|9 Months Ended|
Jun. 30, 2022
|Business Combination and Asset Acquisition [Abstract]|
|Business Acquisitions||Business Acquisitions
On March 7, 2022, the Company acquired substantially all of the assets of Southern Asphalt, Inc., an asphalt paving company headquartered in Burgaw, North Carolina. The transaction provides access to the Wilmington, North Carolina metro area market. On March 18, 2022, the Company acquired substantially all of the assets of GAC Contractors, Inc., an asphalt paving, grading and sitework company headquartered in Panama City, Florida. The transaction enhances the Company's operational resources and capabilities in the growing Panama City, Florida market area.
On October 1, 2021, the Company acquired all of the capital stock of King Asphalt, Inc., a HMA production and paving company headquartered in Liberty, South Carolina. The transaction established the Company's first platform company in South Carolina and added three HMA plants in the Greenville, South Carolina metro area. On October 18, 2021, the Company acquired substantially all of the assets of J. Miller Construction Inc., a grading and site work company headquartered in Pensacola, Florida. The transaction enhanced the Company’s vertical integration of construction services and supplemented the Company’s capabilities in the greater Pensacola, Florida market area.
These acquisitions were accounted for as business combinations in accordance with FASB Accounting Standards Codification ("ASC") Topic 805 Business Combinations. The Company consulted with independent third parties to assist in the valuation of various types and classes of assets. The Company expects to finalize these values as soon as practicable and no later than one year from the acquisition date. Identifiable tangible assets acquired and liabilities assumed were recorded at their estimated fair values based on the methodology described under "Fair Value Measurements" in Note 2 - Significant Accounting Policies. The amount of the purchase price exceeding the net fair value of identifiable assets acquired and liabilities assumed was recorded as provisional goodwill in the amount of approximately $38.2 million, which is deductible for income tax purposes. Goodwill primarily represents the assembled work force and synergies expected to result from the acquisition. Upon finalizing the accounting for these transactions, management expects to ascribe value to other identifiable intangible assets, including customer relationships and customer backlog, which will reduce the provisional amount allocated to goodwill.
Total consideration for these four acquisitions was $104.7 million, of which $104.1 million has been paid with cash as of June 30, 2022. These acquisitions were funded with borrowings under the Company's Revolving Credit Facility. The total consideration has been provisionally allocated as follows: $1.2 million of cash and cash equivalents, $8.9 million of contracts receivable including retainage, net, $0.1 million of costs and estimated earnings in excess of billings on uncompleted contracts, $2.0 million of inventory, $1.0 million of prepaid expenses and other current assets, $2.8 million of accounts payable, $0.4 million of billings in excess of costs and estimated earnings on uncompleted contracts, $1.2 million of accrued expenses and other current liabilities, $49.5 million of property, plant and equipment, $8.2 million of intangible assets and $38.2 million of goodwill.
Combined Acquisitions During the Three Months and Nine Months Ended June 30, 2022
The Consolidated Statements of Comprehensive Income include $40.5 million of revenue and $0.5 million of net income
attributable to the operations of these acquisitions for the three months ended June 30, 2022 and $70.3 million of revenue and $0.8 million of net loss attributable to the operations of these acquisitions for the nine months ended June 30, 2022 from their respective acquisition dates. The Company recorded certain costs to effect the acquisitions as they were incurred, which are reflected in general and administrative expenses on the Company’s Consolidated Statements of Comprehensive Income in the amount of $0.0 million for the three months ended June 30, 2022 and $0.4 million for the nine months ended June 30, 2022.
The following presents actual or pro forma revenues and net income, as applicable, as though the acquisitions had occurred on October 1, 2020 (unaudited, in thousands):
Pro forma financial information is presented as if the acquired operations had been included in the consolidated results of the Company since October 1, 2020, and gives effect to transactions that are directly attributable to the acquisitions, including adjustments to:
(a)Include the pro forma results of operations of the acquisitions for the three and nine months ended June 30, 2022 and 2021.
(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, 2020 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 prices were borrowed on October 1, 2020. Interest expense calculations further assume that no principal payments were made during the period from October 1, 2020 through June 30, 2022, and that the interest rate in effect on the date the Company made the acquisitions was in effect for the period from October 1, 2020 through June 30, 2022.
(d)Exclude $0.4 million of acquisition-related expenses from the three and nine months ended June 30, 2022, as though such expenses were incurred prior to the pro forma acquisition date of October 1, 2020.
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, 2020.
In July 2021, the Company acquired a HMA contracting company and related entities, all headquartered in Cullman, Alabama. In August 2021, the Company acquired a crushed stone and aggregates facility located near Goldston, North Carolina. As of June 30, 2022, there have been no material adjustments to the September 30, 2021 provisional accounting for either acquisition.
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef