What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-11-25 compared with 2023-11-29 · 261 added, 177 removed, 1122 unchanged (28% of the section changed)

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

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

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

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

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

As described in Note 6 to the financial statements, the Company has recognized $2,496,230,000 of costs and estimated earnings to date on uncompleted contracts at September 30, 2024.

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

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

Recognition of revenue under uncompleted construction contracts requires significant judgment by management, including measuring progress towards completion of the contract by estimating total costs expected to be incurred to complete a contract.

We have identified the revenue recognized under long-term construction contracts that were uncompleted at September 30, 2023, as a critical audit matter because of the significant assumptions management makes in determining the amount of revenue to recognize prior to completion of a contract.

Auditing management’s judgments related to measuring progress towards completion of the Company’s contracts through estimating total costs expected to be incurred to complete the contracts involved a high degree of auditor judgment and increased audit effort.

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

Recognition of revenue under uncompleted long-term construction contracts requires significant judgment by management, including measuring progress towards completion of the contract by estimating total costs expected to be incurred to complete the performance obligation of a contract.

We have identified the revenue recognized under long-term construction contracts that were uncompleted at September 30, 2024 as a critical audit matter because of the significant assumptions management makes in determining the amount of revenue to recognize prior to completion of the performance obligation of a contract.

Auditing management’s judgments related to measuring progress towards completion of the Company’s long-term construction contracts through estimating total costs expected to be incurred to complete the performance obligation of the long-term contracts involved a high degree of auditor judgment and increased audit effort.

Our audit procedures related to revenue recognized under uncompleted long-term construction contracts included the following, among others:

• We obtained an understanding of the relevant controls related to revenue recognized under long-term construction contracts and tested such controls for design and operating effectiveness, including management’s controls over the estimation of total contract costs to be incurred in order to complete uncompleted contracts.

• We obtained an understanding of the relevant controls related to revenue recognized under long-term construction contracts and tested such controls for design and implementation, as well as operating effectiveness, including management’s controls over the estimation of total contract costs to be incurred in order to complete the performance obligation of uncompleted contracts.

• We selected a sample of long-term construction contracts, and we performed the following:

– Compared the current year costs incurred to prior year estimates of costs to complete, which involved comparing projects completed during the fiscal year with the estimates made as of the previous balance sheet date to evaluate management’s ability to accurately estimate costs to complete on its long-term construction contracts.

– Analyzed the estimated gross margins for uncompleted contracts by comparing the Company’s three-year historical average gross margin stratified by customer type to the estimated margin for uncompleted contracts at fiscal year-end.

– Inquired with individuals outside of the accounting function, including project management teams and individuals responsible for oversight and performance of the contracts, to obtain corroborating evidence regarding estimates of costs to complete and estimated gross margins on uncompleted contracts.

• Compared the costs incurred during the month immediately subsequent to the fiscal year end to costs and estimated earnings to date on uncompleted contracts at September 30, 2023, and on a sample basis, inquired with individuals responsible for oversight and performance of the contracts in order to obtain corroborating evidence regarding estimated earnings on uncompleted contracts.

◦ Compared the current year costs incurred to prior year estimates of costs to complete, which involved comparing projects completed during the fiscal year with the estimates made as of the previous balance sheet date to evaluate management’s ability to accurately estimate costs to complete the performance obligation of its long-term construction contracts.

◦ Analyzed the estimated cost to complete and gross margins for uncompleted contracts by comparing the Company’s three-year historical average gross margins by customer type to the estimated margin for uncompleted contracts at September 30, 2024.

◦ Inquired with individuals outside of the accounting function, including project management teams and individuals responsible for oversight and satisfaction of the performance obligation, to obtain corroborating evidence regarding estimates of costs to complete and estimated gross margins on uncompleted contracts.

• Compared the costs and estimated earnings during the month immediately subsequent to the fiscal year end to costs and estimated earnings to date on uncompleted contracts at September 30, 2024,and, on a sample basis, inquired with individuals responsible for oversight and satisfaction of the performance obligation in the contracts in order to obtain corroborating evidence regarding estimated earnings on uncompleted contracts.

/s/ RSM US LLP

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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2024 and 2023, the related consolidated statements of comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended September 30, 2024, and the related notes to the consolidated financial statements, and our report dated November 25, 2024, expressed an unqualified opinion.

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

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

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

Basis for Opinion

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Interest expense, net ( 19,071 ) ( 17,346 ) ( 7,701 )

Other income 875 600 819

Other (expense) income ( 70 ) 875 600

Income before provision for income taxes and earnings from investment

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Provision for income taxes 23,161 16,403 6,915

Earnings (loss) from investment in joint venture — ( 21 ) 10

Loss from investment in joint venture ( 3 ) — ( 21 )

Net income $ 68,935 $ 49,001 $ 21,376

Other comprehensive income (loss), net of tax

Unrealized gain (loss) on interest rate swap contract, net 1,297 18,091 ( 23 )

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

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

Other comprehensive (loss) income, net of tax

Unrealized (loss) gain on interest rate swap contract, net ( 11,889 ) 1,297 18,091

Unrealized gain (loss) on restricted investments, net 697 ( 223 ) ( 448 )

Other comprehensive (loss) income, net ( 11,192 ) 1,074 17,643

Comprehensive income $ 57,743 $ 50,075 $ 39,019

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Stock Class B Common Stock

Accumulated Other Comprehensive (Loss), net Retained

Accumulated Other Comprehensive (Loss) Income, net Retained

Earnings Total

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Conversion of Class B common stock to Class A common stock 4,338,924 4 ( 4,338,924 ) ( 4 ) — — — — — —

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

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

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

Issuance of stock awards 256,167 — — — — — — — — —

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

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

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

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

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

Issuance of stock grant awards 256,167 — — — — — — — — —

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

Issuance of stock awards 210,412 — — — — — — — — —

Share-based compensation expense — — — — 10,759 — — — — 10,759

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

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Conversion of Class B common stock to Class A common stock 136,813 — ( 136,813 ) — — — — — — —

