What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-10 compared with 2024-02-09 · 118 added, 64 removed, 147 unchanged (55% of the section changed)

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Such statements involve risks and uncertainties.

Our actual results may differ materially from those contemplated by these forward-looking statements as a result of various factors, including those set forth under the headings “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.” This discussion should be read in conjunction with our unaudited consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes thereto included in the 2023 Form 10-K.

This discussion should be read in conjunction with our unaudited consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes thereto included in the 2023 Form 10-K.

In this discussion, we use certain non-GAAP financial measures.

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Contract Backlog

At December 31, 2023, our contract backlog was $1.6 billion.

At March 31, 2024, our contract backlog was $1.8 billion.

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

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

Backlog of uncompleted work on contracts under which work was either in progress or had not yet begun was $1.3 billion at December 31, 2023.

Backlog of uncompleted work on contracts under which work was either in progress or had not yet begun was $1.4 billion at March 31, 2024.

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

Low bid/no contract backlog was $0.3 billion at December 31, 2023.

Low bid/no contract backlog was $0.4 billion at March 31, 2024.

Recent Developments

Business Acquisitions

During the thee months ended December 31, 2023, we completed three acquisitions across three states, adding to or expanding our operations in Alabama, North Carolina and South Carolina.

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

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

Business Acquisition

During the three months ended March 31, 2024, we completed the acquisition of Littlefield Construction Company, a soil base, surface treatment and sitework company headquartered in Waycross, Georgia.

As a result of this acquisition, we expanded our service offerings in southern and central Georgia.

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

How We Assess Performance of Our Business

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Other Key Performance Indicators - Adjusted EBITDA and Adjusted EBITDA Margin

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

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

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

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

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

For the Three Months Ended December 31,

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

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

2024 2023 (1)

Net income $ 9,843 $ 1,892

2024 2023 (1)

Net income (loss) $ (1,124) $ (5,481) $ 8,719 $ (3,589)

Interest expense, net 4,568 4,802 8,314 8,762

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

Accordingly, periods commencing subsequent to September 30, 2023 do not include an adjustment for management fees and expenses, and the Company has recast comparative Adjusted EBITDA and Adjusted EBITDA Margin for the three months ended December 31, 2022 to conform to the current definition.

Accordingly, periods commencing subsequent to September 30, 2023 do not include an adjustment for management fees and expenses, and the Company has recast comparative Adjusted EBITDA and Adjusted EBITDA Margin for the three and six months ended March 31, 2023 to conform to the current definition.

Results of Operations

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

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

Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023

The following table sets forth selected financial data for the three months ended March 31, 2024 and 2023 (unaudited, in thousands, except percentages):

Change From the Three Months Ended

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

For the Three Months Ended March 31, March 31, 2023

to the Three Months Ended

2023 2022 December 31, 2023

2024 2023 March 31, 2024

Revenues Dollars % of

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Gain on sale of property, plant and equipment 1,031 0.3 % 3,158 1.0 % (2,127) (67.4) %

Operating income (loss) 3,080 0.8 % (2,551) (0.8) % 5,631 (220.7) %

Interest expense, net (4,568) (1.2) % (4,802) (1.5) % 234 (4.9) %

Other income 43 — % 398 0.1 % (355) (89.2) %

Loss before provision for income taxes (1,445) (0.4) % (6,955) (2.2) % 5,510 (79.2) %

Provision for income taxes (321) (0.1) % (1,474) (0.5) % 1,153 (78.2) %

Net loss $ (1,124) (0.3) % $ (5,481) (1.7) % $ 4,357 (79.5) %

Adjusted EBITDA $ 29,516 7.9 % $ 20,397 6.3 % $ 9,119 44.7 %

Revenues for the three months ended March 31, 2024 increased $46.5 million, or 14.3%, to $371.4 million from $324.9 million for the three months ended March 31, 2023.

The increase included $25.1 million of revenues attributable to acquisitions completed during or subsequent to the three months ended March 31, 2023 and an increase of approximately $21.4 million of revenues in our existing markets from contract work and sales of HMA and aggregates to third parties.

The 6.6% increase in revenue in our existing markets was due to strong demand in both public and private work.

Gross Profit.

Gross profit for the three months ended March 31, 2024 increased $12.5 million, or 47.6%, to $38.8 million from $26.3 million for the three months ended March 31, 2023.

The increase in gross profit was primarily the result of a 14.3% increase in revenues for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 and a higher gross profit margin.

