What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-09 compared with 2024-05-10 · 189 added, 172 removed, 613 unchanged (37% of the section changed)

3 unchanged sentences

(in thousands, except share data)

March 31, September 30,

June 30, September 30,

ASSETS (unaudited)

32 unchanged sentences

Preferred stock, par value $ 0.001 ;

10,000,000 shares authorized and no shares issued and outstanding at March 31, 2024 and September 30, 2023

10,000,000 shares authorized and no shares issued and outstanding at June 30, 2024 and September 30, 2023

Class A common stock, par value $ 0.001 ;

400,000,000 shares authorized, 43,896,017 shares issued and 43,828,855 shares outstanding at March 31, 2024 and 43,760,546 shares issued and 43,727,680 shares outstanding at September 30, 2023

400,000,000 shares authorized, 43,926,017 shares issued and 43,763,213 shares outstanding at June 30, 2024 and 43,760,546 shares issued and 43,727,680 shares outstanding at September 30, 2023

Class B common stock, par value $ 0.001 ;

100,000,000 shares authorized, 11,921,463 shares issued and 8,998,511 shares outstanding at March 31, 2024 and September 30, 2023

100,000,000 shares authorized, 11,921,463 shares issued and 8,998,511 shares outstanding at June 30, 2024 and September 30, 2023

Additional paid-in capital 275,562 267,330

Treasury stock, Class A common stock, par value $ 0.001 , at cost, 67,162 shares at March 31, 2024 and 32,866 shares at September 30, 2023

Treasury stock, Class A common stock, par value $ 0.001 , at cost, 162,804 shares at June 30, 2024 and 32,866 shares at September 30, 2023

( 6,783 ) ( 178 )

Treasury stock, Class B common stock, par value $ 0.001 , at cost, 2,922,952 shares at March 31, 2024 and September 30, 2023

Treasury stock, Class B common stock, par value $ 0.001 , at cost, 2,922,952 shares at June 30, 2024 and September 30, 2023

( 15,603 ) ( 15,603 )

5 unchanged sentences

CONSTRUCTION PARTNERS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

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

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

2024 2023 2024 2023

5 unchanged sentences

Gain on facility exchange — — — 5,389

Operating income (loss) 3,080 ( 2,551 ) 19,815 3,777

Operating income 45,657 33,340 65,472 37,117

Interest expense, net ( 4,673 ) ( 5,039 ) ( 12,987 ) ( 13,801 )

Other income 32 493 47 925

Income (loss) before provision for income taxes ( 1,445 ) ( 6,955 ) 11,516 ( 4,553 )

Income before provision for income taxes 41,016 28,794 52,532 24,241

Provision for income taxes 10,108 7,117 12,905 6,153

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

Net income 30,908 21,677 39,627 18,088

Other comprehensive income (loss), net of tax

2 unchanged sentences

Other comprehensive income (loss) ( 574 ) 3,998 ( 4,888 ) ( 637 )

Comprehensive income (loss) $ 1,268 $ ( 8,860 ) $ 4,406 $ ( 8,224 )

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

Comprehensive income $ 30,334 $ 25,675 $ 34,739 $ 17,451

Net income per share attributable to common stockholders:

Basic $ 0.60 $ 0.42 $ 0.76 $ 0.35

7 unchanged sentences

(unaudited in thousands, except share data)

For the six months ended March 31, 2024

For the Nine Months Ended June 30, 2024

Class A Common Stock Class B Common Stock Additional

14 unchanged sentences

March 31, 2024 43,896,017 $ 44 11,921,463 $ 12 $ 272,669 $ ( 1,514 ) $ ( 15,603 ) $ 254,994 $ 14,381 $ 524,983

For the six months ended March 31, 2023

Net income — — — — — — — 30,908 — 30,908

Issuance of stock grant awards 30,000 — — — — — — — — —

Share-based compensation expense — — — — 2,893 — — — — 2,893

Purchase of treasury stock — — — — — ( 5,269 ) — — — ( 5,269 )

Other comprehensive (loss) — — — — — — — — ( 574 ) ( 574 )

June 30, 2024 43,926,017 $ 44 11,921,463 $ 12 $ 275,562 $ ( 6,783 ) $ ( 15,603 ) $ 285,902 $ 13,807 $ 552,941

For the Nine Months Ended June 30, 2023

Class A Common Stock Class B Common Stock Additional

16 unchanged sentences

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

Net income — — — — — — — 21,677 — 21,677

Share-based compensation expense — — — — 2,737 — — — — 2,737

Issuance of stock grant awards 29,614 — — — — — — — — —

Conversion of Class B common stock to Class A common stock 2,354,404 3 ( 2,354,404 ) ( 3 ) — — — — — —

Other comprehensive income — — — — — — — — 3,998 3,998

June 30, 2023 43,760,546 $ 44 11,921,463 $ 12 $ 264,480 $ ( 178 ) $ ( 15,603 ) $ 215,362 $ 16,983 $ 481,100

See notes to consolidated financial statements (unaudited).

2 unchanged sentences

(unaudited in thousands)

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Cash flows from operating activities:

Net income (loss) $ 8,719 $ ( 3,589 )

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

Net income $ 39,627 $ 18,088

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

Depreciation, depletion, accretion and amortization 67,468 57,769

10 unchanged sentences

Changes in operating assets and liabilities, net of business acquisitions:

Contracts receivable including retainage, net 43,443 34,092

Contracts receivable including retainage ( 11,310 ) 22,777

Costs and estimated earnings in excess of billings on uncompleted contracts ( 4,273 ) ( 3,580 )

16 unchanged sentences

Cash flows from financing activities:

Proceeds from revolving credit facility 90,000 38,000

Proceeds from issuance of long-term debt, net of debt issuance costs 149,385 53,000

19 unchanged sentences

(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.

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

The Company was formed in 2007 as a holding company to facilitate an acquisition growth strategy in the hot mix asphalt (“HMA”) paving and construction industry.

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’s primary operations consist of (i) manufacturing and distributing 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 use and consumption of the Company’s products and services fluctuate due to seasonality.

11 unchanged sentences

In the opinion of management, these unaudited consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the dates and periods presented.

