business acquisitions, valuation of operating lease right-of-use assets, allowance for doubtful accounts, valuation allowances related to income taxes, accruals for potential liabilities related to lawsuits or insurance claims, asset retirement obligations, valuation of derivative instruments and valuation of equity-based compensation awards.

Estimates are continually evaluated based on historical information and actual experience;

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Cash consists principally of currency on hand and demand deposits at commercial banks.

Cash equivalents are short-term, highly liquid investments that are both readily convertible to known amounts of cash and are so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.

Cash equivalents include investments with original maturities of three months or less.

Cash equivalents are short-term, highly liquid securities that are both readily convertible to known amounts of cash and are so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.

Cash equivalents include securities with original maturities of three months or less.

The Company maintains demand accounts, money market accounts and certificates of deposit at several banks.

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Restricted Cash

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

The Company had restricted cash of $ 28,261 and $ 0 at September 30, 2022 and 2021, respectively.

Construction Partners Risk Management, Inc.

(the “Captive”), a captive insurance company and wholly-owned subsidiary of the Company, provides general liability, automobile liability and workers’ compensation insurance coverage to the Company and its subsidiaries.

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 $ 0.8 million and $ 0.0 million at September 30, 2023 and 2022, respectively.

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 for the Company and its subsidiaries.

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.

The Company has classified these securities as available-for-sale.

The Company has classified securities held by the Captive as available-for-sale.

As a result, these securities are carried at their fair value.

Purchases and sales of debt securities are recorded on the trade date.

Interest income on debt securities is recorded when earned using an "effective yield method." 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.

Interest income on debt securities is recorded when earned using an effective yield method.

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 and the Company’s intent to reinvest sales proceeds into new restricted investments.

The Company had restricted investments of $ 15.1 million and $ 6.9 million at September 30, 2023 and 2022, respectively.

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

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 has an intent to sell, or 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 the Company has determined that a credit loss exists, the present value of cash flows expected to be collected from the security are 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 that the fair value is less than the amortized cost basis.

For the fiscal years ended September 30, 2022 and 2021, the Company had $ 0 in intent impairments and credit losses.

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 fiscal years ended September 30, 2023 and 2022, the Company had no intent impairments or credit losses.

Contracts Receivable Including Retainage, Net

10 unchanged sentences

The contract asset, “Costs and estimated earnings in excess of billings on uncompleted contracts”, arises when the Company recognizes revenues for services performed under its construction projects, but the Company is not yet entitled to bill the customer under the terms of the contract.

Amounts billed to customers are excluded from this asset and reflected on the Consolidated Balance Sheets as “Contracts receivable including retainage, net.” Included in costs and estimated earnings on uncompleted contracts are amounts the Company seeks or will seek to collect from customers or others for (i) errors, (ii) changes in contract specifications or design, (iii) contract change orders in dispute, unapproved as to scope and price, or (iv) other customer-related causes of unanticipated additional contract costs (such as claims).

Amounts billed to customers are excluded from this asset and reflected on the Consolidated Balance Sheets as “Contracts receivable including retainage, net”.

Included in costs and estimated earnings on uncompleted contracts are amounts the Company seeks or will seek to collect from customers or others for (i) errors, (ii) changes in contract specifications or design, (iii) contract change orders in dispute, unapproved as to scope and price, or (iv) other customer-related causes of unanticipated additional contract costs (such as claims).

Such amounts are recorded to the extent that the amount can be reasonably estimated and recovery is probable.

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Alabama Department of Transportation * 10.0 % 10.8 %

Florida Department of Transportation 10.7 % * *

North Carolina Department of Transportation 10.5 % 11.2 % 10.3 %

* Less than 10%

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

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

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

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

Inventories valued on the average cost basis totaled $ 75.5 million and $ 64.8 million, respectively, at September 30, 2023 and 2022.

1 unchanged sentence

Revenues from Contracts with Customers

The Company derives all of its revenues from contracts with its customers, predominantly by performing construction services for both public and private infrastructure projects, with an emphasis on highways, roads, bridges, airports and commercial and residential developments.

The Company derives a significant portion of revenues from contracts with its customers, predominantly by performing construction services for both public and private infrastructure projects, with an emphasis on highways, roads, bridges, airports and commercial and residential developments.

These projects are performed for a mix of federal, state, municipal and private customers.

8 unchanged sentences

Recognition of revenues and cost of revenues for construction projects requires significant judgment by management, including, among other things, estimating total costs expected to be incurred to complete a project and measuring progress toward completion.

Management reviews contract estimates regularly to assess revisions of estimated costs to complete a project and measurement of progress toward completion.

No material adjustments to a contract were noted in the fiscal year ended September 30, 2022.

Management reviews contract estimates regularly to assess revisions of estimated costs to complete a project and for measurement of progress toward completion.

No material adjustments to a contract were noted in the fiscal years ended September 30, 2023, 2022 or 2021.

Management believes the Company maintains reasonable estimates based on prior experience;

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Accordingly, change orders are generally accounted for as a modification of the existing contract and single performance obligation.

We account for the modification using a cumulative catch-up adjustment.

The Company accounts for the modification using a cumulative catch-up adjustment.

Either the Company or its customers may initiate change orders, which may include changes in specifications or designs, manner of performance, facilities, equipment, materials, sites and period of completion of the work.

4 unchanged sentences

Fair Value Measurements

The Company measures and discloses certain financial assets and liabilities at fair value.

The Company measures and discloses certain financial assets and liabilities at fair value under Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements (“Topic 820”).

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

7 unchanged sentences

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 September 30, 2022.

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

The Company also has Term Loans and a Revolving Credit Facility, as described in Note 11 - Debt.

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

The Company also has debt securities reflected as restricted investments on its Consolidated Balance Sheets at September 30, 2023 and 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 Term Loans and a Revolving Credit Facility, as defined and described in Note 11 - 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 costs and current maturities of long-term debt on the Company’s Consolidated Balance Sheets at September 30, 2023 and 2022.

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

Property, Plant and Equipment

Property, plant and equipment are initially recorded at cost or, if acquired as a business combination, at fair value and depreciated on a straight-line basis over their estimated useful lives.

Property, plant and equipment are initially recorded at cost or, if acquired in connection with a business combination, at fair value, and depreciated on a straight-line basis over their estimated useful lives.

Leasehold improvements for operating leases are amortized over the lesser of the term of the related lease or the estimated useful lives of the improvements.

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If the fair value of the stock is greater than the book value of the stock, goodwill is deemed not to be impaired, and no further testing is required.

If the fair value is less than the calculated book value, then the Company must take a second step to determine the impairment amount, as described below.

If the fair value is less than the book value, then the Company must take a second step to determine the impairment amount, as described below.

The second step requires comparing the carrying value of a reporting unit, including goodwill, to its fair value, typically using the multiple period discounting method under the income approach and market approach.

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If the fair value of the respective reporting unit exceeds its carrying amount, goodwill is not considered to be impaired, and no further testing is required.

If the carrying amount of a reporting unit exceeds its fair value, an impairment charge is recorded to write down goodwill to its fair value and is recorded in the Company’s Consolidated Statements of Comprehensive Income.

The Company performed a quantitative assessment of goodwill using the market capitalization calculation for fiscal years 2022 and 2021 and determined that the fair value of its reporting unit exceeded its carrying value, and thus concluded that the carrying value of goodwill was not impaired as of our annual goodwill and intangible assets impairment test date, which is July 1.

If the carrying amount of a reporting unit exceeds its fair value, an impairment charge is recorded to write down goodwill in the Company’s Consolidated Statements of Comprehensive Income.