Issuance of stock grant awards 210,412 — — — — — — — — —

Equity-based compensation expense — — — — 10,759 — — — — 10,759

Issuance of stock awards 165,471 — — — — — — — — —

Share-based compensation expense — — — — 10,735 — — — — 10,735

Purchase of treasury stock — — — — — ( 11,312 ) — — — ( 11,312 )

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

Other comprehensive (loss) — — — — — — — ( 11,192 ) — ( 11,192 )

Net income — — — — — — — — 68,935 68,935

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Realized losses on restricted investments 53 30 —

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

Share-based compensation expense 14,412 10,759 8,000

Loss (earnings) from investment in joint venture 3 — 21

Distribution of earnings from investment in joint venture — — 100

Deferred income taxes 22,681 11,165 5,966

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Purchase of treasury stock ( 11,312 ) ( 139 ) ( 39 )

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

Net cash provided by (used in) financing activities 126,110 ( 264 ) 159,136

Net change in cash, cash equivalents and restricted cash 27,604 13,521 ( 21,692 )

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Property, plant and equipment financed with accounts payable $ 7,227 $ 2,459 $ 2,587

Amounts payable to sellers in business combinations $ — $ 664 $ 1,457

Non-compete agreements to seller in business combination $ — $ — $ 1,200

Amounts (receivable) payable to sellers in business combinations $ ( 153 ) $ — $ 664

See notes to consolidated financial statements.

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Construction Partners, Inc.

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

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

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.

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

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

Estimates are 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 equity-based compensation awards.

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

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The Company had restricted cash of $ 2.0 million and $ 0.8 million at September 30, 2024 and 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 such amounts shown in the Consolidated Statements of Cash Flows (unaudited, in thousands):

September 30, 2024 September 30, 2023

Cash and cash equivalents $ 74,686 $ 48,243

Restricted cash 1,998 837

Total cash, cash equivalents, and restricted cash $ 76,684 $ 49,080

Restricted Investments

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Contracts Receivable Including Retainage, Net

Contracts receivable are generally based on amounts billed and currently due from customers, amounts currently due but unbilled, and amounts retained by customers pending satisfactory completion of a project.

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.

Contracts receivable are generally based on amounts billed and currently due from customers, amounts currently due but unbilled, and amounts retained by customers.

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 contracts are near completion or fully completed.

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

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

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

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

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

additional contract costs (such as claims).

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

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The Company did not recognize any material amounts associated with claims and unapproved change orders during the periods presented.

The contract liability, “Billings in excess of costs and estimated earnings on uncompleted contracts”, represents the Company’s obligation to transfer goods or services to a customer for which the Company has been paid by the customer or for which the Company

has billed the customer under the terms of the contract.

Revenue for future services reflected in this account are recognized, and the liability is reduced, as the Company subsequently satisfies the performance obligation under the contract.

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Revenues derived from construction projects are recognized over time as the Company satisfies its performance obligations by transferring control of the asset created or enhanced by the project to the customer.

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

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

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

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All deliverables under a contract are part of a project defined by a customer and represent a series of integrated goods and services that have the same pattern of delivery to the customer and use the same measure of progress toward satisfaction of the performance obligation as the customer’s asset is created or enhanced by the Company.

The Company’s obligation is not satisfied until the entire project is complete.

Revenue recognized during a reporting period is based on the cost-to-cost input method applied to the total transaction price, including adjustments for variable consideration, such as liquidated damages, penalties or bonuses, related to the timeliness or quality of project performance.

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The majority of the Company’s public construction contracts are fixed unit price contracts.

Under fixed unit price contracts, the Company is committed to providing materials or services required by a contract at fixed unit prices (for example, dollars per ton of asphalt placed).

Under fixed unit price contracts, the Company commits to providing materials or services required by a contract at fixed unit prices (for example, dollars per ton of asphalt placed).

The Company’s private customer contracts are primarily fixed total price contracts, also known as lump sum contracts, which require that the total amount of work be performed for a single price.

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

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

As of September 30, 2024, the Company also had a Term Loan A and a Revolving Credit Facility, each as defined and described in Note 11 - Debt.

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

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Actual results may differ from these estimates using different assumptions, which could materially impact the results of an impairment assessment.

Segment Reporting and Reporting Units

As of September 30, 2024, the Company operated in Alabama, Florida, Georgia, North Carolina, South Carolina and Tennessee through its wholly-owned subsidiaries.

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

Management has determined that the Company functions as a single operating segment, and thus reports as a single reportable segment.

This determination is based on rules prescribed by GAAP applied to the manner in which management operates the Company.

In particular, management assessed the discrete financial information routinely reviewed by the Company’s chief operating decision maker (“CODM”), its Chief Executive Officer, to monitor the Company’s operating performance and support decisions regarding allocation of resources to its operations.

Specifically, performance is continuously monitored at the consolidated level and as necessary at the individual contract level to timely identify deviations from expected results.

Resource allocations are based on the capacity of the Company’s operating facilities to pursue new project opportunities, including reallocation of assets that are underutilized from time to time at a certain operating facility to another operating facility where additional resources might be required to fully meet demand.

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

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

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

Each operating subsidiary is managed by its president, who has primary responsibility for the

respective operating subsidiary.

These presidents are directly accountable to the CODM and maintain regular contact with the CODM as a team to discuss operating activities, financial results, forecasts, and operating plans for the Company’s single operating segment.

Goodwill and Other Intangible Assets

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Loan issuance costs associated with the Revolving Credit Facility are presented as a component of other assets.

Loan issuance costs incurred in connection with the Revolving Credit Facility are amortized using the straight-line method over the life of the Credit Agreement.

Loan issuance costs incurred in connection with the Revolving Credit Facility are amortized using the straight-line method over the term of the Revolving Credit Facility.

The provision for income taxes includes federal and state income taxes.

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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 in 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.

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Changes in loss assumptions caused by changes in actual experience would affect the assessment of the ultimate liability and could have an effect on the Company’s operating results and financial position.

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

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

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

Pre-production stripping costs included in property, plant and equipment were $ 0.8 million and $ 3.9 million, respectively, for the fiscal years ended September 30, 2023 and 2022.

Pre-production stripping costs included in property, plant and equipment were $ 1.7 million and $ 0.8 million, respectively, as of September 30, 2024 and 2023.