These consolidated financial statements and accompanying notes should be read in conjunction with the Company’s audited annual consolidated financial statements and notes thereto included in its Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (the “2023 Form 10-K”).

Results for interim periods are not necessarily indicative of the results to be expected for a full fiscal year or for any future period.

1 unchanged sentence

The preparation of the consolidated financial statements in conformity with 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 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 share-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 credit losses, 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 share-based compensation awards.

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

13 unchanged sentences

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

The Company had restricted cash of $ 2.5 million and $ 0.8 million at March 31, 2024 and September 30, 2023, respectively.

The Company had restricted cash of $ 2.1 million and $ 0.8 million at June 30, 2024 and September 30, 2023, respectively.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows (unaudited, in thousands):

March 31, 2024 March 31, 2023

June 30, 2024 June 30, 2023

Cash and cash equivalents $ 56,327 $ 54,878

8 unchanged sentences

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.

Unrealized gains and losses are reported as components of “Accumulated other comprehensive income (loss), net” on the Consolidated Balance Sheets.

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 $ 15.5 million and $ 15.1 million at March 31, 2024 and September 30, 2023, respectively.

The Company had restricted investments of $ 17.0 million and $ 15.1 million at June 30, 2024 and September 30, 2023, respectively.

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

3 unchanged sentences

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 six months ended March 31, 2024 and 2023, the Company had no intent impairments or credit losses.

For the nine months ended June 30, 2024 and 2023, the Company had no intent impairments or credit losses.

Contracts Receivable Including Retainage, Net

1 unchanged sentence

It is common in the Company’s industry for a small portion of either progress billings or the contract price, typically 10%, to be withheld by the customer until the Company completes a project to the satisfaction of the customer in accordance with the applicable contract terms.

Such amounts, defined as retainage, are included on the Consolidated Balance Sheets as “Contracts receivable including retainage, net.” Based on the Company’s experience with similar contracts in recent years, billings for such retainage balances are generally collected within one year of the completion of the project.

Such amounts, defined as retainage, are included on the Consolidated Balance Sheets as “Contracts receivable including retainage, net”.

Based on the Company’s experience with similar contracts in recent years, billings for such retainage balances are generally collected within one year of the completion of the project.

Contracts receivable including retainage, net is stated at the amount management expects to collect from outstanding balances.

Management provides for uncollectible accounts through a charge to earnings and a credit to the allowance for doubtful accounts based

on its assessment of the current status of individual accounts, type of service performed, current economic conditions, historical losses and other information available to management.

Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and an adjustment to the contract receivable.

Management provides for uncollectible accounts through a charge to earnings and a credit to the allowance for credit losses based on

its assessment of the current status of individual accounts, type of service performed, current economic conditions, historical losses and other information available to management.

Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for credit losses and an adjustment to the contract receivable.

Contract Assets and Contract Liabilities

20 unchanged sentences

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

No single customer accounted for more than 10% of the Company’s contracts receivable including retainage, net balance at March 31, 2024 or September 30, 2023.

Projects performed for various departments of transportation accounted for 36.0 % and 29.8 % of consolidated revenues for the three months ended March 31, 2024 and 2023, respectively, and for 36.9 % and 30.9 % of consolidated revenues for the six months ended March 31, 2024 and 2023, respectively.

Customers that accounted for more than 10% of consolidated revenues during the three and six months ended March 31, 2024 and 2023 are presented below:

No single customer accounted for more than 10% of the Company’s contracts receivable including retainage, net balance at June 30, 2024 or September 30, 2023.

Projects performed for various departments of transportation accounted for 42.3 % and 38.6 % of consolidated revenues for the three months ended June 30, 2024 and 2023, respectively, and for 39.7 % and 32.0 % of consolidated revenues for the nine months ended June 30, 2024 and 2023, respectively.

Customers that accounted for more than 10% of consolidated revenues during the three and nine months ended June 30, 2024 and 2023 are presented below:

% of Consolidated Revenues

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

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

2024 2023 2024 2023

North Carolina Department of Transportation 12.5 % 11.2 % 10.3 % *

Florida Department of Transportation 13.4 % 11.2 % 13.9 % 10.2 %

6 unchanged sentences

% of Consolidated Revenues

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

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

2024 2023 2024 2023

35 unchanged sentences

Revenues derived from the sale of HMA, aggregates, ready-mix concrete, and liquid asphalt are recognized at a point in time, which is when control of the product is transferred to the customer.

Generally, that point in time is when the customer accepts delivery at its facility or receives product in its own transport vehicles from one of the Company’s HMA plants or aggregates facilities.

Generally, control of a product is deemed to be transferred to the customer when the customer accepts delivery at its facility or receives product in its own transport vehicles from one of the Company’s HMA plants or aggregates facilities.

Upon purchase, the Company generally provides an invoice or similar document detailing the goods transferred to the customer.

4 unchanged sentences

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which the temporary differences are expected to be reversed or settled.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized as income in the period that includes the enactment date.

Management evaluates the realization of deferred tax assets and establishes a valuation allowance when it is more likely than not that all or a portion of the deferred tax assets will not be realized.

12 unchanged sentences

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

The Company’s financial instruments include cash and cash equivalents, restricted cash, contracts receivable including retainage, accounts payable and accrued expenses reflected as current assets and current liabilities on its Consolidated Balance Sheets at March 31, 2024 and September 30, 2023.

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

The Company also has debt securities reflected as restricted investments on its Consolidated Balance Sheets at March 31, 2024 and September 30, 2023.

The Company also has debt securities reflected as restricted investments on its Consolidated Balance Sheets at June 30, 2024 and September 30, 2023.

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

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

The carrying value of amounts outstanding under these credit facilities is reflected as long-term debt, net of current maturities and deferred debt issuance cost and current maturities of long-term debt on the Company’s Consolidated Balance Sheets at March 31, 2024 and September 30, 2023.

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

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

8 unchanged sentences

Management applies fair value measurement guidance to its impairment analysis for tangible and intangible assets, including goodwill.

Comprehensive Income (Loss)

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

Comprehensive income (loss) comprises two subsets:

Comprehensive Income

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

Comprehensive income comprises two subsets:

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

2 unchanged sentences

Note 3 - Accounting Standards

The Company did not adopt any new accounting standards or updates during the six months ended March 31, 2024.