The higher gross profit margin was due to efficient utilization of our plants and equipment fleet and completion of new backlog with more favorable margins.

General and Administrative Expenses.

General and administrative expenses for the three months ended March 31, 2024 increased $4.8 million, or 14.9%, to $36.8 million from $32.0 million for the three months ended March 31, 2023.

The increase was the result of (i) a $0.9 million increase in share-based compensation expense, (ii) a $2.1 million increase attributable to general and administrative expenses associated with the operations of businesses acquired subsequent to March 31, 2023, (iii) a $0.6 million increase in management personnel payroll and benefits, and (iv) a $1.2 million increase in other general and administrative expenses.

Gain on Sale of Property, Plant and Equipment .

Gain on sale of property, plant and equipment for the three months ended March 31, 2024 decreased $2.1 million, or 67.4%, to $1.0 million from $3.2 million for the three months ended March 31, 2023.

The decrease was attributable to lower disposals of equipment and components during the quarter.

Interest Expense, Net.

Interest expense, net for the three months ended March 31, 2024 decreased $0.2 million, or 4.9%, to $4.6 million compared to $4.8 million for the three months ended March 31, 2023.

The decrease in interest expense, net was primarily due to an increase in interest income from an overnight sweep program established in fiscal year 2024.

This increase in interest income was primarily offset by an increase in interest expense due to an increase in the average principal debt balance outstanding during the three months ended March 31, 2024 compared to the corresponding period in 2023.

Provision for Income Taxes.

Our effective tax rate increased to 22.2% for the three months ended March 31, 2024, from 21.1% for the three months ended March 31, 2023.

Our higher effective tax rate during the three months ended March 31, 2024 was due to differences in state tax rates at our operating subsidiaries.

Net loss decreased $4.4 million to a net loss of $1.1 million for the three months ended March 31, 2024, compared to net loss of $5.5 million for the three months ended March 31, 2023.

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

Adjusted EBITDA and Adjusted EBITDA Margin.

Adjusted EBITDA and Adjusted EBITDA Margin were $29.5 million and 7.9%, respectively, for the three months ended March 31, 2024, compared to $20.4 million and 6.3%, respectively, for the three months ended March 31, 2023.

The increase in Adjusted EBITDA and Adjusted EBITDA Margin resulted from an increase in gross profit, partially offset by higher general and administrative expenses and decreased gains on sale of property, plant and equipment, all as described above.

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

Six Months Ended March 31, 2024 Compared to Six Months Ended March 31, 2023

The following table sets forth selected financial data for the six months ended March 31, 2024 and 2023 (unaudited, in thousands, except percentages):

Change From the Six Months Ended

For the Six Months Ended March 31, March 31, 2023

to the Six Months Ended

2024 2023 March 31, 2024

Revenues Dollars % of

Revenues $ 767,932 100.0 % $ 666,629 100.0 % $ 101,303 15.2 %

Cost of revenues 677,251 88.2 % 609,853 91.5 % 67,398 11.1 %

Gross profit 90,681 11.8 % 56,776 8.5 % 33,905 59.7 %

General and administrative expenses (72,733) (9.5) % (61,714) (9.2) % (11,019) 17.9 %

Gain on sale of property, plant and equipment 1,867 0.2 % 3,326 0.5 % (1,459) (43.9) %

Gain on facility exchange — — % 5,389 0.8 % (5,389) (100.0) %

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Interest expense, net (8,314) (1.1) % (8,762) (1.3) % 448 (5.1) %

Other income (expense) (28) — % 34 — % (62) (182.4) %

Income before provision for income taxes 12,961 3.3 % 2,402 0.7 % 10,559 439.6 %

Other income 15 — % 432 — % (417) (96.5) %

Income (loss) before provision for income taxes 11,516 1.5 % (4,553) (0.7) % 16,069 (352.9) %

Provision for income taxes 2,797 0.4 % (964) (0.1) % 3,761 (390.1) %

Net income $ 9,843 2.5 % $ 1,892 0.6 % $ 7,951 420.2 %

Net income (loss) $ 8,719 1.1 % $ (3,589) (0.6) % $ 12,308 (342.9) %

Adjusted EBITDA $ 70,390 9.2 % $ 47,614 7.1 % $ 22,776 47.8 %

Revenues for the three months ended December 31, 2023 increased $54.7 million, or 16.0%, to $396.5 million from $341.8 million for the three months ended December 31, 2022.