Stripping costs incurred during the production phase of a mine are variable production costs and are included in the costs of the inventory produced during the period that the stripping costs are incurred.

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Within the provisions of certain leases, there are escalations in payments over the base lease term, which have been reflected in lease expense on a straight-line basis for operating leases over the expected lease term.

A portion of the Company’s lease contracts contain the option to extend or renew.

The Company assesses these options for individual leases in determining the initial measurement of the operating lease liability.

The Company has elected not to apply the recognition requirements of Topic 842 to short-term leases (those with terms of 12 months or less) or leases to explore for or use minerals.

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OCI includes adjustments for changes in fair value of an interest rate swap contract derivative and available-for-sale restricted investments.

For additional information about comprehensive income, see Note 22 - Other Comprehensive Income.

Segment Reporting and Reporting Units

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

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

Management determined that the Company functions as a single operating segment, and thus reports as a single reportable segment.

This determination is based on rules prescribed by GAAP applied to the manner in which management operates the Company.

Specifically, performance is continuously monitored at the consolidated level and at the individual contract level to timely identify deviations from expected results.

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

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

Each platform company is managed by its president, who has primary responsibility for the respective operating company.

Collectively, these presidents are directly accountable to, and maintain regular contact with the CODM as a team to discuss operating activities, financial results, forecasts, and operating plans for the Company’s single operating segment.

For additional information about comprehensive income, see Note 22 - Other Comprehensive Income (Loss).

Business Acquisitions

The Company accounts for business combinations using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations (“Topic 805”), which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values, other than leases acquired in connection with business combinations, which are recorded based on Topic 842, and contract assets and liabilities acquired in connection with business combinations, which are recorded based on ASC Topic 606, Revenue from Contracts with Customers .

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

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Recently Adopted Accounting Pronouncements

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

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

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

Accounting Standards Pending Adoption

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures,” which requires enhanced disclosures related to significant segment expenses and a description of how the chief operating decision maker utilizes segment operating profit or loss to assess segment performance.

The new standard is effective for fiscal years beginning after December 15, 2023 and is to be applied retrospectively.

The Company does not expect ASU 2023-07 to have a material impact on the Company’s financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes - Improvements to Income Tax Disclosures,” which requires disclosure of specific categories and disaggregation of information in the rate reconciliation table and expands disclosures related to income taxes paid.

The new standard is effective for fiscal years beginning after December 15, 2024 and is to be applied prospectively.

The Company does not expect ASU 2023-09 to have a material impact on the Company's financial statements and disclosures.

Note 4 - Business Acquisitions

During the fiscal year ended September 30, 2024, the Company and its subsidiaries made the following business acquisitions:

Tennessee Acquisition

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

In connection with this transaction, the Company disposed of a quarry in North Carolina, resulting in total cash proceeds of $ 37.0 million and a gain on the facility exchange of $ 5.4 million.

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

North Carolina Acquisition

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

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

Upstate South Carolina Acquisition (Provisional)

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

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

Alabama Acquisition (Provisional)

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

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

Coastal South Carolina Acquisition

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

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

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

On October 2, 2023, the Company acquired substantially all of the assets of Hubbard Paving & Grading, Inc., an asphalt and paving company headquartered in Walhalla, South Carolina, for $ 3.0 million.

This transaction added an HMA plant and expanded the Company’s service capabilities in the Upstate region of South Carolina.

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 of the issued and outstanding membership interests of SJ&L General Contractor, LLC (“SJ&L”), an HMA and sitework company headquartered in Huntsville, Alabama, for $ 57.1 million.

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

In connection with this acquisition, the Company issued awards under the 2018 Equity Incentive Plan (defined below) to a certain key former employee of SJ&L who became a consultant to the Company consisting of 22,791 shares of restricted Class A common stock having an aggregate grant date fair value of $ 1.0 million.

The Company also entered into a five-year non-compete agreement with a key former employee of SJ&L who became an employee of the Company providing for cash payments totaling $ 1.9 million, payable in ten equal payments on each six-month anniversary of the closing of the acquisition.

On January 2, 2024, the Company acquired substantially all of the assets of Littlefield Construction Company, a soil base, surface treatment and sitework company headquartered in Waycross, Georgia, for $ 6.5 million.

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.

(“Sunbelt Asphalt”), an asphalt paving company headquartered in Auburn, Georgia, for $ 29.2 million.

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

In connection with this acquisition, the Company issued awards under the 2018 Equity Incentive Plan (defined below) to certain key former employees of Sunbelt Asphalt who became employees of the Company 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 June 3, 2024, the Company acquired substantially all of the assets of Hudson Paving, Inc., an asphalt and paving company headquartered in Rockingham, North Carolina, for $ 19.1 million.

This transaction added an HMA plant and expanded the Company’s service capabilities in the Sandhills region of North Carolina.

On August 1, 2024, the Company acquired substantially all of the assets of Robinson Paving Company, headquartered in Columbus, Georgia, for $ 59.5 million.

This transaction added three HMA plants and expanded the Company’s service capabilities in Columbus, Georgia and surrounding areas.

On September 10, 2024, the Company acquired substantially all of the assets of John G.

Walton Construction Company, Inc., headquartered in Mobile, Alabama, for $ 38.9 million.

This transaction added an HMA plant and expanded the Company’s service capabilities in the greater Mobile and southwestern Alabama market area.

Combined Acquisitions During the Fiscal Year Ended September 30, 2024

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

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

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

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

Total consideration transferred for these eight acquisitions was $ 231.7 million as of September 30, 2024.

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

The amount of the purchase price exceeding the net fair value of identifiable assets acquired and liabilities assumed was recorded as goodwill in the aggregate amount of $ 71.0 million for these eight acquisitions, which is deductible for income tax purposes.

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

The results of operations attributable to these acquisitions are included in the Company’s Consolidated Statements of Comprehensive Income for the fiscal year ended September 30, 2024, from their respective acquisition dates forward.

The Company recorded certain costs to effect the acquisitions as they were incurred, which are reflected in general and administrative expenses on the Company’s Consolidated Statements of Comprehensive Income in the amounts of $ 0.3 million, $ 0.8 million, and $ 1.3 million for the fiscal years ended September 30, 2023, 2022, and 2021, respectively.