The Company did not adopt any new accounting standards or updates during the nine months ended June 30, 2024.

Note 4 - Business Acquisitions

3 unchanged sentences

On November 1, 2023, the Company acquired three HMA plants and certain related assets from Reeves Construction Company for $ 18.3 million.

This transaction added HMA plants in Concord, North Carolina and Rock Hill and McConnells, South Carolina.

On December 29, 2023, the Company acquired all issued and outstanding membership interests of SJ&L General Contractor, LLC, an HMA and sitework company headquartered in Huntsville, Alabama, for $ 60.1 million.

This transaction added three HMA plants in Concord, North Carolina and Rock Hill and McConnells, South Carolina.

On December 29, 2023, the Company acquired all issued and outstanding membership interests of SJ&L General Contractor, LLC, an asphalt and sitework company headquartered in Huntsville, Alabama, for $ 54.3 million.

This transaction expanded the Company’s service capabilities in the Huntsville, Alabama metro area.

1 unchanged sentence

This transaction expanded the Company’s service capabilities in the Waycross, Georgia area.

On May 1, 2024, the Company acquired certain assets of Sunbelt Asphalt Surfaces, Inc., an asphalt and paving company headquartered in Auburn, Georgia, for $ 28.7 million.

This transaction added an HMA plant and a greenfield plant site in northeastern Georgia.

On June 3, 2024, the Company acquired substantially all of the assets of Hudson Paving, Inc., an asphalt and paving company company headquartered in Rockingham, North Carolina, for $ 18.7 million.

This transaction added an HMA plant and related crews and equipment serving the Sandhills region of North Carolina.

The total amount of consideration for these transactions remains subject to post-closing adjustments with respect to inventory quantities, settlement of working capital and other matters.

Combined Acquisitions During the Six Months Ended March 31, 2024

Combined Acquisitions During the Nine Months Ended June 30, 2024

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

As of March 31, 2024, the purchase price allocation had not yet been finalized due to the recent timing of these acquisitions, as certain information was pending on such date to finalize estimates of fair value of certain assets acquired and liabilities assumed.

As of June 30, 2024, the purchase price allocation had not yet been finalized due to the recent timing of these acquisitions, as certain information was pending on such date to finalize estimates of fair value of certain assets acquired and liabilities assumed.

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

10 unchanged sentences

reduce the provisional amount allocated to goodwill.

Total consideration transferred for these acquisitions was $ 87.9 million, which was paid from available cash and a draw from the Revolving Credit Facility (as defined in Note 8 - Debt).

Total consideration transferred for these acquisitions was $ 129.5 million, which is composed of $ 135.3 million paid from available cash and draws from the Revolving Credit Facility (as defined in Note 8 - Debt) and $ 5.8 million due from sellers related to settlement of working capital provisions.

The combined total consideration has been provisionally allocated as follows:

$ 13.0 million of net working capital, $ 76.2 million of property, plant and equipment and $ 40.3 million of goodwill and intangibles.

The Consolidated Statements of Comprehensive Income (Loss) include $ 17.4 million of revenue and $ 0.9 million of net loss attributable to the operations of these acquisitions for the three months ended March 31, 2024 and $ 22.1 million of revenue and $ 1.2 million of net loss attributable to the operations of these acquisitions for the six months ended March 31, 2024.

The Company recorded certain costs to effect the acquisitions as they were incurred, which are reflected in general and administrative expenses on the Company’s Consolidated Statements of Comprehensive Income in the amount of $ 0.3 million for the three months ended March 31, 2024 and $ 0.8 million for the six months ended March 31, 2024.

The Consolidated Statements of Comprehensive Income include $ 38.5 million of revenue and $ 2.5 million of net income attributable to the operations of these acquisitions for the three months ended June 30, 2024 and $ 60.6 million of revenue and $ 1.3 million of net income attributable to the operations of these acquisitions for the nine months ended June 30, 2024.

The Company recorded certain costs to effect the acquisitions as they were incurred, which are reflected in general and administrative expenses on the Company’s Consolidated Statements of Comprehensive Income in the amount of $ 0.7 million for the three months ended June 30, 2024 and $ 1.5 million for the nine months ended June 30, 2024.

The following tables present pro forma revenues and net income as though the acquisitions had occurred on October 1, 2022 (unaudited, in thousands):

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Pro forma revenues $ 526,414 $ 469,029

Pro forma net income (loss) $ ( 1,124 ) $ ( 7,536 )

For the Six Months Ended March 31,

Pro forma net income $ 32,698 $ 23,065

For the Nine Months Ended June 30,

Pro forma revenues $ 1,341,442 $ 1,187,469

Pro forma net income (loss) $ 9,214 $ ( 5,836 )

Pro forma net income $ 41,096 $ 17,317

Pro forma financial information is presented as if the operations of the acquisitions had been included in the consolidated results of the Company since October 1, 2022, and gives effect to transactions that are directly attributable to the acquisitions, including adjustments to:

(a) include the pro forma results of operations of the acquisitions for the three and six months ended March 31, 2024 and 2023;

(a) include the pro forma results of operations of the acquisitions for the three and nine months ended June 30, 2024 and 2023;

(b) include additional depreciation and depletion expense related to the fair value of acquired property, plant and equipment and reserves at aggregates facilities, as applicable, as if such assets were acquired on October 1, 2022 and consistently applied to the Company’s depreciation and depletion methodologies;

(c) include interest expense under the Revolving Credit Facility as if the funds borrowed to finance the purchase prices were borrowed on October 1, 2022 (interest expense calculations further assume that no principal payments were made during the period from October 1, 2022 through March 31, 2024, and that the interest rate in effect on the date the Company made the acquisitions was in effect for the period from October 1, 2022 through March 31, 2024);

(d) exclude $ 0.8 million of acquisition-related expenses from the six months ended March 31, 2024, as though such expenses were incurred prior to the pro forma acquisition date of October 1, 2022.

(c) include interest expense under the Revolving Credit Facility as if the funds borrowed to finance the purchase prices were borrowed on October 1, 2022 (interest expense calculations further assume that no principal payments were made during the period from October 1, 2022 through June 30, 2024, and that the interest rate in effect on the date the Company made the acquisitions was in effect for the period from October 1, 2022 through June 30, 2024);

(d) exclude $ 1.5 million of acquisition-related expenses from the nine months ended June 30, 2024, as though such expenses were incurred prior to the pro forma acquisition date of October 1, 2022.