The Company performed a quantitative assessment of goodwill using the market capitalization calculation for fiscal years 2023 and 2022 and determined that the fair value of its reporting unit exceeded its carrying value, and thus concluded that the carrying value of goodwill was not impaired as of each goodwill impairment test date, which is July 1 of the applicable year.

Accordingly, no further analysis was required or performed.

Management also annually assesses the carrying value of the Company’s indefinite-lived intangible assets other than goodwill on the first day of the fiscal fourth quarter.

The Company performed a qualitative impairment assessment of its indefinite-lived trade name license.

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

The Company performed a qualitative impairment assessment of its indefinite-lived trade name licenses.

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

Accordingly, no further analysis was required or performed.

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Deferred tax assets and deferred tax liabilities are presented on a net basis by taxing authority and classified as non-current on the Consolidated Balance Sheets.

We recognize the financial statement benefit of the Company’s tax positions that are at least more likely than not to be sustained upon audit based on the technical merits of the tax position.

The Company recognizes the financial statement benefit of the Company’s tax positions that are at least more likely than not to be sustained upon audit based on the technical merits of the tax position.

For tax positions that are more likely than not to be sustained upon audit, management accrues the largest amount of the benefit that is more likely than not to be sustained.

The Company classifies income tax-related interest and penalties as interest expense and other expenses, respectively.

Refer to Note 15 - Provision for Income Taxes for further information regarding our federal and state income taxes.

Refer to Note 15 - Provision for Income Taxes for further information regarding the Company’s federal and state income taxes.

Equity-Based Incentive Plans

3 unchanged sentences

The Company carries insurance policies to cover various risks, primarily including general liability, automobile liability and workers’ compensation, under which it is liable to reimburse the insurance company for a portion of each claim paid.

Effective October 1, 2021, the Captive retains the first $ 1,000,000 per claim liability for each claim paid.

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

Since October 1, 2021, the Captive has retained liability for the first $ 1,000,000 of each claim paid.

Also since October 1, 2021, the Company has been a member of CIRCA, Limited, a group captive insurance company, that retains the next $ 550,000 per claim liability for each claim paid.

The Company utilizes various primary and excess insurance companies to cover the liability for claims in excess of the retained amounts.

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

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

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

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

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

2 unchanged sentences

In addition to the retention items noted above, the Company’s insurance provider requires the Company to maintain a standby letter of credit.

This letter of credit serves as a guarantee by the banking institution to pay the Company’s insurance provider the incurred claim costs attributable to general liability, workers’ compensation and automobile liability claims, up to the amount stated in the standby letter of credit, in the event that these claims are not paid by the Company (see Note 18 - Commitments and Contingencies).

This letter of credit serves as a guarantee to pay the Company’s insurance provider the incurred claim costs attributable to general liability, workers’ compensation and automobile liability claims, up to the amount stated in the standby letter of credit, in the event that these claims are not paid by the Company (see Note 18 - Commitments and Contingencies).

For some contracts, the Company is required to furnish a warranty that is usually one year in length.

Because of the nature of these contracts, including contract owner inspections of the work both during construction and prior to acceptance, the Company has not experienced material warranty costs for these short-term warranties and, therefore, has not established an accrual of these costs.

Because of the nature of these contracts, including contract owner inspections of the work both during construction and prior to acceptance, the Company has not experienced significant warranty costs for these short-term warranties and, therefore, has not established an accrual of these costs.

Certain contracts carry longer warranty periods, for which the Company has accrued an estimate of warranty costs.

The warranty liability is estimated based on the Company's experience with the specific type of construction work and was not material as of September 30, 2022 and 2021.

The warranty liability is estimated based on the Company’s experience with the specific type of construction work and was not significant as of September 30, 2023 or 2022.

Earnings per Share

3 unchanged sentences

Stripping costs are costs incurred for the removal of overburden or waste materials for the purpose of obtaining access to aggregate materials that will be commercially produced.

Stripping costs incurred during the development stage of a mine (pre-production stripping) are capitalized and reported within property, plant and equipment, net in our accompanying Consolidated Balance Sheets.

Stripping costs incurred during the development stage of a mine (pre-production stripping) are capitalized and reported within property, plant and equipment, net in the Company’s Consolidated Balance Sheets.

Capitalized pre-production stripping costs are depleted in accordance with the units-of-production method as aggregates are extracted, once the mine is no longer in the development stage.

3 unchanged sentences

However, the production phase does not commence with the removal of de minimis saleable mineral material that occurs in conjunction with the removal of overburden or waste material for the purpose of obtaining access to aggregate materials.

Stripping costs considered as production costs and included in the costs of inventory produced for the fiscal years ended September 30, 2022, 2021 and 2020 was $ 1.7 million, $ 1.8 million and $ 1.3 million, respectively.

Stripping costs considered as production costs and included in the costs of inventory produced for the fiscal years ended September 30, 2023, 2022 and 2021 were $ 3.1 million, $ 1.7 million and $ 1.8 million, respectively.

Asset Retirement Obligations

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(i) the amount of the initial measurement of the operating lease liability;

(ii) any lease payments made at or before the commencement date, minus any lease incentives received;

and (iii) any initial direct costs incurred.

(ii) any lease payments made at or before the commencement date, minus any lease incentives received, and (iii) any initial direct costs incurred.

The present value calculation may account for an option to extend or terminate the lease when it is reasonably certain that the Company will exercise the option.

3 unchanged sentences

Comprehensive Income

We report comprehensive income in our Consolidated Statements of Comprehensive Income and Consolidated Statements of Stockholders’ Equity.

Comprehensive income comprises two subsets:

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

Comprehensive income consists of two subsets:

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

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Segment Reporting and Reporting Units

As of September 30, 2022, the Company operated in Alabama, Florida, Georgia, North Carolina and South Carolina through its wholly owned subsidiaries located in five southeastern states.

As of September 30, 2023, the Company operated in Alabama, Florida, Georgia, North Carolina, South Carolina and Tennessee through its wholly-owned subsidiaries.

Each of the Company’s platform operating companies engages in essentially the same business, which consists primarily of infrastructure and road construction.

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Other factors further supporting this conclusion include substantial similarities throughout all of the Company’s operations with respect to services provided, type of customers, sourcing of materials and manufacturing and delivery methodologies.

Management further determined that, based on their economic similarities, the Company’s five platform operating companies, representing components, should be aggregated into one reporting unit for purposes of assessing potential impairment of goodwill in accordance with ASC Topic 350, Intangibles — Goodwill and Other .

Management further determined that, based on their economic similarities, the Company’s six platform operating companies, representing components, should be aggregated into one reporting unit for purposes of assessing potential impairment of goodwill in accordance with ASC Topic 350, Intangibles — Goodwill and Other .

These legal entities represent material acquisitions that occurred over time pursuant to the Company’s strategic growth strategy.

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Business Acquisitions

The Company accounts for business combinations using the acquisition method of accounting in accordance with ASC 805 - Business Combinations, which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values.

The Company accounts for business combinations using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations (“Topic 805”), which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values.

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

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

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

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

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

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Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, “Simplifying the Accounting for Income Taxes,” which adds new guidance to simplify the accounting for income taxes and changes the accounting for certain income tax transactions.

The new standard is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

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

In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, "Business Combinations (Topic 805) - Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers.

The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted.

The Company adopted this guidance for the fiscal year ended September 30, 2022 and applied the guidance to business acquisitions that had contract assets and contract liabilities.

The Company monitors all Accounting Standards Update (“ASU”) issued by the Financial Accounting Standards Board and other authoritative guidance.