The Company records certain costs to effect acquisitions as they are incurred, which are reflected in general and administrative expenses on the Company’s Consolidated Statements of Comprehensive Income in the amounts of $ 1.5 million, $ 0.3 million, and $ 0.8 million for the fiscal years ended September 30, 2024, 2023 and 2022, respectively.

There are certain acquisitions with provisional estimates that are subject to finalization due to the recent timing of the acquisitions, status of valuations and finalization of working-capital agreements.

These estimates are subject to revision, which may result in adjustments to the values presented below.

The Company will finalize these amounts within 12 months from the respective acquisition dates.

The following table summarizes the consideration for the aforementioned acquisitions and the amounts of identified assets acquired and liabilities assumed as of September 30, 2024 (in thousands):

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

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

Acquisitions (Final) SJ&L General Contractor, LLC Acquisition (Provisional) Sunbelt Asphalt Surfaces, Inc.

Acquisition (Provisional) Hudson Paving, Inc.

Acquisition (Provisional) Robinson Paving Company Acquisition (Provisional) John G.

Walton Construction Company, Inc.

Acquisition (Provisional) Total

Contracts receivable including retainage $ — $ 16,006 $ 6,645 $ 6,222 $ 7,600 $ 4,565 $ 41,038

4 unchanged sentences

Operating lease right-of-use assets 548 157 438 — 38 — 1,181

Deferred tax assets 36 1,820 — — — — 1,856

Intangible assets 258 220 1,400 — 1,300 — 3,178

4 unchanged sentences

Operating lease liabilities ( 548 ) ( 157 ) ( 438 ) — ( 38 ) — ( 1,181 )

Other long-term liabilities ( 418 ) — — — — — ( 418 )

Total liabilities ( 1,647 ) ( 13,519 ) ( 2,574 ) ( 5,139 ) ( 5,861 ) ( 6,053 ) ( 34,793 )

Goodwill 9,304 15,857 9,268 5,396 18,600 12,529 70,954

Total cash consideration transferred 27,849 57,069 28,655 18,714 60,301 39,256 231,844

Total consideration (receivable) payable — — 516 434 ( 762 ) ( 341 ) ( 153 )

Total purchase price $ 27,849 $ 57,069 $ 29,171 $ 19,148 $ 59,539 $ 38,915 $ 231,691

The Consolidated Statements of Comprehensive Income for the fiscal year ended September 30, 2023 includes $ 86.9 million of revenue and $ 1.0 million of net income attributable to the operations of the businesses acquired during the 2023 fiscal year from their respective acquisition dates through September 30, 2023.

The following presents pro forma revenues and net income as though the acquisitions had occurred on October 1, 2020 (unaudited, in thousands):

The fair value of the financial assets acquired includes contracts receivables including retainage with an estimated fair value $ 41.0 million, which is the same amount as the gross amount due under the contracts.

There is no amount that is expected to be uncollectible.

The Consolidated Statement of Comprehensive Income for the fiscal year ended September 30, 2024 includes $ 119.2 million of revenue and $ 4.5 million of net income attributable to the operations of the businesses acquired during the 2024 fiscal year from their respective acquisition dates through September 30, 2024.

The following table presents pro forma revenues and net income as though the fiscal year 2024 acquisitions had occurred on October 1, 2022 (unaudited, in thousands):

For the Fiscal Year Ended September 30,

2023 2022 2021

Pro forma revenues $ 1,992,037 $ 1,846,235

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(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 Term Loan as if the funds borrowed to finance the purchase price were borrowed on October 1, 2020.

(c) Include interest expense under the Revolving Credit Facility, as if the funds borrowed to finance the purchase price 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 September 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 September 30, 2024.

(d) Exclude $ 0.3 million of acquisition-related expenses from the fiscal year ended September 30, 2023, as though such expenses were incurred prior to the pro forma acquisition date of October 1, 2020.

(d) Exclude acquisition-related expenses from the fiscal year ended September 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.

10 unchanged sentences

Intangible assets 5,900 5,900

Operating lease right-of-use assets 433 433

Total assets 69,779 70,200

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Accrued expenses and other current liabilities 895 1,790

Unfavorable contract liabilities 7,900 8,500

Deferred tax liabilities 282 282

Operating lease liabilities 433 433

Total liabilities 7,375 9,295

1 unchanged sentence

Total purchase price $ 91,993 $ 91,926

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

During the year ended September 30, 2024, goodwill increased by $ 1.4 million for measurement period adjustments for acquisitions completed during the fiscal year ended September 30, 2023.

Note 5 - Contracts Receivable Including Retainage, net

5 unchanged sentences

351,884 304,610 265,819

Allowance for doubtful accounts ( 906 ) ( 612 ) ( 1,926 )

Allowance for credit losses ( 1,073 ) ( 906 ) ( 612 )

Contracts receivable including retainage, net $ 350,811 $ 303,704 $ 265,207

The following is a summary of changes in the allowance for doubtful accounts balance during the fiscal years ended September 30, 2023, 2022, and 2021 (in thousands):

The following is a summary of changes in the allowance for credit losses balance during the fiscal years ended September 30, 2024, 2023, and 2022 (in thousands):

For the Fiscal Year Ended

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Balance at end of period $ 1,073 $ 906 $ 612

Retainage receivables have been billed and the Company has an unconditional right to payment, but are not due until satisfactory contract completion and acceptance by the customer.

Retainage receivables are amounts earned by the Company but held by customers until contracts are near completion or fully completed.

Note 6 - Contract Assets and Liabilities

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September 30, 2024 $ 25,966 $ ( 120,065 ) $ ( 94,099 )

As work is performed, revenue is recognized and the corresponding liability balance of billings in excess of costs and estimated earnings on uncompleted contracts is reduced.

During the years ended September 30, 2024 and 2023 and 2022, the Company recognized revenue of $ 78.9 million, $ 52.5 million and $ 33.7 million, respectively, that was included in the billings in excess of costs and estimated earnings on uncompleted contracts liability balance at September 30, 2023, 2022 and 2021, respectively.

