What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-09 compared with 2024-05-10 · 101 added, 91 removed, 174 unchanged (52% of the section changed)

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

Explanations of these non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures are included in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Investors should not consider non-GAAP financial measures in isolation or as substitutes for financial information presented in compliance with GAAP.

Investors should not consider non-GAAP financial measures in isolation or as substitutes for financial information presented in compliance with GAAP.

We are a civil infrastructure company that specializes in the building and maintenance of transportation networks.

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Our public projects are funded by federal, state and local governments and include roads, highways, bridges, airports and other forms of infrastructure.

Public transportation infrastructure projects historically have been a relatively stable portion of state and federal budgets and represent a significant share of the United States construction market.

Public transportation infrastructure projects historically have been a relatively stable portion of state and federal budgets and represent a significant share of the U.S.

construction market.

Federal funds are allocated on a state-by-state basis, and each state is required to match a portion of the federal funds that it receives.

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Contract Backlog

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

At June 30, 2024, our contract backlog was $1.9 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 $1.4 billion at March 31, 2024.

Backlog of uncompleted work on contracts under which work was either in progress or had not yet begun was $1.5 billion at June 30, 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 $0.4 billion at March 31, 2024.

Low bid/no contract backlog was $0.4 billion at June 30, 2024.

Recent Developments

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.

Business Acquisitions

During the three months ended June 30, 2024, we completed two acquisitions, expanding our operations in Georgia and North Carolina.

As a result of these acquisitions, we added two asphalt plants, a greenfield asphalt plant site, 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.

Stock Repurchase Plan

On April 12, 2024, 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 our 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 us 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 our 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 our Class A common stock, capital allocation alternatives, general market and economic conditions and other corporate considerations.

How We Assess Performance of Our Business

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Interest Expense, Net

Interest expense, net primarily represents interest incurred on our long-term debt, such as the Term Loan and the Revolving Credit Facility, and amortization of deferred debt issuance costs.

Interest expense, net primarily represents interest incurred on our long-term debt, such as the Term Loans and the Revolving Credit Facility, and amortization of deferred debt issuance costs.

These amounts are partially offset by interest income earned on short-term investments of cash balances in excess of our current operating needs.

Other Key Performance Indicators - Adjusted EBITDA and Adjusted EBITDA Margin

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 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 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 (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,

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 June 30, For the Nine Months Ended June 30,

2024 2023 (1)

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

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

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

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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 and six months ended March 31, 2023 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 nine months ended June 30, 2023 to conform to the current definition.

Results of Operations

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):

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

The following table sets forth selected financial data for the three months ended June 30, 2024 and 2023 (unaudited, in thousands, except percentages):

Change From the Three Months Ended

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

For the Three Months Ended June 30, June 30, 2023

to the Three Months Ended

2024 2023 March 31, 2024

2024 2023 June 30, 2024

Revenues Dollars % of

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Gain on sale of property, plant and equipment 1,093 0.2 % 1,499 0.4 % (406) (27.1) %

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

Operating income 45,657 8.8 % 33,340 7.9 % 12,317 36.9 %

Interest expense, net (4,673) (0.9) % (5,039) (1.2) % 366 (7.3) %

Other income 32 — % 493 0.1 % (461) (93.5) %

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

Income before provision for income taxes 41,016 7.9 % 28,794 6.8 % 12,222 42.4 %

Provision for income taxes 10,108 1.9 % 7,117 1.7 % 2,991 42.0 %

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

Net income $ 30,908 6.0 % $ 21,677 5.1 % $ 9,231 42.6 %

Adjusted EBITDA $ 73,235 14.1 % $ 56,106 13.3 % $ 17,129 30.5 %

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.

Revenues for the three months ended June 30, 2024 increased $95.9 million, or 22.7%, to $517.8 million from $421.9 million for the three months ended June 30, 2023.

The increase included $40.9 million of revenues attributable to acquisitions subsequent to June 30, 2023, and an increase of approximately $55.0 million of revenues in our existing markets from contract work and sales of HMA and aggregates to third parties.

The 13.0% 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.

Gross profit for the three months ended June 30, 2024 increased $19.4 million, or 30.3%, to $83.5 million from $64.1 million for the three months ended June 30, 2023.

The increase in gross profit was primarily the result of a 22.7% increase in revenues for the three months ended June 30, 2024 compared to the three months ended June 30, 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.

General and administrative expenses for the three months ended June 30, 2024 increased $6.7 million, or 20.8%, to $38.9 million from $32.2 million for the three months ended June 30, 2023.

The increase was the result of (i) a $1.3 million increase in share-based compensation expense, (ii) a $2.6 million increase attributable to general and administrative expenses associated with the operations of businesses acquired subsequent to June 30, 2023, (iii) a $1.3 million increase in management personnel payroll and benefits, and (iv) a $1.5 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.

Gain on sale of property, plant and equipment for the three months ended June 30, 2024 decreased $0.4 million, or 27.1%, to $1.1 million from $1.5 million for the three months ended June 30, 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.