There are no recently issued accounting pronouncements that are expected to have a material impact on the Company’s financial statements.

Note 4 - Business Acquisitions

Acquisitions - Final

During the fiscal year ended September 30, 2023, the Company and its subsidiaries made the following business acquisitions:

On October 1, 2021, the Company acquired all of the capital stock of King Asphalt, Inc., an HMA production and paving company headquartered in Liberty, South Carolina.

The transaction established the Company's first platform company in South Carolina and added three HMA plants in the Greenville, South Carolina metro area.

On October 18, 2021, a subsidiary of the Company acquired substantially all of the assets of J.

Miller Construction Inc., a grading and sitework company headquartered in Pensacola, Florida.

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

On March 18, 2022, a subsidiary of the Company acquired substantially all of the assets of GAC Contractors, Inc., an asphalt paving, grading and sitework company headquartered in Panama City, Florida.

The transaction enhanced the Company's operational resources and capabilities in the Panama City, Florida market area.

These acquisitions were accounted for as business combinations in accordance with Topic 805.

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

As of September 30, 2022, the Company has finalized its purchase price allocation for these acquisitions.

Total consideration transferred for these three acquisitions was $ 92.4 million as of September 30, 2022.

Identifiable assets acquired and liabilities assumed were recorded at their estimated fair values based on the methodology described under Fair Value Measurements in Note 2 - Significant Accounting Policies.

The amount of the purchase price exceeding the net fair value of identifiable assets acquired and liabilities assumed was recorded as goodwill in the aggregate amount of $ 37.6 million for these three acquisitions, which is deductible for income tax purposes.

Goodwill primarily represents the assembled work force and synergies expected to result from the acquisition.

The results of operations attributable to these acquisitions are included in the Company’s Consolidated Statements of Comprehensive Income for the fiscal year ended September 30, 2022, from the date of acquisition forward.

The Company recorded certain costs to effect the acquisition 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 $ 0.4 million for the fiscal year ended September 30, 2022.

North Carolina Acquisition - Provisional

On March 7, 2022, a subsidiary of the Company acquired substantially all of the assets of Southern Asphalt, Inc., an asphalt paving company headquartered in Burgaw, North Carolina.

The transaction provided access to the Wilmington, North Carolina metro area market.

The acquisition was accounted for as a business combination in accordance with Topic 805.

As of September 30, 2022, the purchase price allocation was provisional pending certain information necessary to finalize estimates of liabilities assumed.

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

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

Total consideration transferred for this acquisition was $ 11.7 million as of September 30, 2022.

The amount of the purchase price exceeding the net fair value of identifiable assets acquired and liabilities assumed was recorded as provisional goodwill in the amount of approximately $ 7.4 million, of which $ 6.6 million is deductible for income tax purposes.

Goodwill primarily represents the assembled work force and synergies expected to result from the acquisition.

The results of operations since the March 7, 2022 acquisition date attributable to this acquisition are included in the Company’s Consolidated Statements of Comprehensive Income for the fiscal year ended September 30, 2022.

The Company recorded certain costs to effect the acquisition 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 $ 0.1 million for the fiscal year ended September 30, 2022.

South Carolina Acquisition - Provisional

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

The transaction provides access to Horry County and the larger Myrtle Beach metro area market.

The acquisition was accounted for as a business combination in accordance with Topic 805.

As of September 30, 2022, the purchase price allocation has not yet been finalized due to the recent timing of this acquisition, as certain information is pending 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.

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

Total consideration transferred for this acquisition was $ 25.6 million as of September 30, 2022.

The amount of the purchase price exceeding the net fair value of identifiable assets acquired and liabilities assumed was recorded as provisional goodwill in the amount of approximately $ 0.3 million, of which $ 0.0 million is deductible for income tax purposes.

Goodwill primarily represents the assembled work force and synergies expected to result from the acquisition.

The results of operations since the August 1, 2022 acquisition date attributable to this acquisition are included in the Company’s Consolidated Statements of Comprehensive Income for the fiscal year ended September 30, 2022.

The Company recorded certain costs to effect the acquisition 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 $ 0.3 million for the fiscal year ended September 30, 2022.

Tennessee Acquisition

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 in North Carolina, resulting in total cash proceeds of $ 37.0 million and a gain on the facility exchange of $ 5.4 million.

The transaction established the Company’s first operations in Tennessee.

North Carolina Acquisition

On December 1, 2022, the Company acquired all of the capital stock of Ferebee Corporation, an HMA production and paving company headquartered in Charlotte, North Carolina, for $ 67.3 million.

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

Upstate South Carolina Acquisition (Provisional)

On April 3, 2023, the Company acquired substantially all of the assets of Pickens Construction, Inc., an asphalt paving company headquartered in Anderson, South Carolina, for $ 5.0 million.

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

Alabama Acquisition (Provisional)

On May 1, 2023, the Company acquired the Huntsville, Alabama operations of Southern Site Contractors, LLC., an excavation, grading and utility contractor, for $ 1.1 million.

The transaction enhanced the Company’s vertical integration of construction services in the Huntsville, Alabama metro area.

Coastal South Carolina Acquisition

On August 1, 2023, the Company acquired an HMA plant, together with the related inventory and certain equipment, of C.R.

Jackson, Inc., an asphalt paving company headquartered in Columbia, South Carolina, for $ 9.1 million.

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

Combined Acquisitions During the Fiscal Year Ended September 30, 2023

The above-referenced acquisitions were accounted for as business combinations in accordance with Topic 805.

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

Total consideration transferred for these five acquisitions was $ 92.0 million as of September 30, 2023.

Identifiable assets acquired and liabilities assumed were recorded at their estimated fair values based on the methodologies described under Fair Value Measurements in Note 2 - Significant Accounting Policies.

The amount of the purchase price exceeding the net fair value of identifiable assets acquired and liabilities assumed was recorded as goodwill in the aggregate amount of $ 29.6 million for these five acquisitions, which is deductible for income tax purposes.

Goodwill primarily represents the assembled workforce and synergies expected to result from the acquisitions.

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 amounts of $ 0.3 million, $ 0.8 million, and $ 1.3 million for the fiscal years ended September 30, 2023, 2022, and 2021, respectively.

The following table summarizes the consideration for the aforementioned acquisitions and the amounts of identified assets acquired and liabilities assumed as of September 30, 2023 (in thousands):

Acquisitions - Final North Carolina Acquisition - Provisional South Carolina Acquisition - Provisional Total

Alabama Acquisition (Provisional) North Carolina Acquisition Upstate South Carolina Acquisition (Provisional) Coastal South Carolina Acquisition Tennessee Acquisition Total

Cash and cash equivalents $ — $ 33 $ — $ — $ — $ 33

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Property, plant and equipment 1,004 27,375 3,196 6,191 8,171 45,937

Deferred tax assets 2,237 234 — 2,471

Operating lease right-of-use assets — — 433 — — 433

Intangible assets — 5,900 — — — 5,900

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Accrued expenses and other current liabilities — 787 108 — — 895

Unfavorable contract liabilities 4,900 — 3,000 7,900

Deferred tax liabilities — — 282 282

Operating lease liabilities — — 433 — — 433

Total liabilities — 6,834 541 — — 7,375

Goodwill 117 26,281 774 2,407 10 29,589

Total cash consideration transferred 92,374 11,716 25,646 129,736

Total consideration payable — 664 — 664

Total purchase price $ 1,121 $ 67,304 $ 4,965 $ 9,080 $ 9,523 $ 91,993

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Combined Acquisitions During the Fiscal Year Ended September 30, 2022

North Carolina Acquisitions

During the fiscal year ended September 30, 2021, a subsidiary of the Company purchased five HMA production and paving companies and a grading and sitework company on the following dates and based in the following locations:

(i) on October 8, 2020, in Carthage, North Carolina, (ii) on October 30, 2020, in Ahoskie, North Carolina, (iii) on December 3, 2020, in Raleigh, North Carolina, (iv) on December 18, 2020, in Kitty Hawk, North Carolina, (v) on June 22, 2021, in Wilson, North Carolina and (vi) on September 10, 2021, in Albemarle, North Carolina.