At September 30, 2024, the Company had unsatisfied or partially unsatisfied performance obligations under construction project contracts representing approximately $ 1.48 billion in aggregate transaction price.

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

The Company expects to earn revenue as it satisfies the performance obligations under those contracts in the amount of approximately $ 1.18 billion during the fiscal year ending September 30, 2025, and approximately $ 0.30 billion thereafter.

Note 7 - Other Assets

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Depreciation, depletion and amortization expense related to property, plant and equipment for the fiscal years ended September 30, 2024, 2023 and 2022 was $ 92.6 million, $ 80.0 million and $ 68.9 million, respectively.

Mineral reserves, net of accumulated depletion, for the years ended September 30, 2023 and 2022 were $ 63.6 million and $ 87.6 million, respectively.

These amounts include $ 1.5 million and $ 2.0 million of asset retirement obligation assets, net of accumulated depletion associated with active mining operations for the years ended September 30, 2023 and 2022, respectively, and $ 0.8 million and $ 3.9 million of capitalized stripping costs, net of accumulated depletion associated with development stage mining operations for the fiscal years ended September 30, 2023 and 2022, respectively.

Mineral reserves, net of accumulated depletion, as of September 30, 2024 and 2023 were $ 62.1 million and $ 63.6 million, respectively.

These amounts include $ 1.4 million and $ 1.5 million of asset retirement obligation assets, net of accumulated depletion associated with active mining operations as of September 30, 2024 and 2023, respectively, and $ 1.7 million and $ 0.8 million of capitalized stripping costs, net of accumulated depletion associated with development stage mining operations as of September 30, 2024 and 2023, respectively.

Note 9 - Goodwill and Other Intangible Assets

2 unchanged sentences

Additions 29,589

Dispositions ( 2,383 )

Measurement period adjustments 2,599

1 unchanged sentence

Additions 70,954

Dispositions ( 2,383 )

Measurement period adjustments 1,432

1 unchanged sentence

The additions in goodwill as of September 30, 2024 compared to September 30, 2023 were attributable to $ 71.0 million for business acquisitions (see Note 4 - Business Acquisitions) completed during the fiscal year ended September 30, 2024 and an increase of $ 1.4 million for measurement period adjustments that were finalized for acquisitions completed during the fiscal year ended September 30, 2023.

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

A summary of other intangible assets at September 30, 2024 and 2023 is as follows (in thousands):

10 unchanged sentences

Total intangible assets $ 26,643 $ ( 6,094 ) $ 20,549 $ 23,465 $ ( 3,945 ) $ 19,520

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

The change in gross value of other intangible assets as of September 30, 2024 compared to September 30, 2023 is attributable to $ 3.2 million of business acquisitions (see Note 4 - Business Acquisitions) completed during the fiscal year ended September 30, 2024, and the weighted average life of the acquired intangible assets is six years .

Total amortization expense related to finite-lived intangible assets was $ 2.2 million, $ 2.4 million and $ 0.8 million for the fiscal years ended September 30, 2024, 2023 and 2022, respectively.

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Note 11 - 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.

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

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

1 unchanged sentence

Long-term debt:

Term Loan $ 283,750 $ 271,875

Term Loan A $ 392,188 $ 283,750

Revolving Credit Facility 122,850 93,100

3 unchanged sentences

Long-term debt, net of current maturities and debt issuance costs $ 486,961 $ 360,740

Since 2017, the Company and each of its subsidiaries have been parties to a credit agreement with PNC Bank, National Association (successor in interest to BBVA USA) and certain other lenders party from time to time thereto (as amended, the “Credit Agreement”).

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

The obligations of the Company and its subsidiaries under the Credit Agreement are secured by a first priority security interest in substantially all of the Company’s assets.

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” and together with the Term Loan, the “Term Loans”).

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

All outstanding advances under the Term Loans and Revolving Credit Facility are due and payable in full on June 30, 2027 (the “Maturity Date”).

The Term Loan (commencing on September 30, 2022) and the Delayed Draw Term Loan (commencing on

September 30, 2023) will amortize in quarterly installments in an amount (subject, in each case, to adjustments for prior mandatory and voluntary prepayments of principal) equal to:

(a) 1.25 % of the original principal and continuing on each of the following eleven quarter-end payment dates;

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

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

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

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 “Term Loan A / Revolver Credit Agreement”).

The Term Loan A / Revolver 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 A”) and a subsequent term loan in the principal amount of $ 125.0 million (the “Incremental Term Loan A,” and collectively, the “Term Loan A”)), (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 $ 0.8 million related to an amendment to the Term Loan A / Revolver 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 September 30, 2024 Consolidated Balance Sheets.

All outstanding advances under the Term Loan A and Revolving Credit Facility are due and payable in full on June 30, 2027 (the “Maturity Date”).

The Initial Term Loan A (commencing on September 30, 2022) and the Incremental Term Loan A (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 11 quarter-end payment dates;

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

and (c) all remaining principal on the Maturity Date.

The annual interest rates applicable to advances are 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 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.

The obligations of the Company and its subsidiaries under the Term Loan A / Revolver 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 September 30, 2024 and 2023, there was $ 392.2 million and $ 283.8 million, respectively, of principal outstanding under the Term Loan A, $ 122.9 million and $ 93.1 million, respectively, of principal outstanding under the Revolving Credit Facility, and availability of $ 268.8 million and $ 222.1 million, respectively, under the Revolving Credit Facility, including a reduction for outstanding letters of credit.

The Term Loan A / Revolver 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 Term Loan A / Revolver 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 September 30, 2024 and 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 September 30, 2023 and 2022, the Company was in compliance with all covenants under the Credit Agreement.

At both September 30, 2024 and 2023, the Company was in compliance with all covenants under the Term Loan A / Revolver 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.

2 unchanged sentences

Fiscal Year Amount

2025 $ 26,563

Total $ 515,038

13 unchanged sentences

Restricted Stock Awards

During the fiscal year ended September 30, 2023, the Company awarded a total of 210,412 restricted shares of Class A common stock to certain members of Company management under the Construction Partners, Inc.