The increase included $29.6 million of revenues attributable to acquisitions completed during or subsequent to the three months ended December 31, 2022 and an increase of approximately $25.1 million of revenues in our existing markets from contract work and sales of HMA and aggregates to third parties.

The 7.3% increase in revenue in our existing markets was due to strong demand in both public and private work.

Revenues for the six months ended March 31, 2024 increased $101.3 million, or 15.2%, to $767.9 million from $666.6 million for the six months ended March 31, 2023.

The increase included $54.7 million of revenues attributable to acquisitions completed subsequent to March 31, 2023 and $46.5 million of revenues in our existing markets from contract work and sales of HMA and aggregates to third parties.

The 7.0% increase in revenues in our existing markets compared to the prior year period was due to strong demand in both public and private work.

Gross Profit.

Gross profit for the three months ended December 31, 2023 increased $21.4 million, or 70.1%, to $51.9 million from $30.5 million for the three months ended December 31, 2022.

The increase in gross profit was primarily the result of the 16.0% increase in revenues for the three months ended December 31, 2023 compared to the three months ended December 31, 2022 and a higher gross profit margin.

The higher gross profit margin was due to (i) efficient utilization of our plants and equipment fleet and (ii) completion of new backlog with more favorable margins.

Gross profit for the six months ended March 31, 2024 increased $33.9 million, or 59.7%, to $90.7 million from $56.8 million for the six months ended March 31, 2023.

The increase in gross profit was primarily the result of a 15.2% increase in revenues for the six months ended March 31, 2024 compared to the six months ended March 31, 2023 and a higher gross profit margin.

The higher gross profit margin was due to efficient utilization of our plants and equipment fleet and completion of new backlog with more favorable margins.

General and Administrative Expenses.

General and administrative expenses for the three months ended December 31, 2023 increased $6.3 million, or 21.0%, to $36.0 million from $29.7 million for the three months ended December 31, 2022.

The increase was the result of (i) a $0.5 million increase in share-based compensation expense, (ii) a $2.0 million increase attributable to general and administrative expenses associated with the operations of businesses acquired subsequent to December 31, 2022, (iii) a $1.9 million increase in management personnel payroll and benefits, and (iv) a $1.8 million increase in other general and administrative expenses.

General and administrative expenses for the six months ended March 31, 2024 increased $11.0 million, or 17.9%, to $72.7 million from $61.7 million for the six months ended March 31, 2023.

The increase was primarily the result of (i) a $1.4 million increase in share-based compensation expense, (ii) a $3.7 million increase attributable to general and administrative expenses associated with the operations of businesses acquired subsequent to March 31, 2023, (iii) a $3.3 million increase in management personnel payroll and benefits, and (iv) a $2.6 million increase in other general and administrative expenses.

Gain on Sale of Property, Plant and Equipment .

Gain on sale of property, plant and equipment for the three months ended December 31, 2023 increased $0.6 million, or 397.6%, to $0.8 million from $0.2 million for the three months ended December 31, 2022.

The increase is attributable to higher disposals of equipment and components during the quarter.

Gain on sale of property, plant and equipment for the six months ended March 31, 2024 decreased $1.5 million, or 43.9%, to $1.9 million from $3.3 million for the six months ended March 31, 2023.

The decrease was attributable to lower disposals of equipment and components during the period.

Gain on Facility Exchange .

Gain on facility exchange for the three months ended December 31, 2023 was $0.0 million compared to $5.4 million for the three months ended December 31, 2021.

There was no gain on facility exchange for the six months ended March 31, 2024 compared to $5.4 million for the six months ended March 31, 2023.

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

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Interest Expense, Net.

Interest expense, net for the three months ended December 31, 2023 decreased $0.3 million, or 5.4%, to $3.7 million compared to $4.0 million for the three months ended December 31, 2022.

The decrease in interest expense, net was primarily due to an increase in interest income from an overnight sweep program established during the three months ended December 31, 2023.

This was partially offset by an increase in interest expense due to an increase in the average principal debt balance outstanding during the three months ended December 31, 2023 compared to the three months ended December 31, 2022.

Interest expense, net for the six months ended March 31, 2024 decreased $0.5 million, or 5.1%, to $8.3 million compared to $8.8 million for the six months ended March 31, 2023.

The decrease in interest expense, net was primarily due to an increase in interest income from an overnight sweep program established in fiscal year 2024.