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

2 unchanged sentences

In May 2023, the Company acquired an excavation, grading and utility company headquartered in Huntsville, Alabama.

As of March 31, 2024, there had been no material adjustments to the September 30, 2023 provisional accounting for either acquisition as reported in the 2023 Form 10-K.

As of June 30, 2024, there had been no material adjustments to the September 30, 2023 provisional accounting for either acquisition as reported in the 2023 Form 10-K.

Note 5 - Contracts Receivable Including Retainage, Net

Contracts receivable including retainage, net consisted of the following at March 31, 2024 and September 30, 2023 (in thousands):

March 31, 2024 September 30, 2023

Contracts receivable including retainage, net consisted of the following at June 30, 2024 and September 30, 2023 (in thousands):

June 30, 2024 September 30, 2023

Contracts receivable $ 291,726 $ 251,324

1 unchanged sentence

341,850 304,610

Allowance for doubtful accounts ( 1,162 ) ( 906 )

Allowance for credit losses ( 1,166 ) ( 906 )

Contracts receivable including retainage, net $ 340,684 $ 303,704

1 unchanged sentence

Note 6 - Contract Assets and Liabilities

Costs and estimated earnings compared to billings on uncompleted contracts at March 31, 2024 and September 30, 2023 consisted of the following (in thousands):

March 31, 2024 September 30, 2023

Costs and estimated earnings compared to billings on uncompleted contracts at June 30, 2024 and September 30, 2023 consisted of the following (in thousands):

June 30, 2024 September 30, 2023

Costs on uncompleted contracts $ 1,922,709 $ 1,831,106

3 unchanged sentences

Net billings in excess of costs and estimated earnings on uncompleted contracts $ ( 80,645 ) $ ( 51,609 )

Significant changes to balances of costs and estimated earnings in excess of billings (contract asset) and billings in excess of costs and estimated earnings (contract liability) on uncompleted contracts from September 30, 2022 to March 31, 2023 and September 30, 2023 to March 31, 2024 are presented below (in thousands):

Significant changes to balances of costs and estimated earnings in excess of billings (contract asset) and billings in excess of costs and estimated earnings (contract liability) on uncompleted contracts from September 30, 2022 to June 30, 2023 and September 30, 2023 to June 30, 2024 are presented below (in thousands):

Costs and Estimated Earnings in Excess of Billings on

3 unchanged sentences

Changes in revenue billed, contract price or cost estimates 4,178 ( 16,270 ) ( 12,093 )

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

June 30, 2023 (unaudited) $ 33,449 $ ( 68,748 ) $ ( 35,299 )

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

Changes in revenue billed, contract price or cost estimates $ 5,254 $ ( 34,290 ) $ ( 29,036 )

March 31, 2024 (unaudited) $ 36,120 $ ( 103,453 ) $ ( 67,332 )

At March 31, 2024, the Company had unsatisfied or partially unsatisfied performance obligations under construction project contracts representing approximately $ 1.37 billion in aggregate transaction price.

The Company expects to earn revenue as it satisfies its performance obligations under such contracts in the amount of approximately $ 743.7 million during the remainder of the fiscal year ending September 30, 2024 and $ 629.0 million thereafter.

June 30, 2024 (unaudited) $ 32,550 $ ( 113,195 ) $ ( 80,645 )

At June 30, 2024, the Company had unsatisfied or partially unsatisfied performance obligations under construction project contracts representing approximately $ 1.45 billion in aggregate transaction price.

The Company expects to earn revenue as it satisfies its performance obligations under such contracts in the amount of approximately $ 0.43 billion during the remainder of the fiscal year ending September 30, 2024 and $ 1.02 billion thereafter.

Note 7 - Property, Plant and Equipment

Property, plant and equipment at March 31, 2024 and September 30, 2023 consisted of the following (in thousands):

March 31, 2024 September 30, 2023

Property, plant and equipment at June 30, 2024 and September 30, 2023 consisted of the following (in thousands):

June 30, 2024 September 30, 2023

Construction equipment $ 525,969 $ 447,467

9 unchanged sentences

Total property, plant and equipment, net $ 579,106 $ 505,095

Depreciation, depletion and amortization expense related to property, plant and equipment was $ 23.1 million and $ 20.4 million for the three months ended March 31, 2024 and 2023, respectively, and $ 44.1 million and $ 39.7 million for the six months ended March 31, 2024 and 2023, respectively.

Depreciation, depletion and amortization expense related to property, plant and equipment was $ 23.5 million and $ 20.2 million for the three months ended June 30, 2024 and 2023, respectively, and $ 67.6 million and $ 59.9 million for the nine months ended June 30, 2024 and 2023, respectively.

Note 8 - Debt

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

Debt at March 31, 2024 and September 30, 2023 consisted of the following (in thousands):

March 31, 2024 September 30, 2023

Debt at June 30, 2024 and September 30, 2023 consisted of the following (in thousands):

June 30, 2024 September 30, 2023

Long-term debt:

Term Loan $ 276,250 $ 283,750

Term Loans $ 397,500 $ 283,750

Revolving Credit Facility 81,850 93,100

3 unchanged sentences

Long-term debt, net of current maturities and deferred debt issuance costs $ 453,942 $ 360,740

The Company and each of its subsidiaries are parties to a Third Amended and Restated Credit Agreement, dated June 30, 2022 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”).

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 on December 31, 2023), amortize in quarterly installments in an amount (subject, in each case, to adjustments for prior mandatory and voluntary prepayments of principal) equal to:

The Company and each of its subsidiaries are parties to a Third Amended and Restated Credit Agreement, dated June 30, 2022, 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, restated, supplemented or otherwise modified, the “Credit Agreement”).

The Credit Agreement provides for (i) term loans in the aggregate principal amount of $ 375.0 million (consisting of an initial aggregate principal amount of $ 250.0 million (the “Initial Term Loan”) and a subsequent term loan in the principal amount of $ 125.0 million (the “Incremental Term Loan,” and collectively, the “Term Loans”)), (ii) a revolving credit facility in an aggregate principal amount of up to $ 400.0 million (the “Revolving Credit Facility”) and (iii) a delayed draw term loan facility, the availability under which facility terminated as of December 31, 2023, in the aggregate principal amount of up to $ 50.0 million (the “Delayed Draw Term Loan”).