These acquisitions were accounted for as business combinations in accordance with Topic 805.

Total consideration transferred for these six acquisitions was $ 98.7 million.

The amount of the purchase price exceeding the net fair value of identifiable assets acquired and liabilities assumed was recorded as goodwill in the aggregate amount of $ 33.3 million for these acquisitions.

On August 2, 2021, a subsidiary of the Company acquired a crushed stone and aggregates facility located near Goldston, North Carolina.

This acquisition was accounted for as a business combination in accordance with Topic 805.

Total consideration transferred for this acquisition was $ 31.4 million.

The amount of the purchase price exceeding the net fair value of identifiable assets acquired and liabilities assumed was recorded as goodwill in the aggregate amount of $ 2.4 million for this acquisition.

The prior year provisional accounting for this acquisition was finalized as of September 30, 2022.

Alabama Acquisition

On July 30, 2021, a subsidiary of the Company acquired an HMA contracting company and related entities, all headquartered in Cullman, Alabama.

This acquisition was accounted for as a business combination in accordance with Topic 805.

Total consideration transferred for this acquisition was $ 82.1 million.

The amount of the purchase price exceeding the net fair value of identifiable assets acquired and liabilities assumed was recorded as goodwill in the aggregate amount of $ 2.1 million for this acquisition.

The prior year provisional accounting for this acquisition was finalized as of September 30, 2022.

The following table summarizes the consideration for the aforementioned acquisitions and the amounts of identified assets acquired and liabilities assumed (in thousands):

North Carolina Acquisitions Alabama Acquisition Total as of September 30, 2021 Finalized as of September 30, 2022

Accounts receivable $ 110 $ — $ 110 $ 110

The following table summarizes the finalized consideration for the combined acquisitions during the fiscal year ended September 30, 2022, and the amounts of identified assets acquired and liabilities assumed (in thousands):

Provisional amounts as of September 30, 2022 Finalized amounts as of September 30, 2023

Cash and cash equivalents $ 1,168 $ 1,168

Contracts receivable including retainage 9,016 9,016

Cost and estimated earnings in excess of billings on uncompleted contracts 125 125

Inventories 2,980 2,980

Prepaid expenses and other current assets 213 239

Property, plant and equipment 80,291 80,291

Mineral reserves (included in property, plant and equipment) 18,600 38,118 56,718 56,718

Deferred tax assets 2,471 3,356

Intangible assets 9,000 9,000

Total assets 105,264 106,175

Accounts payable 2,759 2,759

Billings in excess of costs and estimated earnings on uncompleted contracts 3,123 3,677

Accrued expenses and other current liabilities 6,100 8,631

Unfavorable contract liabilities 7,900 8,500

Deferred tax liabilities 282 282

Total liabilities 20,164 23,849

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Total purchase price $ 130,400 $ 130,225

Combined Acquisitions During the Fiscal Year Ended September 30, 2020

During the fiscal year ended September 30, 2020, a subsidiary of the Company purchased an HMA production and paving company and two HMA manufacturing plants and certain related assets on the following dates and based in the following locations:

(i) on October 1, 2019, in Palm City, Florida, (ii) on March 23, 2020, in Pensacola and DeFuniak Springs, Florida.

These acquisitions were accounted for as business combinations in accordance with Topic 805.

Total consideration transferred for these two acquisitions was $ 27.5 million.

The amount of the purchase price exceeding the net fair value of identifiable assets acquired and liabilities assumed was recorded as goodwill in the aggregate amount of $ 7.8 million for these acquisitions.

During the year ended September 30, 2023, the provisional purchase price allocation (goodwill) changed by $ 2.6 million based on final valuation reports for unfavorable contract liabilities and finalization of assumed liabilities obtained during the measurement period.

Note 5 - Contracts Receivable Including Retainage, net

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September 30,

2023 2022 2021

Contracts receivable $ 251,324 $ 221,566 $ 132,456

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September 30,

2023 2022 2021

Balance at beginning of period $ 612 $ 1,926 $ 1,440

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September 30,

2023 2022 2021

Costs on uncompleted contracts $ 1,831,106 $ 1,520,510 $ 1,058,434

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September 30, 2022 29,271 ( 52,477 ) ( 23,206 )

At September 30, 2022, the Company had unsatisfied or partially unsatisfied performance obligations under construction project contracts representing approximately $ 1,027.8 million in aggregate transaction price.

The Company expects to earn revenue as it satisfies its performance obligations under those contracts in the amount of approximately $ 783.5 million during the fiscal year ending September 30, 2023 and approximately $ 244.3 million thereafter.

Changes in revenue billed, contract price or cost estimates ( 1,975 ) ( 26,428 ) ( 28,403 )

September 30, 2023 $ 27,296 $ ( 78,905 ) $ ( 51,609 )

At September 30, 2023, the Company had unsatisfied or partially unsatisfied performance obligations under construction project contracts representing approximately $ 1.28 billion in aggregate transaction price.

The Company expects to earn revenue as it satisfies the performance obligations under those contracts in the amount of approximately $ 933.6 million during the fiscal year ending September 30, 2024, and approximately $ 341.5 million thereafter.

Note 7 - Other Assets

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Additions 45,300

Measurement period adjustments ( 1,257 )

Balance at September 30, 2022 129,465

Additions 29,589

Dispositions ( 2,383 )

Measurement period adjustments 2,599

Balance at September 30, 2023 $ 159,270

The additions in goodwill as of September 30, 2022 compared to September 30, 2021 were attributable to $ 45.3 million for various Business Acquisitions (see Note 4 - Business Acquisitions) completed during the fiscal year ended September 30, 2022 and a reduction of $ 1.3 million for measurement period adjustments that were finalized for acquisitions completed during the fiscal year ended September 30, 2021.

The additions in goodwill as of September 30, 2023 compared to September 30, 2022 were attributable to $ 29.6 million for business acquisitions (see Note 4 - Business Acquisitions) completed during the fiscal year ended September 30, 2023 and an increase of $ 2.6 million for measurement period adjustments that were finalized for acquisitions completed during the fiscal year ended September 30, 2022.

The dispositions of goodwill of $ 2.4 million were attributed to the sale of a quarry facility in North Carolina (see Note 4 - Business Acquisitions).

A summary of other intangible assets at September 30, 2023 and 2022 is as follows (in thousands):

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Indefinite-lived:

Trade name license Indefinite $ 5,300 N/A $ 5,300 $ 2,000 N/A $ 2,000

Trade name licenses Indefinite $ 5,300 N/A $ 5,300 $ 5,300 N/A $ 5,300

Finite-lived:

Customer relationship 14 years 14,745 ( 2,598 ) 12,147 11,045 ( 1,304 ) 9,741

Non-compete agreements 7 years 1,220 ( 285 ) 935 1,295 ( 137 ) 1,158

Other 6 years 3,420 ( 1,347 ) 2,073 1,220 ( 285 ) 935

Total intangible assets $ 23,465 $ ( 3,945 ) $ 19,520 $ 17,565 $ ( 1,589 ) $ 15,976

The change in gross value as of September 30, 2022 compared to September 30, 2021 is attributable to $ 9.0 million for various Business Acquisitions (see Note 4 - Business Acquisitions) completed during the fiscal year ended September 30, 2022 and $ 3.7 million for provisional accounting adjustments that were finalized for acquisitions completed during the fiscal year ended September 30, 2021.