During the fiscal year ended September 30, 2024, the Company awarded a total of 165,471 shares of Class A common stock to certain members of Company management under the Construction Partners, Inc.

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

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

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

Treasury Stock

1 unchanged sentence

The Company received another 3,349 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 fiscal year ended September 30, 2024, the Company purchased 173,741 shares of Class A common stock for aggregate consideration of approximately $ 10.0 million through open market transactions.

Note 13 - Earnings Per Share

20 unchanged sentences

to common stockholders $ 1.31 $ 0.94 $ 0.41

Note 14 - Equity-Based Compensation

Restricted Stock

Note 14 - Share-Based Compensation

The Equity Incentive Plan was initially approved by the Company’s stockholders in 2016, was amended and restated in April 2018, and was further amended in May 2019.

In connection with the 2018 amendment and restatement, the Company reserved 2,000,000 shares of Class A common stock for issuance pursuant to awards granted thereunder.

In March 2024, the Company’s stockholders approved an increase in such share reserve by an additional 1,000,000 shares.

At September 30, 2024, there were 1,241,710 shares of Class A common stock remaining available for issuance under the Equity Incentive Plan.

The Construction Partners, Inc.

2024 Restricted Stock Plan (the “Restricted Stock Plan”) was approved by the Company’s stockholders and adopted by the Company in March 2024.

At that time, the Company reserved 2,000,000 shares of Class B common stock for issuance pursuant to awards granted thereunder.

At September 30, 2024, there were 2,000,000 shares of Class B common stock remaining available for issuance under the Restricted Stock Plan.

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 fiscal years ended September 30, 2024, 2023 and 2022 (in thousands):

For the Fiscal Year Ended September 30,

2024 2023 2022

Equity classified awards $ 10,735 $ 10,759 $ 8,000

Liability classified awards 3,677 — —

Employee stock purchase plan 619 — —

Total share-based compensation expense $ 15,031 $ 10,759 $ 8,000

Restricted Stock - Equity Classified Awards

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

3 unchanged sentences

2024 2023 2022

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

Unvested shares, beginning balance 824,280 28.41 715,724 29.34 595,561 25.42

6 unchanged sentences

Unrecognized compensation expense at fiscal year-end 6,331 9,766 15,152

Weighted average recognition period remaining, in years 2.5 2.5 2.5

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

1 unchanged sentence

Total 509,171

Performance Stock Units

Performance Stock Units - Equity Classified Awards

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

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

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

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

The Company recognizes expense, net of estimated forfeitures, for PSUs based on the forecasted achievement of 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.

1 unchanged sentence

The grants are classified as equity awards.

The aggregate grant date fair value of these restricted awards was $ 2.2 million.

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

The aggregate grant date fair value of these PSU awards was $ 5.5 million.

During the fiscal years ended September 30, 2024 and 2023, the Company recorded compensation expense in connection with PSUs in the amount of $ 2.3 million and $ 2.0 million, respectively, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income.

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

At September 30, 2024, the Company forecasted 149,807 shares of Class A common stock underlying PSUs as unvested and approximately $ 3.9 million of unrecognized compensation expense related to PSU awards, which will be recognized over a remaining weighted-average period of 2.1 years.

During the fiscal year ended September 30, 2024, 55,358 shares of Class A common stock underlying PSUs were vested and issued.

Cash-Settled Restricted Stock Units - Liability Classified Awards

During the fiscal year ended September 30, 2024, the Company granted 114,264 of cash-settled restricted stock units (“RSUs”) to employees of the Company under the Equity Incentive Plan, of which 5,352 shares were forfeited by employees.

The Company elects to account for forfeitures as they occur.

The aggregate grant date fair value of these awards was $ 5.1 million and the fair value at September 30, 2024 was $ 7.6 million.

Compensation expense associated with these awards for the fiscal years ended September 30, 2024, 2023 and 2022 was $ 3.7 million, $ 0.0 million and $ 0.0 million , respectively, which is reflected as general and administrative expenses in the Consolidated Statements of Comprehensive Income.

As of September 30, 2024 and September 30, 2023, the liability for cash-settled RSUs was $ 3.7 million and $ 0.0 million , respectively, and is included in accrued expenses and other current liabilities and other long-term liabilities.

At September 30, 2024, there was approximately $ 3.9 million of unrecognized compensation expense related to these awards, which will be recognized over a remaining weighted-average period of 3 years.

The grant date fair value of cash-settled RSU 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.

The awards must be settled in cash and are accounted for as liability-type awards.

The expense is recognized over the requisite service period with remeasurement at the end of each reporting period at fair value until settlement.

The requisite service period is based on the vesting provisions of the awards, which generally occurs in four equal annual installments beginning on the date of the first fiscal year-end after the grant date.

Employee Stock Purchase Plan

The Construction Partners, Inc.

Employee Stock Purchase Plan (“ESPP”) became effective on May 13, 2021.

The ESPP is intended to provide eligible employees of the Company an opportunity to purchase shares of the Company’s Class A common stock at a discounted rate using funds withheld through payroll deductions.

The total number of shares offered under the ESPP is 1,000,000 .

The first offering period under the ESPP commenced on July 1, 2023.

Since that date, employees have purchased 47,349 shares under the ESPP.

Employer expense associated with the ESPP for the fiscal years ended September 30, 2024, 2023 and 2022 was $ 0.6 million, $ 0.0 million , and $ 0.0 million , respectively, and is included in general and administrative expenses in the Consolidated Statements of Comprehensive Income.

Note 15 - Provision for Income Taxes

1 unchanged sentence

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

The provision for income taxes for the fiscal years ended September 30, 2023, 2022 and 2021 consisted of the following (in thousands):

The provision for income taxes (benefit) for the fiscal years ended September 30, 2024, 2023 and 2022 consisted of the following (in thousands):

For the Fiscal Year Ended

13 unchanged sentences

Deferred tax assets

Allowance for bad debt $ 226 $ 150

Amortization of finite-lived intangible assets $ 1,082 $ 1,022

Federal net operating loss carryforward 4,099 —

Federal 163J carryforward 1,254 —

Federal interest limitation carryforward 6,198 1,254

State net operating loss carryforward 3,160 1,177

Employee benefits 7,959 4,695

Acquisition liabilities 796 2,127

Accrued insurance claims 536 911

Other 3,846 2,709

12 unchanged sentences

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

To the extent that management does

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

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

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

Income taxes payable have been reduced by fuel tax credits of $ 0.5 million and $ 0.3 million for the fiscal years ended September 30, 2024 and 2023, respectively.

