Annual report pursuant to Section 13 and 15(d)

Business Acquisitions

v3.23.3
Business Acquisitions
 12 Months Ended
Sep. 30, 2023
Business Combinations [Abstract]  
Business Acquisitions Business Acquisitions
During the fiscal year ended September 30, 2023, 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.
Combined Acquisitions During the Fiscal Year Ended September 30, 2023
The above-referenced acquisitions were accounted for as business combinations in accordance with Topic 805. 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. 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, 2023, 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 following table summarizes the consideration for the aforementioned acquisitions and the amounts of identified assets acquired and liabilities assumed as of September 30, 2023 (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 
Contracts receivable including retainage —  12,216  775  —  —  12,991 
Cost and estimated earnings in excess of billings on uncompleted contracts —  598  —  —  —  598 
Inventories —  1,314  189  484  1,101  3,088 
Prepaid expenses and other current assets —  421  137  —  241  799 
Property, plant and equipment 1,004  27,375  3,196  6,191  8,171  45,937 
Operating lease right-of-use assets —  —  433  —  —  433 
Intangible assets —  5,900  —  —  —  5,900 
Total assets 1,004  47,857  4,730  6,675  9,513  69,779 
Accounts payable —  3,718  —  —  —  3,718 
Billings in excess of costs and estimated earnings on uncompleted contracts —  2,329  —  —  —  2,329 
Accrued expenses and other current liabilities —  787  108  —  —  895 
Operating lease liabilities —  —  433  —  —  433 
Total liabilities —  6,834  541  —  —  7,375 
Goodwill 117  26,281  774  2,407  10  29,589 
Total purchase price $ 1,121  $ 67,304  $ 4,965  $ 9,080  $ 9,523  $ 91,993 
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):
For the Fiscal Year Ended September 30,
2023 2022 2021
Pro forma revenues $ 1,588,268  $ 1,412,313  $ 1,021,378 
Pro forma net income $ 48,923  $ 22,175  $ 20,976 

Pro forma financial information is presented as if the operations of the acquisitions had been included in the consolidated results of the Company since October 1, 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 fiscal years ended September 30, 2023, 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 price 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 September 30, 2023, 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 September 30, 2023.

(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.

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.
Combined Acquisitions During the Fiscal Year Ended September 30, 2022
The following table summarizes the finalized consideration for the combined acquisitions during the fiscal year ended September 30, 2022, and the amounts of identified assets acquired and liabilities assumed (in thousands):
Provisional amounts as of September 30, 2022 Finalized amounts as of September 30, 2023
Cash and cash equivalents $ 1,168  $ 1,168 
Contracts receivable including retainage 9,016  9,016 
Cost and estimated earnings in excess of billings on uncompleted contracts 125  125 
Inventories 2,980  2,980 
Prepaid expenses and other current assets 213  239 
Property, plant and equipment 80,291  80,291 
Deferred tax assets 2,471  3,356 
Intangible assets 9,000  9,000 
Total assets 105,264  106,175 
Accounts payable 2,759  2,759 
Billings in excess of costs and estimated earnings on uncompleted contracts 3,123  3,677 
Accrued expenses and other current liabilities 6,100  8,631 
Unfavorable contract liabilities 7,900  8,500 
Deferred tax liabilities 282  282 
Total liabilities 20,164  23,849 
Goodwill 45,300  47,899 
Total purchase price $ 130,400  $ 130,225 
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.