Interest expense, net for the three months ended June 30, 2024 decreased $0.3 million, or 7.3%, to $4.7 million compared to $5.0 million for the three months ended June 30, 2023.

The decrease in interest expense, net was primarily due to an increase in interest income from an overnight sweep program established in fiscal 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 June 30, 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.

Our effective tax rate decreased to 24.6% for the three months ended June 30, 2024, from 24.7% for the three months ended June 30, 2023.

Our lower effective tax rate during the three months ended June 30, 2024 was due to differences in state tax rates at our operating subsidiaries.

Net income increased $9.2 million to $30.9 million for the three months ended June 30, 2024, compared to $21.7 million for the three months ended June 30, 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 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.

Adjusted EBITDA and Adjusted EBITDA Margin were $73.2 million and 14.1%, respectively, for the three months ended June 30, 2024, compared to $56.1 million and 13.3%, respectively, for the three months ended June 30, 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

Nine Months Ended June 30, 2024 Compared to Nine Months Ended June 30, 2023

The following table sets forth selected financial data for the nine months ended June 30, 2024 and 2023 (unaudited, in thousands, except percentages):

Change From the Nine Months Ended

For the Nine Months Ended June 30, June 30, 2023

to the Nine Months Ended

2024 2023 June 30, 2024

Revenues Dollars % of

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Other income 47 — % 925 0.1 % (878) (94.9) %

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

Income before provision for income taxes 52,532 4.1 % 24,241 2.2 % 28,291 116.7 %

Provision for income taxes 12,905 1.0 % 6,153 0.6 % 6,752 109.7 %

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

Net income $ 39,627 3.1 % $ 18,088 1.6 % $ 21,539 119.1 %

Adjusted EBITDA $ 143,573 11.2 % $ 103,720 9.5 % $ 39,853 38.4 %

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.

Revenues for the nine months ended June 30, 2024 increased $197.2 million, or 18.1%, to $1.3 billion from $1.1 billion for the nine months ended June 30, 2023.

The increase included $95.6 million of revenues attributable to acquisitions completed subsequent to June 30, 2023 and $101.6 million of revenues in our existing markets from contract work and sales of HMA and aggregates to third parties.

The 9.3% increase in revenues in our existing markets compared to the prior year period was due to strong demand in both public and private work.

Gross Profit.

Gross profit for the six months ended March 31, 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.

Gross profit for the nine months ended June 30, 2024 increased $53.4 million, or 44.1%, to $174.2 million from $120.8 million for the nine months ended June 30, 2023.

The increase in gross profit was primarily the result of a 18.1% increase in revenues for the nine months ended June 30, 2024 compared to the nine months ended June 30, 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 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.

General and administrative expenses for the nine months ended June 30, 2024 increased $17.7 million, or 18.9%, to $111.6 million from $93.9 million for the nine months ended June 30, 2023.

The increase was primarily the result of (i) a $2.7 million increase in share-based compensation expense, (ii) a $6.2 million increase attributable to general and administrative expenses associated with the operations of businesses acquired subsequent to June 30, 2023, (iii) a $5.1 million increase in management personnel payroll and benefits, and (iv) a $3.7 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 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.

Gain on sale of property, plant and equipment for the nine months ended June 30, 2024 decreased $1.8 million, or 38.7%, to $3.0 million from $4.8 million for the nine months ended June 30, 2023.

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

Gain on Facility Exchange .

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.

There was no gain on facility exchange for the nine months ended June 30, 2024 compared to a gain of $5.4 million for the nine months ended June 30, 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 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.

Interest expense, net for the nine months ended June 30, 2024 decreased $0.8 million, or 5.9%, to $13.0 million compared to $13.8 million for the nine months ended June 30, 2023.

The decrease in interest expense, net was primarily due to an increase in interest income from an overnight sweep program established in fiscal 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 nine months ended June 30, 2024 compared to the corresponding period in 2023.

Provision for Income Taxes.

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.

Our effective tax rate decreased to 24.6% for the nine months ended June 30, 2024, from 25.4% for the nine months ended June 30, 2023.

Our higher effective tax rate during the nine months ended June 30, 2023 was due to differences in state tax rates at our operating subsidiaries.

Net income increased $21.5 million to $39.6 million for the nine months ended June 30, 2024, compared to $18.1 million for the nine months ended June 30, 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 gain on the facility exchange and 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 $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.

Adjusted EBITDA and Adjusted EBITDA Margin were $143.6 million and 11.2%, respectively, for the nine months ended June 30, 2024, compared to $103.7 million and 9.5%, respectively, for the nine months ended June 30, 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 gain on the facility exchange and 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”.