This increase in interest income was primarily offset by an increase in interest expense due to an increase in the average principal debt balance outstanding during the six months ended March 31, 2024 compared to the corresponding period in 2023.

Provision for Income Taxes.

Our effective tax rate increased to 24.1% for the three months ended December 31, 2023, from 21.2% for the three months ended December 31, 2022.

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

Net income increased $7.9 million, or 420.2%, to $9.8 million for the three months ended December 31, 2023, compared to $1.9 million for the three months ended December 31, 2022.

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

Our effective tax rate increased to 24.3% for the six months ended March 31, 2024, from 21.1% for the six months ended March 31, 2023.

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

Net Income (Loss).

Net income increased $12.3 million to net income of $8.7 million for the six months ended March 31, 2024, compared to a net loss of $3.6 million for the six months ended March 31, 2023.

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

Adjusted EBITDA and Adjusted EBITDA Margin.

Adjusted EBITDA and Adjusted EBITDA Margin were $40.9 million and 10.3%, respectively, for the three months ended December 31, 2023, compared to $27.2 million and 8.0%, respectively, for the three months ended December 31, 2022.

The increase in Adjusted EBITDA and Adjusted EBITDA Margin resulted from an increase in gross profit and gain on sale of property, plant and equipment, partially offset by higher general and administrative expenses and decreased gain on facility exchange, all as described above.

Adjusted EBITDA and Adjusted EBITDA Margin were $70.4 million and 9.2%, respectively, for the six months ended March 31, 2024, compared to $47.6 million and 7.1%, respectively, for the six months ended March 31, 2023.

The increase in Adjusted EBITDA and Adjusted EBITDA Margin resulted from an increase in gross profit, partially offset by higher general and administrative expenses and decreased gains on the facility exchange and sale of property, plant and equipment, all as described above.

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

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

For the Three Months Ended December 31,

For the Six Months Ended March 31,

Net cash provided by operating activities, net of acquisitions $ 78,550 $ 45,696

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Operating Activities

During the three months ended December 31, 2023, cash provided by operating activities, net of acquisitions, was $60.4 million, primarily as a result of:

• net income of $9.8 million, including $21.1 million of depreciation, depletion, accretion and amortization and $2.9 million of share-based compensation expense, gain on sale of property, plant and equipment of $0.8 million;

During the six months ended March 31, 2024, cash provided by operating activities, net of acquisitions, was $78.6 million, primarily as a result of:

• net income of $8.7 million, including $44.0 million of depreciation, depletion, accretion and amortization, $6.2 million of share-based compensation expense and $1.9 million of gain on sale of property, plant and equipment;

• a decrease in contracts receivable including retainage, net of $43.4 million due to normal fluctuations resulting from the timing of processing transactions in our accounts receivable cycle;

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• a net increase in the difference between costs and estimated earnings in excess of billings on uncompleted contracts and billings in excess of costs and estimated earnings on uncompleted contracts of $14.6 million due to the timing of performing and closing projects.

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

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

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

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

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

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

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

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

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

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

Investing Activities

During the three months ended December 31, 2023, cash used in investing activities was $104.7 million, of which $81.4 million related to acquisitions completed in the period and $26.8 million was invested in property, plant and equipment, partially offset by $2.5 million of proceeds from the sale of property, plant and equipment and $1.0 million of proceeds from the sale of restricted investments.

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

During the six months ended March 31, 2024, cash used in investing activities was $138.4 million, of which $87.9 million related to acquisitions completed in the period, $55.5 million was invested in property, plant and equipment and $1.9 million was invested in restricted investments by the Captive, partially offset by $5.0 million of proceeds from the sale of property, plant and equipment and $1.9 million of proceeds from the sale of restricted investments.

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

Financing Activities

During the three months ended December 31, 2023, cash provided by financing activities was $64.9 million.

During the six months ended March 31, 2024, cash provided by financing activities was $61.2 million.

We received $90.0 million of proceeds from our Revolving Credit Facility, which were primarily used for acquisitions completed in the period.

This cash flow was partially offset by $27.5 million of principal payments on long-term debt and purchase of treasury stock of $1.3 million.

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

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

This cash flow was partially offset by $3.1 million of principal payments on long-term debt.

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

We received $38.0 million of proceeds from our Revolving Credit Facility and $15.0 million from our Term Loan, which were primarily used for acquisitions completed in the period.

This cash flow was partially offset by $6.3 million of principal payments on long-term debt and purchase of treasury stock of $0.1 million.