The Company incurred debt issuance costs of $ 0.6 million related to an amendment to the Credit Agreement entered into on May 29, 2024, which are included as part of “Long-term debt, net of current maturities and deferred issuance costs” on the June 30, 2024 Consolidated Balance Sheet.

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 Initial Term Loan (commencing on September 30, 2022) and the Incremental Term Loan (commencing on May 29, 2024) 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 on each of the following eleven quarter-end payment dates;

1 unchanged sentence

and (c) all remaining principal 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 %, in each case, plus an applicable margin percentage that corresponds to the Company’s consolidated net leverage ratio.

The annual interest rates applicable to advances will be calculated, at the Company’s option, by using either a base rate, Term SOFR plus 0.10 % or (solely with respect to the Revolving Credit Facility) Daily Simple SOFR plus 0.10 %, 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 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 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.

Agreement also 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 March 31, 2024 and September 30, 2023, the Company’s fixed charge coverage ratio was 3.39 -to-1.00 and 2.56 -to-1.00, respectively, and the Company’s consolidated leverage ratio was 1.81 -to-1.00 and 1.72 -to-1.00, respectively.

At both March 31, 2024 and September 30, 2023, the Company was in compliance with all covenants under the Credit Agreement.

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 assets of the Company and each of its subsidiaries.

At June 30, 2024 and September 30, 2023, there was $ 397.5 million and $ 283.8 million, respectively, of principal outstanding under the Term Loans, $ 81.9 million and $ 93.1 million, respectively, of principal outstanding under the Revolving Credit Facility, and availability of $ 309.7 million and $ 222.1 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.

The Credit Agreement also 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 June 30, 2024 and September 30, 2023, the Company’s fixed charge coverage ratio was 3.15 -to-1.00 and 2.56 -to-1.00, respectively, and the Company’s consolidated leverage ratio was 1.81 -to-1.00 and 1.72 -to-1.00, respectively.

At both June 30, 2024 and September 30, 2023, the Company was in compliance with all covenants under the Credit Agreement.

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

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

At June 30, 2024 and September 30, 2023, the aggregate notional value of these interest rate swap agreements was $ 300.0 million, and the fair value was $ 20.5 million and $ 26.9 million, respectively, which is included within “Other assets” on the Company’s Consolidated Balance Sheets.

Note 9 - Equity

7 unchanged sentences

Treasury Stock

During the six months ended March 31, 2024, the Company received a total of 33,772 shares of Class A common stock from employees for reimbursement of income taxes paid by the Company on behalf of these employees related to the vesting of restricted stock awards and 524 shares of Class A common stock through forfeitures of restricted stock awards by terminated employees.

During the nine months ended June 30, 2024, the Company received a total of 33,772 shares of Class A common stock from employees for reimbursement of income taxes paid by the Company on behalf of these employees related to the vesting of restricted stock awards and 2,758 shares of Class A common stock through forfeitures of restricted stock awards by terminated employees.

On April 12, 2024, the Company's Board of Directors authorized a stock repurchase program under which up to $ 40.0 million is available to purchase shares of the Company's outstanding Class A common stock through September 30, 2025.

Shares of the Company’s 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 Company’s 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 Company’s Class A common stock, capital allocation alternatives, general market and economic conditions and other corporate considerations.

During the three and nine months

ended June 30, 2024, the Company purchased 93,408 shares of Class A common stock for aggregate consideration of approximately $ 5.3 million through open market transactions.

Restricted Stock Awards

During the six months ended March 31, 2024, the Company awarded a total of 80,113 restricted shares of Class A common stock to certain directors, officers and employees of the Company under the Construction Partners, Inc.

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

During the nine months ended June 30, 2024, the Company awarded a total of 110,113 restricted shares of Class A common stock to certain directors, officers and employees of the Company under the Construction Partners, Inc.

2018 Equity Incentive Plan, as amended (the “Equity Incentive Plan”).

Performance Stock Units

During the six months ended March 31, 2024, the Company issued a total of 55,358 shares of Class A common stock in settlement of vested performance stock units ("PSUs") under the Equity Incentive Plan.

During the nine months ended June 30, 2024, the Company issued a total of 55,358 shares of Class A common stock in settlement of vested performance stock units (“PSUs”) under the Equity Incentive Plan.

Additional information about these transactions is set forth in Note 13 - Share-Based Compensation.

3 unchanged sentences

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

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

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

2024 2023 2024 2023

Net income (loss) attributable to common stockholders $ ( 1,124 ) $ ( 5,481 ) $ 8,719 $ ( 3,589 )

Net income attributable to common stockholders $ 30,908 $ 21,677 $ 39,627 $ 18,088

Weighted average number of common shares outstanding, basic 51,913,124 51,827,448 51,914,508 51,826,578

Net income (loss) per common share attributable to common stockholders, basic $ ( 0.02 ) $ ( 0.11 ) $ 0.17 $ ( 0.07 )

Net income per common share attributable to common stockholders, basic $ 0.60 $ 0.42 $ 0.76 $ 0.35

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

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

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

2024 2023 2024 2023

Net income (loss) attributable to common stockholders $ ( 1,124 ) $ ( 5,481 ) $ 8,719 $ ( 3,589 )

Net income attributable to common stockholders $ 30,908 $ 21,677 $ 39,627 $ 18,088

Weighted average number of basic common shares outstanding, basic 51,913,124 51,827,448 51,914,508 51,826,578

2 unchanged sentences

Weighted average number of diluted common shares outstanding 52,654,882 52,293,846 52,572,429 52,114,438

51,938,216 51,827,365 52,523,100 51,826,143

Net income (loss) per diluted common share attributable to common stockholders $ ( 0.02 ) $ ( 0.11 ) $ 0.17 $ ( 0.07 )

Net income per diluted common share attributable to common stockholders $ 0.59 $ 0.41 $ 0.75 $ 0.35

Note 11 - Provision for Income Taxes

The Company files a consolidated United States federal income tax return and income tax returns in various states.