The remaining amount of goodwill expected to be deductible for tax purposes was $ 164.9 million and $ 109.5 million at September 30, 2024 and 2023, respectively.

3 unchanged sentences

Deferred income taxes, net ( 53,852 ) ( 37,121 )

Net deferred tax assets (liabilities) $ ( 37,121 ) $ ( 26,713 )

Net deferred tax liabilities $ ( 53,852 ) $ ( 37,121 )

At September 30, 2024 and 2023, the Company had federal net operating loss carryforwards of $ 19.5 million and $ 0.0 million , respectively, and state net operating loss carryforwards of $ 65.4 million and $ 27.8 million, respectively.

30 unchanged sentences

Employer contributions charged to earnings during the fiscal years ended September 30, 2024, 2023 and 2022 were $ 7.8 million, $ 6.8 million, and $ 5.5 million, respectively.

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

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

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

Note 17 - Related Parties

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 an interest-bearing note receivable in the amount of $ 1.0 million, which approximated the net book value of the disposed entity.

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 September 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.

In connection with this transaction, the Company also received an interest-bearing 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.

In connection with this transaction, the Company also received a note 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.

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

Remaining principal and interest payments are scheduled to be made in periodic installments 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.

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As of September 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 September 30, 2023 (in thousands):

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

Fiscal Year Amount

2025 $ 11,067

Thereafter 4,617

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September 30, 2024 Level 1 Level 2 Level 3

Commodity swap contracts $ — $ 204 $ —

Interest rate swaps $ — $ 11,646 $ —

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Total Assets $ — $ 29,666 $ —

Commodity swap contracts $ — $ 20 $ —

Total Liabilities $ — $ 20 $ —

Fair Value Measurement at Reporting Date Using

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

Derivative liabilities are included within “Accrued expense and other current liabilities” and “Other long-term liabilities” on the Company’s Consolidated Balance Sheets.

Derivative liabilities are

included within “Accrued expense and other current liabilities” and “Other long-term liabilities” on the Company’s Consolidated Balance Sheets.

Debt securities primarily consist of corporate bonds and U.S.

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

The Company records all derivatives at fair value.

The Company records derivatives at fair value.

On the date the derivative contract is entered into, the Company may designate the derivative as one of the following:

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

$ 204 $ 1,032

Other assets - commodity swaps (2)

Other assets - interest rate swap (1)

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

( 20 ) ( 601 )

Other long-term liabilities - commodity swaps (2)

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

Net unrealized gain position $ 11,646 $ 27,093

(1) Represents designated cash flow hedge of $ 11.6 million and $ 26.9 million as of September 30, 2024 and 2023, respectively.

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Interest rate swap contract, net of blend and extend arrangement 9,852 25,533 23,761

Unrealized loss on available-for-sale securities ( 848 ) ( 566 ) —

Unrealized gain (loss) on available-for-sale securities 34 ( 848 ) ( 566 )

Less tax effect of other comprehensive income (loss) items ( 2,384 ) ( 5,991 ) ( 5,575 )

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2024 2023 2022

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

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

Interest (benefit) expense $ ( 10,630 ) $ ( 8,297 ) $ 468

Realized loss on restricted investments 53 30 —

Expense (benefit) from income taxes 2,558 1,998 ( 108 )

Total reclassifications from AOCI to earnings $ ( 8,019 ) $ ( 6,269 ) $ 360

Note 23 - Asset Retirement Obligations

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

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

At September 30, 2024 and 2023, the Company’s AROs were $ 2.5 million and $ 2.4 million, respectively, which are reflected as “Other long-term liabilities” on the Company’s Consolidated Balance Sheets.

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Note 24 - Investments

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

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

September 30, 2024

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Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

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

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

Corporate debt securities 5,931 — 326 5,605

Municipal government securities 1,853 — 105 1,748

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Balance at end of year $ 19,596 $ 15,297

At September 30, 2024 and 2023, these amounts are reflected as “Accrued expenses and other current liabilities” and “Other long-term liabilities” on the Company’s Consolidated Balance Sheets.

Note 26 - Condensed Financial Statements of Parent Company

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

Other long-term liabilities 1,787 —

Total long-term liabilities 178,592 106,949

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Unrealized gain (loss) on interest rate swap contract, net ( 11,889 ) 1,297 18,091

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

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

Unrealized gain (loss) on restricted investments, net 697 ( 223 ) ( 448 )

Other comprehensive income (loss) ( 11,192 ) 1,074 17,643

Comprehensive income $ 57,743 $ 50,075 $ 39,019

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Net income $ 68,935 $ 49,001 $ 21,376

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

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion, accretion and amortization 834 757 757

Gain on sale of equipment — ( 6 ) —

Loss (gain) on sale of equipment 4 — ( 6 )

Loss (gain) on derivative instruments — — ( 1,668 )

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

Share-based compensation expense 14,412 10,759 8,000

Equity in net income of subsidiaries ( 72,602 ) ( 50,899 ) ( 24,690 )

6 unchanged sentences

Other liabilities — — ( 748 )

Net cash (used in) provided by operating activities 11,175 682 ( 3,879 )

Net cash provided by operating activities 10,305 11,175 682

Cash flows from investing activities:

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Note 27 - Subsequent Events

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

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

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

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

Acquisition of Lone Star Paving

On November 1, 2024, the Company acquired all of the outstanding membership units of Asphalt Inc., LLC (doing business as Lone Star Paving) (“Lone Star Paving” and such acquisition, the “Lone Star Acquisition”), a vertically integrated asphalt manufacturing and paving company headquartered in Austin, Texas, with 10 HMA plants, four aggregate facilities, and one liquid asphalt terminal supporting its operations.