The change in gross value as of September 30, 2023 compared to September 30, 2022 is attributable to $ 5.9 million of business acquisitions (see Note 4 - Business Acquisitions) completed during the fiscal year ended September 30, 2023.

Total amortization expense related to finite-lived intangible assets was $ 2.4 million, $ 0.8 million and $ 0.3 million for the fiscal years ended September 30, 2023, 2022 and 2021, respectively.

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Accrued insurance costs 4,843 3,081

Unfavorable contract liabilities 4,824 —

Other current liabilities 8,559 12,423

Total accrued expenses and other current liabilities $ 31,534 $ 28,484

Unfavorable contract liabilities represent liabilities acquired as part of the Company's business acquisitions during the fiscal year ended September 30, 2022, as described in Note 4 - Business Acquisitions.

Total amortization expense related to the acquired unfavorable contract liabilities was $ 4.1 million, $ 0.0 million and $ 0.0 million for the fiscal years ended September 30, 2022, 2021 and 2020, respectively.

Other Long-Term Liabilities

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Total long-term debt 376,850 376,975

Deferred debt issuance costs ( 1,409 ) ( 1,325 )

Deferred debt issuance costs, net ( 1,110 ) ( 1,409 )

Current maturities of long-term debt ( 15,000 ) ( 12,500 )

Long-term debt, net of current maturities and debt issuance costs $ 360,740 $ 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.

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

The 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.

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

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

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

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:

(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;

(b) 1.875 % 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) on each of the next eight quarter-end payment dates;

and (c) all remaining principal of the Term Loan and the Delayed Draw Term Loans are due and payable in full on the Maturity Date.

At September 30, 2023 and 2022, there was $ 283.8 million and $ 271.9 million, respectively, of principal outstanding under the Term Loans, $ 93.1 million and $ 105.1 million, respectively, of principal outstanding under the Revolving Credit Facility, and availability of $ 222.1 million and $ 208.6 million, respectively, under the Revolving Credit Facility, including a reduction for outstanding letters of credit.

All outstanding advances under the Term Loans 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 on

September 30, 2023) 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 and continuing on each of the following eleven quarter-end payment dates;

(b) 1.875 % of the original principal on each of the next eight quarter-end payment dates;

and (c) all remaining principal of the Term Loans are due and payable in full on the Maturity Date.

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

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

The 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 September 30, 2022 and 2021, there was $ 271.9 million and $ 197.5 million, respectively, of principal outstanding under the Term Loan, $ 105.1 million and $ 20.0 million, respectively, of principal outstanding under the Revolving Credit Facility, and availability of $ 208.6 million and $ 193.7 million, respectively, under the Revolving Credit Facility, including a reduction for outstanding letters of credit.

The Credit Agreement contains customary negative covenants for agreements of this type, including, but not limited to, restrictions on the Company’s ability to make acquisitions, make loans or advances, make capital expenditures and investments, pay dividends, create or incur indebtedness, create liens, wind up or dissolve, consolidate, merge or liquidate, or sell, transfer or dispose of assets.

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

At September 30, 2022 and 2021, the aggregate notional value of these interest rate swap agreements was $ 300.0 million and $ 198.3 million, respectively, and the fair value was $ 24.7 million and $( 0.8 ) million, respectively, which is included within other assets or other long-term liabilities on the Company’s Consolidated Balance Sheets.

At September 30, 2023 and 2022, the aggregate notional value of these interest rate swap agreements was $ 300.0 million and the fair value was $ 26.9 million and $ 24.7 million, respectively, which is included within other assets on the Company’s Consolidated Balance Sheets.

The scheduled contractual repayment terms of long-term debt at September 30, 2023 are as follows:

Fiscal Year Amount

2023 $ 12,500

Total 376,850

Interest expense was $ 18.7 million, $ 7.9 million and $ 2.5 million for the fiscal years ended September 30, 2023, 2022 and 2021, respectively.

Amortization of deferred debt issuance costs and debt discounts included in interest expense was $ 0.2 million, $ 0.3 million and $ 0.2 million for the fiscal years ended September 30, 2022, 2021 and 2020, respectively.

Amortization of deferred debt issuance costs included in interest expense was $ 0.3 million, $ 0.2 million and $ 0.3 million for the fiscal years ended September 30, 2023, 2022 and 2021, respectively.

Note 12 - Equity

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Additional information about these transactions is set forth in Note 14 - Equity-Based Compensation.

Registration Rights Agreement

The Company is a party to a registration rights agreement (the “Registration Rights Agreement”) with certain of the Company’s directors and officers and affiliates of SunTx (collectively, the “RRA Holders”).

Under the Registration Rights Agreement, the RRA Holders have “demand” registration rights, meaning that the Company must register under the Securities Act shares of the Company’s common stock owned by such RRA Holders upon their demand under certain circumstances, and “piggyback” registration rights, meaning that, if the Company proposes to register an offering of securities, it generally must give written notice to the RRA Holders to allow each to include its shares in the registration.

In general, the Company must pay all out-of-pocket expenses in connection with a registration under the Registration Rights Agreement, including filing and registration fees, printing costs, fees and expenses of the Company’s legal counsel and independent registered public accountants and fees and expenses for one legal counsel for the applicable RRA Holders.

The RRA Holders whose shares are registered must pay all incremental selling expenses relating to any offering, such as underwriters’ commissions and discounts, brokerage fees, underwriter marketing costs and any additional legal counsel that they may engage.

As of September 30, 2022, a total of 3,796,670 shares of the Company’s common stock were subject to the Registration Rights Agreement, of which 37,248 shares had been previously registered but not yet sold.

The Registration Rights Agreement expires on May 4, 2023.

Treasury Stock

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Note 14 - Equity-Based Compensation

Restricted Stock Units

A summary of the changes in the Company's restricted stock units ("RSUs") is as follows:

For the Fiscal Year Ended September 30,

2022 2021 2020

RSUs Weighted Average Grant Date Fair Value Per RSU RSUs Weighted Average Grant Date Fair Value Per RSU RSUs Weighted Average Grant Date Fair Value Per RSU

Unvested, beginning balance 595,561 $ 25.42 292,534 $ 12.88 292,534 $ 12.88

Granted 256,167 32.62 510,733 26.52 — —

Vested ( 134,481 ) 18.19 ( 207,706 ) 10.47 — —

Forfeited ( 1,523 ) 33.77 — — — —

Unvested, ending balance 715,724 $ 29.34 595,561 $ 25.42 292,534 $ 12.88

Restricted Stock

The Company measures and recognizes stock-based compensation expense, net of forfeitures, over the requisite vesting periods for all stock-based payment awards made, and recognizes forfeitures as they occur.

Stock-based compensation is included in general and administrative expenses in the Consolidated Statements of Comprehensive Income.

During the fiscal year ended September 30, 2019, the Company awarded a total of 292,534 restricted shares of Class A common stock to its non-employee directors under the Equity Incentive Plan.

The grants are classified as equity awards.

The aggregate grant date fair value of these restricted stock awards was $ 3.8 million.