The Company files a consolidated U.S.

federal income tax return and income tax returns in various states.

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

The Company’s effective income tax rate for the three months ended March 31, 2024 and 2023 was 22.2 % and 21.1 %, respectively.

The Company’s effective tax rate for the six months ended March 31, 2024 and 2023 was 24.3 % and 21.1 %, respectively.

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

The Company’s effective income tax rate for the three months ended June 30, 2024 and 2023 was 24.6 % and 24.7 %, respectively.

The Company’s effective tax rate for the nine months ended June 30, 2024 and 2023 was 24.6 % and 25.4 %, respectively.

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

Note 12 - Related Parties

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

At March 31, 2024, $ 0.1 million and $ 0.2 million was reflected on the Company’s Consolidated Balance Sheets within other current assets and other assets, respectively, representing the remaining balances on this note receivable.

At June 30, 2024, $ 0.1 million and $ 0.2 million was reflected on the Company’s Consolidated Balance Sheets within other current assets and other assets, respectively, representing the remaining balances on this note receivable.

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

At March 31, 2024, $ 0.1 million and $ 0.1 million was reflected on the Company’s Consolidated Balance Sheets within other current assets and other assets, respectively, representing the remaining balances on this note receivable.

At June 30, 2024, $ 0.1 million and $ 0.1 million was reflected on the Company’s Consolidated Balance Sheets within other current assets and other assets, respectively, representing the remaining balances on this note receivable.

Remaining principal and interest payments are scheduled to be made in periodic installments during fiscal year 2024 through fiscal year 2026.

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

The obligations of the borrower entity to repay the advances were guaranteed by a separate entity owned by the same family member of the officer.

4 unchanged sentences

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.

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

Amounts outstanding under the note are reflected on the Company’s Consolidated Balance Sheets within “Other current assets” and “Other assets.”

From time to time, the Company conducts or has conducted business with the following related parties:

2 unchanged sentences

• The Company is party to a management services agreement with SunTx Capital Partners, a private equity firm based in Dallas, Texas and a member of the Company’s controlling group (“SunTx”), under which the Company pays SunTx $ 0.30 million per fiscal quarter and reimburses certain travel and other out-of-pocket expenses associated with services rendered under the management services agreement.

The following table presents revenues earned and expenses incurred by the Company during the three and six months ended March 31, 2024 and 2023, and accounts receivable and payable balances at March 31, 2024 and September 30, 2023, related to transactions with the related parties described above (in thousands):

The following table presents revenues earned and expenses incurred by the Company during the three and nine months ended June 30, 2024 and 2023, and accounts receivable and payable balances at June 30, 2024 and September 30, 2023, related to transactions with the related parties described above (in thousands):

Revenue Earned (Expense Incurred) Accounts Receivable (Payable)

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

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

2024 2023 2024 2023 2024 2023

6 unchanged sentences

SunTx ( 523 ) (2) ( 383 ) (2) ( 1,405 ) (2) ( 1,109 ) (2) — —

(1) Cost is reflected as cost of revenues on the Company’s Consolidated Statements of Comprehensive Income (Loss).

(2) Cost is reflected as general and administrative expenses on the Company’s Consolidated Statements of Comprehensive Income (Loss).

(1) Cost is reflected as cost of revenues on the Company’s Consolidated Statements of Comprehensive Income.

(2) Cost is reflected as general and administrative expenses on the Company’s Consolidated Statements of Comprehensive Income.

Note 13 - Share-Based Compensation

The following table summarizes the components of share-based compensation expense included in general and administrative expenses in the Consolidated Statements of Comprehensive Income during the three and six months ended March 31, 2024 and 2023 (unaudited, in thousands):

For the Three Months Ended March 31,

The following table summarizes the components of share-based compensation expense included in general and administrative expenses in the Consolidated Statements of Comprehensive Income during the three and nine months ended June 30, 2024 and 2023 (unaudited, in thousands):

For the Three Months Ended June 30,

Equity classified awards $ 2,893 $ 2,737

2 unchanged sentences

Total share-based compensation expense $ 4,039 $ 2,737

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Equity classified awards $ 8,232 $ 7,909

3 unchanged sentences

Restricted Stock - Equity Classified Awards

During the six months ended March 31, 2024, the Company awarded a total of 80,113 restricted shares of Class A common stock to certain members of Company management and consultants under the Equity Incentive Plan.

During the nine months ended June 30, 2024, the Company awarded a total of 110,113 restricted shares of Class A common stock to certain members of Company management and consultants under the Equity Incentive Plan.

The grants are classified as equity awards.

The aggregate grant date fair value of these restricted stock awards was $ 5.0 million.

During the three and six months ended March 31, 2024, the Company recorded compensation expense in connection with these and prior restricted stock grants in the amount of $ 2.0 million and $ 4.4 million, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income (Loss).

At March 31, 2024, there was approximately $ 8.9 million of unrecognized compensation expense related to these awards, which will be recognized over a remaining weighted-average period of 2.6 years.

During the three and nine months ended June 30, 2024, the Company recorded compensation expense in connection with these and prior restricted stock grants in the amount of $ 2.2 million and $ 6.4 million, respectively, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income.

At June 30, 2024, there was approximately $ 8.2 million of unrecognized compensation expense related to these awards, which will be recognized over a remaining weighted-average period of 2.4 years.

Performance Stock Units - Equity Classified Awards

3 unchanged sentences

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 six months ended March 31, 2024, the Company issued 55,358 shares of Class A common stock as a result of the vesting of PSUs granted to certain members of Company management on December 29, 2021.

During the six months ended March 31, 2024, the Company awarded PSUs representing a target of 83,044 shares and forecasted vesting of 62,283 shares of Class A common stock to certain members of Company management.

During the nine months ended June 30, 2024, the Company issued 55,358 shares of Class A common stock as a result of the vesting of PSUs granted to certain members of Company management on December 29, 2021.

During the nine months ended June 30, 2024, the Company awarded PSUs representing a target of 113,044 shares and forecasted vesting of 84,783 shares of Class A common stock to certain members of Company management.

The grants are classified as equity awards.

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

During the three and six months ended March 31, 2024, the Company recorded compensation expense in connection with these type awards in the amount of $ 0.6 million and $ 1.0 million, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income (Loss).