The aggregate consideration delivered at the closing of the Lone Star Acquisition consisted of (i) $ 654.2 million in cash (as adjusted pursuant to the Unit Purchase Agreement, dated as of October 20, 2024, by and among the Company, Lone Star Paving, the selling unit holders party thereto, and John J.

Wheeler, in his capacity as the selling unit holders’ representative thereunder) and (ii) 3,000,000 shares of Class A common stock having an aggregate fair market value of approximately $ 238.9 million at closing.

In addition, the Company agreed to (i) pay cash to the selling unit holders in an amount equal to the working capital remaining in Lone Star Paving at closing, as finally determined (subject to adjustments and offsets to satisfy certain indemnification obligations and any purchase price overpayments), to be paid out in quarterly installments over four quarters following the closing and (ii) purchase from the selling unit holders for $ 30.0 million in cash an entity that owns certain real property following receipt of specified operational entitlements by such entity.

The cash paid at closing was funded from the proceeds of the Term Loan B (defined below).

The transaction will be accounted for as a business combination in accordance with Topic 805.

In connection with the acquisition, the Company issued awards under the Equity Incentive Plan to certain key employees of Lone Star Paving consisting of 180,000 shares of restricted Class A common stock having an aggregate grant date fair value of approximately $ 14.2 million.

Separately, the Company paid transaction bonuses to certain officers, directors, key contractors and employees of the Company consisting of approximately $ 2.7 million in cash, 85,000 restricted shares of Class A common stockissued under the Equity Incentive Plan having an aggregate grant date fair value of approximately $ 6.3 million, and 55,000 restricted shares of Class B common stock issued under the Restricted Stock Plan having an aggregate grant date fair value of approximately $ 4.1 million.

The restricted shares of Class A common stock and Class B common stock vested in full on November 6, 2024.

Term Loan B Credit Agreement

On November 1, 2024, the Company entered into a Term Loan Credit Agreement with Bank of America, N.A., as administrative agent, BofA Securities, Inc., PNC Capital Markets LLC, Regions Capital Markets, a division of Regions Bank, and TD Securities (USA) LLC, each as joint lead arranger and joint bookrunner, and certain other lenders party thereto (the “Term Loan B Credit Agreement”).

The Term Loan B Credit Agreement provides for a senior secured first lien term loan facility in the aggregate principal amount of $ 850.0 million, which amount was fully drawn on November 1, 2024 (the “Term Loan B”).

A portion of the proceeds of the Term Loan B was used to finance the cash portion of the consideration for the Lone Star Paving acquisition, including the repayment of certain outstanding indebtedness of Lone Star Paving and its subsidiaries at the closing.

The remaining loan proceeds were or will be used (i) to repay the Company’s outstanding borrowings under the Revolving Credit Facility provided by the Term Loan A / Revolver Credit Agreement, (ii) to pay fees and expenses incurred in connection with the foregoing debt financing transactions and the Lone Star Acquisition and (iii) for working capital and other corporate purposes as permitted by the Term Loan B Credit Agreement.

The term loan matures on November 1, 2031 (the “Term Loan B Maturity Date”), and all outstanding principal amounts and accrued and unpaid interest thereon shall be due and payable on such date.

The Company must repay the term loan in equal quarterly installments, commencing with the first full fiscal quarter ending after the date of the Term Loan B Credit Agreement, in an aggregate principal amount equal to 0.25 % of the principal amount of the term loan, subject to adjustment for, among other things, any incremental term loans, with the balance payable on the Term Loan B Maturity Date.

Borrowings under the Term Loan B Credit Agreement bear interest, at the Company’s option, at a rate per annum equal to (i) a forward-looking term rate based on the Secured Overnight Financing Rate for the applicable interest period (“Term SOFR”) plus an applicable margin (the “Term SOFR Loans”) or (ii) the Base Rate (as defined below) plus the applicable margin (the “Base Rate Loans”).

The Base Rate means, for any day, a fluctuating rate per annum equal to the highest of (w) the federal funds rate plus 0.50 %, (x) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate”, (y) Term SOFR plus 1.00 % and (z) 1.00 %.

The applicable margin is (A) 2.50 % in the case of Term SOFR Loans and (B) 1.50 % in the case of Base Rate Loans.

With respect to any Term SOFR Loans, the Company is required to pay interest on the last day of each one-, three- or six-month interest period, as elected by the Company, and, if such interest period is longer than three months, also at the end of each three-month period during such interest period.

With respect to any Base Rate Loans, the Company is required to pay interest quarterly in arrears.

Amendment to Term Loan A / Revolver Credit Agreement

On October 30, 2024, the Company entered into a Fourth Amendment to the Term Loan A / Revolver Credit Agreement to, among other things, permit (i) the Lone Star Acquisition, (ii) entry into the Term Loan B Credit Agreement, and (iii) certain liens to be granted to secure the indebtedness incurred under the Term Loan B Credit Agreement on a pari passu basis with the liens securing the Company’s obligations under the Term Loan A / Revolver Credit Agreement.

In addition, effective November 1, 2024, Lone Star

Paving was joined as a borrower and its subsidiaries were joined as guarantors under the Term Loan A / Revolver Credit Agreement.

The amendment also modified certain negative covenants and adjusted the maximum consolidated net leverage ratio permitted under the Term Loan A / Revolver Credit Agreement as follows:

(i) for each fiscal quarter ending on or prior to September 30, 2024, a maximum consolidated net leverage ratio of 3.50 to 1.00;

(ii) for each fiscal quarter ending December 31, 2024 through and including September 30, 2025, a maximum consolidated net leverage ratio of 4.50 to 1.00;

(iii) for each fiscal quarter ending December 31, 2025 through and including September 30, 2026, a maximum consolidated net leverage ratio of 4.00 to 1.00;

and (iv) for each fiscal quarter ending December 31, 2026 and thereafter, a maximum consolidated net leverage ratio of 3.50 to 1.00.

Treasury Stock

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

In October and November 2024, the Company received a total of 120,847 shares of Class A common stock and 2,653 shares of Class B common stock from employees upon forfeitures of restricted stock awards and for reimbursement of income taxes paid by the Company on behalf of these employees related to restricted stock awards that vested on or subsequent to September 30, 2024.

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

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data