During the fiscal years ended September 30, 2022, 2021 and 2020, the Company recorded $ 0.4 million, $ 1.3 million and $ 1.6 million, respectively, of compensation expense in connection with these grants, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income.

At September 30, 2022, the Company had no unrecognized compensation expense related to these awards due to full vesting.

During the fiscal year ended September 30, 2021, the Company awarded a total of 510,733 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 $ 13.6 million.

During the fiscal years ended September 30, 2022 and 2021, the Company recorded compensation expense of $ 3.5 million and $ 2.2 million, respectively, in connection with these grants, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income.

At September 30, 2022, there was approximately $ 7.8 million of unrecognized compensation expense related to these awards, which will be recognized over a remaining weighted-average period of 2.5 years.

During the fiscal year ended September 30, 2022, the Company awarded a total of 256,167 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 $ 8.3 million.

During the fiscal year ended September 30, 2022, the Company recorded compensation expense in connection with these grants in the amount of $ 3.1 million, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income.

At September 30, 2022, there was approximately $ 5.2 million of unrecognized compensation expense related to these awards, which will be recognized over a remaining weighted-average period of 2.4 years.

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

A summary of the changes in the Company’s restricted stock is as follows (in thousands, except share data):

For the Fiscal Year Ended September 30,

2021 2022 2023

Unvested shares, beginning balance 292,534 595,561 715,724

Shares awarded 510,733 256,167 210,412

Shares vested ( 207,706 ) ( 134,481 ) ( 76,963 )

Shares forfeited — ( 1,523 ) ( 24,893 )

Unvested shares, ending balance 595,561 715,724 824,280

Aggregate grant date fair value of awards $ 13,546 $ 8,356 $ 5,514

Compensation expense recorded upon vesting of awards 3,549 6,966 8,717

Unrecognized compensation expense at fiscal year-end 11,650 15,152 9,766

The restricted shares granted under the Equity Incentive Plan will vest, as applicable, as follows:

Fiscal Year Number of Shares

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Performance Stock Units

Performance stock units ("PSUs") provide for the issuance of shares of Class B common stock upon vesting, which occurs at the end of the performance period based on achievement of certain Company performance metrics established by the Compensation Committee of the Company’s Board of Directors.

Performance stock units (“PSUs”) provide for the issuance of shares of Class A common stock upon vesting, which occurs at the end of the performance period based on achievement of certain Company performance metrics established by the Compensation Committee of the Company’s Board of Directors.

The final number of shares of common stock issuable upon vesting of PSUs can range from 0 % to 150 % of the number of PSUs initially granted, depending on the level of achievement, as determined by the Compensation Committee of the Company’s Board of Directors.

The achievement of performance goals is modified by the total shareholder return ranking of the Company against the Russell 2000 Index over the performance period and can increase or decrease the achieved award by up to 15 %.

The Company recognizes expense, net of estimated forfeitures, for PSUs based on the forecasted achievement of the Company performance metrics, multiplied by the fair value of the total number of shares of common stock that the Company anticipates will be issued based on such achievement.

During the fiscal year ended September 30, 2022, the Company awarded PSUs of 131,341 shares and forecasted vesting of 98,505 restricted shares of Class B common stock to certain members of Company management under the Equity Incentive Plan.

The Company recognizes expense, net of estimated forfeitures, for PSUs based on the forecasted achievement of Company performance metrics, multiplied by the fair value of the total number of shares of common stock that the Company anticipates will be issued based on such achievement.

During the fiscal year ended September 30, 2023, the Company awarded PSUs representing a target of 92,423 shares and forecasted vesting of 65,024 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 $ 2.2 million.

During the fiscal year ended September 30, 2022, the Company recorded compensation expense in connection with these grants in the amount of $ 1.0 million, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income.

At September 30, 2022, there was approximately $ 2.0 million of unrecognized compensation expense related to these awards.

During the fiscal year ended September 30, 2022, the Company awarded PSUs representing a target of 131,341 shares and forecasted vesting of 98,505 shares of Class A common stock to certain members of Company management under the Equity Incentive Plan.

During the fiscal years ended September 30, 2023 and 2022, the Company recorded compensation expense in connection with PSUs in the amount of $ 2.0 million and $ 1.0 million, respectively, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income.

At September 30, 2023, the Company forecasted 163,529 restricted shares of Class A common stock as unvested and approximately $ 2.1 million of unrecognized compensation expense related to these awards.

Note 15 - Provision for Income Taxes

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Federal net operating loss carryforward — 2,632

Federal 163J carryforward 1,254 —

State net operating loss carryforward 1,177 1,205

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Based on the weight of all evidence known and available as of the balance sheet date, management believes that these tax benefits are more likely than not to be realized in the future.

To the extent that management does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established.

To the extent that management does

not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established.

Income taxes payable have been reduced by fuel tax credits of $ 0.3 million for each of the fiscal years ended September 30, 2023 and 2022.

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At September 30, 2023 and 2022, the Company had federal net operating loss carryforwards of $ 0.0 million and $ 10.5 million, respectively, and state net operating loss carryforwards of $ 27.8 million and $ 38.0 million, respectively.

The federal net operating loss credit carryforward is indefinite and the state net operating loss credit carryforwards expire in varying amounts between the fiscal years ended September 30, 2032 and 2041 or are indefinite.

The state net operating loss credit carryforwards expire in varying amounts between the fiscal years ended September 30, 2032 and 2042 or are indefinite.

statutory federal income tax rate applicable to the Company was 21% during the fiscal years ended September 30, 2023, 2022 and 2021.

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Uncertain Tax Positions

ASC Topic 740, Income Taxes (“ASC 740”), prescribes a recognition threshold and measurement model for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return and provides guidance on derecognition classification, interest and penalties, accounting in interim periods, disclosure and transition.

ASC Topic 740, Income Taxes (“Topic 740”), prescribes a recognition threshold and measurement model for the financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return and provides guidance on derecognition classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company is subject to tax audits in various jurisdictions in the United States.

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Accordingly, there was no liability for uncertain tax positions at September 30, 2023 or 2022.

Based on the provisions of ASC 740, the Company had no material unrecognized tax benefits at September 30, 2022 or 2021.

Based on the provisions of Topic 740, the Company had no material unrecognized tax benefits at September 30, 2023 or 2022.

Due to the utilization of net operating loss carryforwards, the Company’s federal income tax returns for fiscal years ended September 30, 2019 through 2022 are subject to examination.

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Employer contributions charged to earnings during the fiscal years ended September 30, 2023, 2022 and 2021 were $ 6.8 million, $ 5.5 million, and $ 3.9 million, respectively.

In addition, the Company offers an Employee Stock Purchase Plan (“ESPP”), under which the first offering period commenced July 1, 2023.

The purpose of the ESPP is to provide the Company’s employees with an opportunity to purchase shares on the exercise date at a price equal to 85 % of the fair value of the Company’s Class A common stock as of either the exercise date, or the first day of the relevant offering period, whichever is less.

Employer expense charged to earnings during the fiscal years ended September 30, 2023, 2022 and 2021 were $ 0.1 million, $ 0.0 million , and $ 0.0 million , respectively.

Note 17 - Related Parties

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The note bears simple interest at a rate of 4.0 % and requires annual minimum payments of $ 0.1 million inclusive of principal and accrued interest, with any remaining principal and accrued interest due and payable in full on December 31, 2027.

As security for his payment obligations, the officer pledged as collateral 30,000 shares of the 140,389 shares of Class B common stock that had previously been pledged as collateral and 7,500 shares of Class A common stock owned by the officer personally.

Amounts outstanding under the note are reflected on the Company’s Consolidated Balance Sheets within other current assets and other assets (“Land Development Project”).

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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 each of September 30, 2022 and 2021, the Company had aggregate letters of credit outstanding in the amount of $ 11.3 million, primarily related to certain insurance policies as described in Note 2 - Significant Accounting Policies.

At each of September 30, 2023 and 2022, the Company had aggregate letters of credit outstanding in the amount of $ 9.8 million and $ 11.3 million, respectively, primarily related to certain insurance policies as described in Note 2 - Significant Accounting Policies.

Purchase Commitments

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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 September 30, 2022, our purchase commitments annually thereafter are as follows (in thousands):

As of September 30, 2023, the Company’s purchase commitments annually thereafter are as follows (in thousands):

Fiscal Year Amount

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Royalty expense recorded in cost of revenue during the fiscal years ended September 30, 2023, 2022 and 2021 was $ 1.5 million, $ 1.6 million and $ 1.2 million, respectively.

Note 19 - Joint Venture

One of the Company’s wholly owned subsidiaries is party to a joint venture agreement (the “JV”) with a third party for the sole purpose of bidding on and performing a construction project for the Alabama Department of Transportation.

The Company and the third party each own a 50 % partnership interest in the JV and share revenue and expenses equally.

The JV is jointly managed by

representatives of the Company and the third party, and all labor, material and equipment required to perform the contract is subcontracted, with both of the participants of the JV performing some portion of the subcontracted work.

The Company accounts for this joint venture as an equity method investment in accordance with GAAP.

At each of September 30, 2022 and 2021, the Company’s investment in the JV was $ 0.1 million, which is reflected as “Investment in joint venture” on the Company’s Consolidated Balance Sheets.

During the fiscal years ended September 30, 2022, 2021 and 2020, the Company recognized $ 0.0 million , $ 0.0 million and $ 0.6 million, respectively, of pre-tax income, representing its 50 % interest in the earnings of the JV, which is reflected as “Earnings from investment in joint venture” on the Company’s Consolidated Statements of Comprehensive Income.

The income tax impact attributable to the Company’s investment in the JV is included within the provision for income taxes in the Company’s Consolidated Statements of Comprehensive Income.

Note 19 - Leases

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

As of September 30, 2022, operating leases under 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 $ 14.0 million, $ 2.2 million and $ 12.1 million, respectively.

As of September 30, 2023, operating leases under 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 Consolidated Balance Sheets in the amounts of $ 14.5 million, $ 2.3 million and $ 12.6 million, respectively.

As of September 30, 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 (in thousands):

The components of lease expense were as follows for the periods presented (in thousands):

For the Fiscal Year Ended September 30,

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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.

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Note 20 - Fair Value Measurements

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

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

Fair Value Measurement at Reporting Date Using

12 unchanged sentences

Commodity swap contracts $ — $ 1,187 $ —

Total Assets $ — $ 1,812 $ —

Interest rate swaps — 24,719 —

Corporate debt securities — 2,537 —

government securities — 2,481 —

Municipal government securities — 1,055 —

Other debt securities — 793 —

Total Assets $ — $ 32,772 $ —

Commodity swap contracts $ — $ 661 $ —

Total Liabilities $ — $ 661 $ —

The fair value of interest rate swap contracts is based on a model-driven valuation using the observable components (e.g., interest rates), which are observable at commonly quoted intervals for the full term of the contracts.

The fair value of our commodity swap contracts is based on an analysis of the expected cash flow of the contract in combination with observable forward price inputs obtained from a third-party pricing source.

The fair value of the Company’s commodity swap contracts is based on an analysis of the expected cash flow of the contract in combination with observable forward price inputs obtained from a third-party pricing source.

The calculations are adjusted for credit risk.

Therefore, our derivative assets and liabilities are classified within Level 2 of the fair value hierarchy.

Therefore, the Company’s derivative assets and liabilities are classified within Level 2 of the fair value hierarchy.

Derivative assets are included within “Prepaid expenses and other current assets” and “Other assets” on the Company’s Consolidated Balance Sheets.

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Interest Rate Swap Contracts

The Company uses derivative instruments as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates.

We regularly monitor the financial stability and credit standing of the counterparties to our derivative instruments.

We do not enter into derivative financial instruments for speculative purposes.

The Company uses derivative instruments as part of its overall strategy to manage its exposure to market risks associated with fluctuations in interest rates.

The Company regularly monitors the financial stability and credit standing of the counterparties to its derivative instruments.

The Company does not enter into derivative financial instruments for speculative purposes.

The Company records all derivatives at fair value.

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The Company performs an initial prospective assessment of hedge effectiveness on a quantitative basis between the inception date and the earlier of the first quarterly hedge effectiveness date or the issuance of the financial statements that include the hedged transaction.

On a quarterly basis, the Company assesses the effectiveness of our designated hedges in offsetting the variability in the cash flows or fair values of the hedged assets or obligations using the Hypothetical Derivative Method.

On a quarterly basis, the Company assesses the effectiveness of designated hedges in offsetting the variability in the cash flows or fair values of the hedged assets or obligations using a qualitative assessment.

The Company would discontinue hedge accounting prospectively when the derivative is no longer highly effective as a hedge, the underlying hedged transaction is no longer probable or the hedging instrument expires, is sold, terminated or exercised.

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The Company’s operations expose it to a variety of market risks, including the effects of changes in commodity prices.

As part of its risk management process, the Company began entering into commodity swap transactions through regulated commodity exchanges in February 2020.

As part of its risk management process, the Company began entering into commodity swap transactions through regulated commodity exchanges.

The Company does not enter into derivative financial instruments for speculative purposes.

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Prepaid expenses and other current assets - commodity swaps (2)

$ 204 $ 1,032

Other assets - commodity swaps (2)

Other assets - interest rate swap (1)

26,909 24,719

Accrued expense and other current liabilities - commodity swaps (2)

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

( 20 ) ( 601 )

Other long-term liabilities - commodity swaps (2)

Other long-term liabilities - interest rate swaps (2)

Net unrealized gain (loss) position $ 27,093 $ 25,245

(1) Includes designated cash flow hedge of $ 24,719 as of September 30, 2022.

(2) Includes designated cash flow hedge of $( 31 ) as of September 30, 2021.

Note 23 - Other Comprehensive Income

Comprehensive income comprises two subsets:

net income and other comprehensive income ("OCI").

The components of other comprehensive income 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 for the fiscal year ended September 30, 2022 was entered into on July 1, 2022 with an original notional value of $ 300.0 million.

(1) Represents designated cash flow hedge of $ 26.9 million and $ 24.7 million as of September 30, 2023 and 2022, respectively.

(2) Represents derivatives not designated as hedges.

Note 22 - Other Comprehensive Income (Loss)

Comprehensive income (loss) consists of two subsets:

net income and OCI.

The components of other comprehensive income (loss) 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 for the fiscal years ended September 30, 2023 and 2022 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 September 30, are as follows (in thousands):

Amounts in accumulated other comprehensive income (loss) (“AOCI”), net of tax, are as follows (in thousands):

September 30,

AOCI 2023 2022 2021

11 unchanged sentences

2023 2022 2021

Interest expense $ 468 $ 224 $ —

Interest expense (benefit) $ ( 8,297 ) $ 468 $ 224

Benefit from income taxes 2,004 ( 108 ) ( 56 )

1 unchanged sentence

Note 23 - Asset Retirement Obligations

As discussed in Note 2, the Company has asset retirement obligations (“AROs”), which are liabilities associated with our legally required obligations to reclaim owned and leased aggregates facilities.