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

For the Six Months Ended March 31,

For the Nine Months Ended June 30,

Net cash provided by operating activities, net of acquisitions $ 113,181 $ 94,542

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Operating Activities

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:

During the nine months ended June 30, 2024, cash provided by operating activities, net of business acquisitions, was $113.2 million, primarily as a result of:

• net income of $39.6 million, including $67.5 million of depreciation, depletion, accretion and amortization, $10.2 million of share-based compensation expense and $3.0 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;

• an increase in contracts receivable including retainage, net of $11.3 million due to normal fluctuations resulting from the timing of processing transactions in our accounts receivable cycle;

• an increase in inventories of $17.0 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 $24.5 million due to the timing of processing transactions in our accounts payable cycle;

• an increase in accounts payable and accrued expenses and other current liabilities of $6.0 million due to the timing of processing transactions in our accounts payable cycle;

• a net increase in the difference between costs and estimated earnings in excess of billings on uncompleted contracts and billings in excess of costs and estimated earnings on uncompleted contracts of $22.8 million due to the timing of performing and closing projects.

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;

During the nine months ended June 30, 2023, cash provided by operating activities, net of business acquisitions, was $94.5 million, primarily as a result of:

• net income of $18.1 million, including $57.8 million of depreciation, depletion, accretion and amortization of long-lived assets, unrealized losses on derivative instruments of $1.4 million, gain on sale of property, plant and equipment of $4.8 million, gain on facility exchange of $5.4 million and share-based compensation expense of $7.9 million;

• a decrease in contracts receivable including retainage, net of $22.8 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 prepaid expenses and other current assets of $3.2 million primarily due to the timing of payments under our insurance policies and other expenses;

• an increase in inventories of $12.0 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 $9.2 million due to the timing of processing transactions in our accounts payable cycle;

• 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.

• a net increase of $10.6 million in the difference between billings in excess of costs and estimated earnings on uncompleted contracts and costs and estimated earnings in excess of billings on uncompleted contracts and due to the timing of performing and closing projects.

Investing Activities

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.

During the nine months ended June 30, 2024, cash used in investing activities was $199.1 million, of which $135.2 million related to acquisitions completed in the period, $70.4 million was invested in property, plant and equipment and $4.4 million was invested in restricted investments by the Captive, partially offset by $8.0 million of proceeds from the sale of property, plant and equipment and $2.9 million of proceeds from sales, calls and maturities of restricted investments.

During the nine months ended June 30, 2023, cash used in investing activities was $118.6 million, of which $82.7 million related to acquisitions completed in the period, $79.0 million was invested in property, plant and equipment and $7.9 million was invested in restricted investments by the Captive, partially offset by $12.6 million of proceeds from the sale of property, plant and equipment, $37.0 million of proceeds from the facility exchange and $1.4 million of proceeds from sales, calls and maturities of restricted investments.

Financing Activities

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

During the nine months ended June 30, 2024, cash provided by financing activities was $95.3 million.

We received $149.4 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 $47.5 million of principal payments on long-term debt and purchase of treasury stock of $6.6 million.

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.

During the nine months ended June 30, 2023, cash provided by financing activities was $43.5 million.

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

This cash flow was partially offset by $9.4 million of principal payments on long-term debt.

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 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 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.

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

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 requires us 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, our fixed charge coverage ratio was 3.15-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.

We have entered into an interest rate swap agreement to hedge against the risk of changes in interest rates.

At June 30, 2024 and September 30, 2023, the notional value of the interest rate swap agreement was $300.0 million, and the fair value was $20.5 million and $26.9 million, respectively, which amounts are included within other assets on our 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 six months ended March 31, 2024 and 2023, our capital expenditures were approximately $55.5 million and $60.4 million, respectively.

During the nine months ended June 30, 2024 and 2023, our capital expenditures were approximately $70.4 million and $79.0 million, respectively.

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

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.

At June 30, 2024, 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.

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

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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.

During the 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.

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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In the event that we make one or more acquisitions and the amount of capital required is greater than the amount of cash on hand we have available for acquisitions at that time, we could be required to reduce the expected level of capital expenditures and/or seek additional capital.

If we seek additional capital, we may do so through borrowings under the Credit Agreement, joint ventures, asset sales, offerings of debt or equity securities or other means.

If we seek additional capital, we may do so through borrowings under the Credit Agreement or other credit facilities, joint ventures, asset sales, offerings of debt or equity securities or other means.

However, our ability to engage in any such transactions may be constrained by economic conditions and other factors outside of our control.

We cannot guarantee that additional capital will be available on acceptable terms or at all.

We cannot guarantee that additional capital will be

available on acceptable terms or at all.

If we are unable to obtain the funds we need, we may not be able to complete acquisitions that may be favorable to us or finance the capital expenditures necessary to conduct our operations.

Contractual Obligations

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

The following table summarizes our significant contractual obligations outstanding as of June 30, 2024 (unaudited, in thousands):

Payments Due by Fiscal Year

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Off-Balance Sheet Arrangements

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.

As of June 30, 2024, we had aggregate letters of credit outstanding in the amount of $8.5 million, future purchase commitments of diesel fuel and natural gas of $2.7 million and $0.2 million, respectively, and $2.4 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