At March 31, 2024, there was approximately $ 4.1 million of unrecognized compensation expense related to these awards, which will be recognized over a remaining weighted-average period of 2.3 years.

During the three and nine months ended June 30, 2024, the Company recorded compensation expense in connection with this type of award in the amount of $ 0.7 million and $ 1.7 million, respectively, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income.

At June 30, 2024, there was approximately $ 4.5 million of unrecognized compensation expense related to these awards, which will be recognized over a remaining weighted-average period of 2.4 years.

Cash-Settled Restricted Stock Units - Liability Classified Awards

During the six months ended March 31, 2024, the Company granted 114,264 of cash-settled restricted stock units ("RSUs") to employees of the Company under the Equity Incentive Plan.

During the nine months ended June 30, 2024, the Company granted 114,264 of cash-settled restricted stock units (“RSUs”) to employees of the Company under the Equity Incentive Plan.

The aggregate grant date fair value of these awards was $ 6.0 million.

Compensation expense associated with these awards for the three and six months ended March 31, 2024 was $ 0.8 million and $ 0.9 million, respectively, and is included in general and administrative expenses in the Consolidated Statements of Comprehensive Income (Loss).

As of March 31, 2024 and September 30, 2023, the liability for cash-settled RSUs was $ 0.9 million and $ 0.0 million and is included in other long-term liabilities.

At March 31, 2024, there was approximately $ 4.2 million of unrecognized compensation expense related to these awards, which will be recognized over a remaining weighted-average period of 3.5 years.

Compensation expense associated with these awards for the three and nine months ended June 30, 2024 was $ 1.1 million and $ 2.0 million, respectively, which is reflected as general and administrative expenses in the Consolidated Statements of Comprehensive Income.

As of June 30, 2024 and September 30, 2023, the liability for cash-settled RSUs was $ 2.0 million and $ 0.0 million , respectively, and is included in other long-term liabilities.

At June 30, 2024, there was approximately $ 4.0 million of unrecognized compensation expense related to these awards, which will be recognized over a remaining weighted-average period of 3.3 years.

The grant date fair value of these awards is based on the price of the Company’s Class A common stock and the number of RSUs awarded on the date of grant.

9 unchanged sentences

Since that date, the Company has purchased 37,809 shares under the ESPP.

Compensation expense associated with the ESPP for the three and six months ended March 31, 2024 was $ 0.2 million and $ 0.4 million, respectively, and is included in general and administrative expenses in the Consolidated Statements of Comprehensive Income (Loss).

Compensation expense associated with the ESPP for the three and nine months ended June 30, 2024 was $ 0.1 million and $ 0.4 million, respectively, and is included in general and administrative expenses in the Consolidated Statements of Comprehensive Income.

Note 14 - Leases

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

As of March 31, 2024, operating leases under ASC Topic 842, Leases (“Topic 842”) were included in (i) operating lease right-of use assets, (ii) current portion of operating lease liabilities and (iii) operating lease liabilities, net of current portion on the Company’s Consolidated Balance Sheets in the amounts of $ 26.7 million, $ 5.6 million and $ 21.7 million , respectively.

As of March 31, 2024, the Company did not have any lease contracts that had not yet commenced but had created significant rights and obligations.

As of June 30, 2024, operating leases under ASC Topic 842, Leases (“Topic 842”) were included in (i) “Operating lease right-of use assets,” (ii) “Current portion of operating lease liabilities” and (iii) “Operating lease liabilities, net of current portion” on the Company’s Consolidated Balance Sheets in the amounts of $ 33.3 million, $ 7.3 million and $ 26.8 million, respectively.

As of June 30, 2024, the Company did not have any lease contracts that had not yet commenced but had created significant rights and obligations.

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

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Operating lease cost $ 2,080 $ 817

1 unchanged sentence

Total lease expense $ 8,269 $ 6,368

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Operating lease cost $ 4,454 $ 2,331

4 unchanged sentences

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

As of March 31, 2024, the weighted-average remaining term of the Company’s leases was 5.9 years , and the weighted-average discount rate was 5.09 % .

As of March 31, 2024, the lease liability was equal to the present value of the remaining lease payments,

discounted using the incremental borrowing rate on the Company’s secured debt using a single maturity discount rate, as such rate is not materially different from the discount rate applied to each of the leases in the portfolio.

The following table summarizes the Company’s undiscounted lease liabilities outstanding as of March 31, 2024 (unaudited, in thousands):

As of June 30, 2024, the weighted-average remaining term of the Company’s leases was 5.3 years, and the weighted-average discount rate was 5.92 %.

As of June 30, 2024, the lease liability was equal to the present value of the remaining lease payments, discounted using the incremental borrowing rate on the Company’s secured debt using a single maturity discount rate, as such rate is not materially different from the discount rate applied to each of the leases in the portfolio.

The following table summarizes the Company’s undiscounted lease liabilities outstanding as of June 30, 2024 (unaudited, in thousands):

Fiscal Year Amount

12 unchanged sentences

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

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

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

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

12 unchanged sentences

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

The following table represents the approximate amount of realized and unrealized gains (losses) and changes in fair value recognized in earnings on commodity derivative contracts for the three and six months ended March 31, 2024 and 2023 and the fair value of these derivatives as of March 31, 2024 and September 30, 2023 (in thousands):

For the Three Months Ended March 31,

The following table represents the approximate amount of realized and unrealized gains (losses) and changes in fair value recognized in earnings on commodity derivative contracts for the three and nine months ended June 30, 2024 and 2023 and the fair value of these derivatives as of June 30, 2024 and September 30, 2023 (in thousands):

For the Three Months Ended June 30,

(unaudited) (unaudited)

4 unchanged sentences

Total $ 2,635 $ 10 $ 2,645 $ 1,407 $ 878 $ 2,285

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

(unaudited) (unaudited)

4 unchanged sentences

Total $ 7,858 $ ( 184 ) $ 7,674 $ 3,692 $ ( 1,408 ) $ 2,284

March 31, 2024 September 30, 2023

June 30, 2024 September 30, 2023

Balance Sheet Classification (unaudited)

4 unchanged sentences

Net unrealized gain position $ 20,452 $ 27,093

(1) Includes designated cash flow hedge of $ 21.0 million and $ 26.9 million as of March 31, 2024 and September 30, 2023, respectively.

(1) Includes designated cash flow hedge of $ 20.5 million and $ 26.9 million as of June 30, 2024 and September 30, 2023, respectively.

Note 16 - Fair Value Measurements

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2024 and September 30, 2023 under ASC 820, Fair Value Measurements (in thousands):

March 31, 2024 September 30, 2023

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and September 30, 2023 under ASC 820, Fair Value Measurements (in thousands):

June 30, 2024 September 30, 2023

Level 2 Level 2

16 unchanged sentences

Letters of Credit

Under the Revolving Credit Facility, the Company had a total capacity of $ 325.0 million at March 31, 2024 that may be used for a combination of cash borrowings and letter of credit issuances.

At March 31, 2024, the Company had aggregate letters of credit outstanding in the amount of $ 8.2 million, primarily related to certain insurance policies as described in Note 2 - Significant Accounting Policies.

Under the Revolving Credit Facility, the Company had a total capacity of $ 400.0 million at June 30, 2024 that may be used for a combination of cash borrowings and letter of credit issuances.

At June 30, 2024, the Company had aggregate letters of credit outstanding in the amount of $ 8.5 million, primarily related to certain insurance policies as described in Note 2 - Significant Accounting Policies.

Purchase Commitments

As of March 31, 2024, the Company had unconditional purchase commitments for diesel fuel and natural gas in the normal course of business in the aggregate amount of $ 2.4 million.

As of June 30, 2024, the Company had unconditional purchase commitments for diesel fuel and natural gas in the normal course of business in the aggregate amount of $ 2.9 million.

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

As of March 31, 2024, the Company’s purchase commitments for the remainder of fiscal 2024 and in 2025 were as follows (unaudited, in thousands):

As of June 30, 2024, the Company’s purchase commitments for the remainder of fiscal 2024 and for 2025 and 2026 were as follows (unaudited, in thousands):

Fiscal Year Amount

6 unchanged sentences

however, certain agreements have minimum annual payments.

The Company had commitments in the form of minimum royalties as of March 31, 2024 in the amount of $ 2.5 million, due as follows (unaudited, in thousands):

The Company had commitments in the form of minimum royalties as of June 30, 2024 in the amount of $ 2.4 million, due as follows (unaudited, in thousands):

Fiscal Year Amount

2 unchanged sentences

Total $ 2,379

Royalty expense recorded in cost of revenue was $ 0.4 million for each of three months ended March 31, 2024 and 2023, and $ 0.8 million for each of the six months ended March 31, 2024 and 2023.

Royalty expense recorded in cost of revenue was $ 0.5 million and $ 0.4 million for the three months ended June 30, 2024 and 2023, and $ 1.3 million and $ 1.2 million for the nine months ended June 30, 2024 and 2023.

Note 18 - Restricted Investments

The following is a summary of the Company’s debt securities as of March 31, 2024 and September 30, 2023 (in thousands):

March 31, 2024

The following is a summary of the Company’s debt securities as of June 30, 2024 and September 30, 2023 (in thousands):

June 30, 2024

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

11 unchanged sentences

Total $ 15,926 $ — $ 847 $ 15,079

The amortized cost and fair value of debt securities classified as available for sale by contractual maturity, as of March 31, 2024, are as follows (unaudited, in thousands):

The amortized cost and fair value of debt securities classified as available for sale by contractual maturity, as of June 30, 2024, are as follows (unaudited, in thousands):

Amortized Cost Fair Value

4 unchanged sentences

Note 19 - Other Comprehensive Income (Loss)

Comprehensive income (loss) comprises two subsets:

net income (loss) and OCI.

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

Comprehensive income comprises two subsets:

net income and OCI.

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

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

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

Amounts in accumulated other comprehensive income (“AOCI”), net of tax, at March 31, 2024 and September 30, 2023, were as follows (in thousands):

AOCI March 31, 2024 (unaudited) September 30, 2023

Amounts in accumulated other comprehensive income (“AOCI”), net of tax, at June 30, 2024 and September 30, 2023, were as follows (in thousands):

AOCI June 30, 2024 (unaudited) September 30, 2023

Interest rate swap contract, net of blend and extend arrangement $ 18,763 $ 25,533

6 unchanged sentences

Net OCI changes ( 4,887 )

Balance at March 31, 2024 (unaudited) $ 14,381

Balance at June 30, 2024 (unaudited) $ 13,807

AOCI Interest Rate Hedge

1 unchanged sentence

Net OCI changes ( 637 )

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

Balance at June 30, 2023 (unaudited) $ 16,983

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

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Interest expense (benefit) $ ( 2,635 ) $ ( 2,377 )

2 unchanged sentences

Total reclassifications from AOCI to earnings $ ( 1,977 ) $ ( 1,759 )

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Interest expense (benefit) $ ( 7,919 ) $ ( 5,719 )

2 unchanged sentences

Total reclassifications from AOCI to earnings $ ( 5,913 ) $ ( 4,236 )

Note 20 - Subsequent Events

Note 20 - Subsequent Event

Georgia Acquisition

On May 1, 2024, a subsidiary of the Company acquired certain assets of Sunbelt Asphalt Surfaces, Inc.

(“Sunbelt”), an asphalt paving company headquartered in Auburn, Georgia, for $ 28.6 million.

The transaction added an HMA plant and a greenfield plant site in northeastern Georgia.

Issuance of Equity Awards

In connection with the Sunbelt acquisition, the Company issued awards under the Equity Incentive Plan to certain key former employees of Sunbelt who became employees of the acquiring Company subsidiary consisting of (i) 30,000 shares of restricted Class A common stock having an aggregate grant date fair value of $ 1.5 million and (ii) performance stock awards representing a target of 30,000 shares of Class A common stock having an aggregate grant date fair value of $ 1.5 million.

On August 1, 2024, a subsidiary of the Company acquired substantially all of the assets of Robinson Paving Company, an asphalt paving company headquartered in Columbus, Georgia, for approximately $ 60.3 million.

The transaction added three HMA plants and related crews and equipment located in Columbus, Georgia and the surrounding area.

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

What changed 10-Q

Item 1. Financial Statements