As discussed in Note 2, the Company has AROs, which are liabilities associated with its legally required obligations to reclaim owned and leased aggregates facilities.

At September 30, 2023 and 2022, the Company’s AROs were $ 2.4 million and $ 2.9 million, respectively, which are reflected as “Other long-term liabilities” on the Company’s Consolidated Balance Sheets.

Accretion and depreciation expense related to AROs for the fiscal years ended September 30, 2023, 2022 and 2021 was $ 0.1 million, $ 0.1 million and $ 0.0 million , respectively.

The following is a reconciliation of these asset retirement obligations (in thousands):

The following is a reconciliation of these AROs (in thousands):

For the Fiscal Year Ended September 30,

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Note 24 - Investments

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

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

September 30, 2023

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

government securities $ 6,869 $ — $ 320 $ 6,549

Corporate debt securities 5,931 — 326 5,605

Municipal government securities 1,853 — 105 1,748

Other debt securities 1,273 — 96 1,177

Total $ 15,926 $ — $ 847 $ 15,079

September 30, 2022

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

Corporate debt securities $ 2,797 $ — $ 260 $ 2,537

government securities 2,622 — 141 2,481

5 unchanged sentences

Amortized Cost Fair Value

Less than five years $ 4,836 $ 4,562

Six to ten years 2,252 1,984

Greater than ten years 344 320

Due within one year $ 2,499 $ 2,480

Due after one year through three years 4,327 4,154

Due after three years 9,100 8,445

Total $ 15,926 $ 15,079

Note 25 - Unpaid Losses and Loss Adjustment Expenses

The following is a summary of the Company's activity in the liability for loss and loss adjustment expense reserves for workers' compensation, general liability and automobile liability as of as of September 30, 2022 and 2021 (in thousands):

The following is a summary of the Company’s activity in the liability for loss and loss adjustment expense reserves for workers’ compensation, general liability and automobile liability as of September 30, 2023 and 2022 (in thousands):

For the Fiscal Year Ended September 30,

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Investment in subsidiaries 524,466 444,473

Deferred income taxes, net — 892

Due from subsidiaries 13,015 58,593

3 unchanged sentences

Current liabilities:

Due to subsidiaries $ — $ 46,304

Accrued expenses and other current liabilities $ 4,123 $ 3,477

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Long-term debt, net of current maturities and debt issuance costs 14,736 77,589

Other long-term liabilities — 748

Total long-term liabilities 106,949 121,417

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Class A common stock, par value $ 0.001 ;

400,000,000 shares authorized, 41,195,730 shares issued and 41,193,024 shares outstanding at September 30, 2022, and 36,600,639 shares issued and outstanding at September 30, 2021

400,000,000 shares authorized, 43,760,546 shares issued and 43,727,680 shares outstanding at September 30, 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 ;

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Additional paid-in capital 267,330 256,571

Treasury stock, at cost, 2,706 shares of Class A common stock at September 30, 2022, and no shares at September 30, 2021, par value $ 0.001

Treasury stock, at cost, 2,922,952 shares of Class B common stock, par value $ 0.001

Treasury stock, Class A common stock, par value $ 0.001 , at cost, 32,866 shares at September 30, 2023, and 2,706 shares at September 30, 2022

( 178 ) ( 39 )

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

( 15,603 ) ( 15,603 )

Accumulated other comprehensive loss 18,694 17,620

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Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation, depletion and amortization of long-lived assets 757 475 463

Depreciation, depletion, accretion and amortization 757 757 475

Gain on sale of equipment — ( 6 ) —

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Note 27 - Subsequent Events

Restricted Stock Awards

On November 3, 2022, the Company awarded a total of 150,798 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 and have four-year graded vesting.

The aggregate grant date fair value of these restricted awards was $ 4.6 million.

Performance Stock Units

On November 3, 2022, the Company awarded PSUs of 84,371 shares of Class A common stock to certain executive officers of the Company under the Equity Incentive Plan.

The grants are classified as equity awards.

The aggregate grant date fair value of these restricted awards was $ 2.6 million.

The PSUs provide for the issuance of shares of Class A common stock upon vesting, which occurs over a three-year performance period based on achievement of the following metrics:

(i) compound aggregate revenue growth rate and (ii) average Adjusted EBITDA margin.

The final number of shares of Class A common stock issuable upon vesting of PSUs can range from 0 % to 150 % of the number of PSUs initially granted, depending on the level of achievement, as determined by the Compensation Committee of the Company’s Board of Directors.

On October 2, 2023, the Company acquired from Hubbard Paving & Grading, Inc.

an asphalt and paving company headquartered in Walhalla, South Carolina, one HMA plant in the Greenville, South Carolina metro area for $ 2.9 million.

On November 1, 2023, the Company acquired from Reeves Construction Company three HMA plants and related construction operations located in Concord, North Carolina and Rock Hill and McConnells, South Carolina for $ 16.0 million.

The total amount of consideration for these transactions remain subject to post-closing adjustments with respect to inventory quantities and other matters as of the date of this report.

Treasury Stock

On November 4, 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 restricted stock awards that vested on September 30, 2022.

Amendment to Credit Agreement

On November 18, 2022, the Company and each of its wholly owned subsidiaries (collectively, the “Borrowers”) entered into a First Amendment to the Third Amended and Restated Credit Agreement (the “Amendment” and the “Credit Agreement,” respectively).

Among other things, the Amendment modified the provisions of the Credit Agreement requiring a prepayment of outstanding indebtedness following a disposition of property or assets exceeding certain thresholds.

As a result of the Amendment, the Borrowers may receive up to $ 10.0 million in the aggregate of net cash proceeds from the disposal of property or assets (other than inventory in the ordinary course of business) in any fiscal year without the requirement to prepay any outstanding indebtedness.

However, the Borrowers also may reinvest all or any portion of such net cash proceeds in fixed capital or operating assets, including real property (which reinvested amount will not count against the $ 10.0 million threshold), provided that (i) if any of the disposed property or assets constitute collateral under the Credit Agreement, the reinvestment must be in fixed capital or operating investments that also constitute collateral, (ii) the reinvestment (or entry into a definitive agreement providing for such reinvestment) must occur within 180 days after receipt of such net cash proceeds and (iii) if a definitive agreement to reinvest the net cash proceeds has been executed within such 180 -day period, then the reinvestment must occur within 180 days after the entering into such definitive agreement.

Any net cash proceeds not reinvested or subject to a definitive agreement must be applied to the prepayment of the outstanding indebtedness upon the conclusion of the applicable 180 -day period.

Acquisition of HMA Plants and Disposition of Quarry

On November 18, 2022, the Company’s Alabama-based subsidiary acquired three HMA plants in the Nashville, Tennessee metro area from Blue Water Industries.

The transaction extended the Company’s footprint into the fast-growing Nashville, Tennessee metro area.

In connection with the transaction, the Company’s North Carolina-based subsidiary received cash and transferred ownership of its Daurity Springs Quarry in North Carolina to Blue Water Industries, while retaining aggregate sourcing rights from the quarry for its HMA plants in the central North Carolina area.

The Company received net cash consideration of $ 28.0 million related to these transactions.

The total amount of consideration for these transactions remains subject to post-closing adjustments with respect to inventory quantities and other matters as of the date of this report.

On October 2, 2023, the Company received a total of 16,622 shares of Class A common stock from employees for reimbursement of income taxes paid by the Company on behalf of these employees related to restricted stock awards that vested on September 30, 2023.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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-K

Item 8. Financial Statements and Supplementary Data