Credit Agreement

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

At December 31, 2023 and September 30, 2023, we had $280.0 million and $283.8 million, respectively, of principal outstanding under the Term Loan, $163.1 million and $93.1 million, respectively, of principal outstanding under the Revolving Credit Facility, and availability of $153.6 million and $221.1 million, respectively, under the Revolving Credit Facility, including reduction for outstanding letters of credit.

At March 31, 2024 and September 30, 2023, there was $276.3 million and $283.8 million, respectively, of principal outstanding under the Term Loan, $163.1 million and $93.1 million, respectively, of principal outstanding under the Revolving Credit Facility, and availability of $153.7 million and $222.1 million, respectively, under the Revolving Credit Facility, including a reduction for outstanding letters of credit.

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

At December 31, 2023 and September 30, 2023, our fixed charge coverage ratio was 3.35-to-1.00 and 2.56-to-1.00, respectively, and our consolidated leverage ratio was 1.78-to-1.00 and 1.72-to-1.00, respectively.

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

At December 31, 2023 and September 30, 2023, the aggregate notional value of the interest rate swap agreement was $300.0 million, and the fair value was $17.6 million and $26.9 million, respectively, which amounts are included within other assets on the Company’s Consolidated Balance Sheets.

At March 31, 2024 and September 30, 2023, our fixed charge coverage ratio was 3.39-to-1.00 and 2.56-to-1.00, respectively, and our consolidated leverage ratio was 1.81-to-1.00 and 1.72-to-1.00, respectively.

The Company has entered into an interest rate swap agreement to hedge against the risk of changes in interest rates.

At March 31, 2024 and September 30, 2023, the notional value of the interest rate swap agreement was $300.0 million, and the fair value was $21.0 million and $26.9 million, respectively, which amounts are included within other assets on the Company’s Consolidated Balance Sheets.

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

Capital Requirements and Sources of Liquidity

During the three months ended December 31, 2023 and 2022, our capital expenditures were approximately $26.8 million and $31.7 million, respectively.

During the six months ended March 31, 2024 and 2023, our capital expenditures were approximately $55.5 million and $60.4 million, respectively.

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

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

For fiscal 2024, we expect total capital expenditures to be $90.0 million to $95.0 million.

At March 31, 2024, our commitments for capital expenditures were not material to our financial condition or results of operations on a consolidated basis.

For fiscal year 2024, we expect total capital expenditures to be $90.0 million to $95.0 million.

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

Historically, we have required significant amounts of cash in order to make capital expenditures, purchase materials and fund our organic expansion into new markets.

Historically, we have required significant amounts of cash in order to make capital expenditures, purchase materials, execute our growth strategy through acquisitions and fund our organic expansion into new markets.

Our working capital needs are driven by the seasonality and growth of our business, with our cash requirements increasing in periods of growth.

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

Furthermore, on April 12, 2024, we announced that our Board of Directors authorized a stock repurchase program under which up to $40 million is available to purchase shares of our outstanding Class A common stock through September 30, 2025.

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

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

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

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

We have historically relied on cash available through credit facilities, in addition to cash from operations, to finance our working capital requirements and to support our growth.

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

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

We believe that our operating cash flow and available borrowings under the Credit Agreement will be sufficient to fund our operations, make planned capital expenditures and opportunistically repurchase shares of Class A common stock for at least the next 12 months.

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

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Contractual Obligations

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

The following table summarizes our significant obligations outstanding as of March 31, 2024 (unaudited, in thousands):

Payments Due by Fiscal Year

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Debt obligations $ 439,350 $ 7,500 $ 18,750 $ 22,500 $ 390,600 $ — $ —

Operating leases 21,677 3,031 3,545 3,353 2,984 2,492 6,272

Lease obligations 31,128 3,450 6,530 6,234 5,486 3,150 6,277

Purchase commitments 2,430 1,734 696 — — — —

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Off-Balance Sheet Arrangements

As of December 31, 2023, we had aggregate letters of credit outstanding in the amount of $8.3 million, future purchase commitments of diesel fuel and natural gas of $2.9 million and $0.4 million, respectively, and $2.5 million of minimum royalty payments related to aggregates facilities.

As of March 31, 2024, we had aggregate letters of credit outstanding in the amount of $8.2 million, future purchase commitments of diesel fuel and natural gas of $2.3 million and $0.1 million, respectively, and $2.5 million of minimum royalty payments related to aggregates facilities.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis