Annual report pursuant to Section 13 and 15(d)

Equity

v3.22.2.2
Equity
 12 Months Ended
Sep. 30, 2022
Equity [Abstract]  
Equity Equity
Shares of Class A common stock and Class B common stock are identical, except with respect to voting rights, conversion rights and transfer restrictions applicable to shares of Class B common stock. The holders of Class A common stock are entitled to one vote per share, and the holders of Class B common stock are entitled to ten votes per share. The holders of Class A common stock and Class B common stock vote together as a single class on all matters submitted to a vote of stockholders, including the election of directors, unless otherwise required by applicable law or the Company’s certificate of incorporation or bylaws. Shares of Class B common stock are convertible into shares of Class A common stock at any time at the option of the holder or upon any transfer, subject to certain limited exceptions. In addition, upon the election of the holders of a majority of the then-outstanding shares of Class B common stock, all outstanding shares of Class B common stock will be converted into shares of Class A common stock. Once converted into shares of Class A common stock, shares of Class B common stock will not be reissued. Class A common stock is not convertible into any other class of the Company’s capital stock.
Conversion of Class B Common Stock to Class A Common Stock
During the fiscal year ended September 30, 2022, certain stockholders of the Company converted a total of 4,338,924 shares of Class B common stock into shares of Class A common stock on a one-for-one basis. As of September 30, 2022, there were 41,193,024 shares of Class A common stock and 11,352,915 shares of Class B common stock outstanding.
Restricted Stock Awards
During the fiscal year ended September 30, 2022, the Company awarded a total of 256,167 restricted 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.
Registration Rights Agreement
The Company is a party to a registration rights agreement (the “Registration Rights Agreement”) with certain of the Company’s directors and officers and affiliates of SunTx (collectively, the “RRA Holders”). Under the Registration Rights Agreement, the RRA Holders have “demand” registration rights, meaning that the Company must register under the Securities Act shares of the Company’s common stock owned by such RRA Holders upon their demand under certain circumstances, and “piggyback” registration rights, meaning that, if the Company proposes to register an offering of securities, it generally must give written notice to the RRA Holders to allow each to include its shares in the registration. In general, the Company must pay all out-of-pocket expenses in connection with a registration under the Registration Rights Agreement, including filing and registration fees, printing costs, fees and expenses of the Company’s legal counsel and independent registered public accountants and fees and expenses for one legal counsel for the applicable RRA Holders. The RRA Holders whose shares are registered must pay all incremental selling expenses relating to any offering, such as underwriters’ commissions and discounts, brokerage fees, underwriter marketing costs and any additional legal counsel that they may engage. As of September 30, 2022, a total of 3,796,670 shares of the Company’s common stock were subject to the Registration Rights Agreement, of which 37,248 shares had been previously registered but not yet sold. The Registration Rights Agreement expires on May 4, 2023.

Treasury Stock

During the fiscal year ended September 30, 2022, the Company received a total of 1,183 shares of Class A common stock from employees for reimbursement of income taxes paid by the Company on behalf of these employees related to the vesting of restricted stock awards. The Company received another 1,523 shares of Class A common stock through forfeitures of restricted stock awards by terminated employees.
Other Comprehensive Income
Comprehensive income comprises two subsets: net income and other comprehensive income ("OCI"). The components of other comprehensive income are presented in the accompanying Consolidated Statements of Comprehensive Income and Consolidated Statements of Stockholders’ Equity, net of applicable taxes. The Company’s interest rate swap contract hedge included in other comprehensive income for the fiscal year ended September 30, 2022 was entered into on July 1, 2022 with an original notional value of $300.0 million. The maturity date of this swap is June 30, 2027. The Company received a credit of $12.6 million under the "blend and extend" arrangement utilizing the fair values of the existing interest rate swap agreements at June 30, 2022.

Amounts in accumulated other comprehensive income ("AOCI"), net of tax, at September 30, are as follows (in thousands):
AOCI 2022 2021 2020
Interest rate swap contract, net of blend and extend arrangement 23,761  (31) — 
Unrealized loss on available-for-sale securities (566) —  — 
Less tax effect of other comprehensive income (loss) items (5,575) 8  — 
Total $ 17,620  $ (23) $ — 

Changes in AOCI, net of tax, are as follows (in thousands):
AOCI
Balance at September 30, 2020 — 
Net OCI changes (23)
Balance at September 30, 2021 (23)
Net OCI changes 17,643 
Balance at September 30, 2022 $ 17,620 
Amounts reclassified from AOCI to earnings, are as follows (in thousands):
2022 2021 2020
Interest expense $ 468  $ 224  $ — 
Benefit from income taxes (108) (56) — 
Total reclassifications from AOCI to earnings $ 360  $ 168  $ —