Construction Partners, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Fair Value Measurements

Fair Value Measurements

12 Months Ended

Sep. 30, 2023

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 and 2022 under Topic 820 (in thousands):


	Fair Value Measurement at Reporting Date Using
September 30, 2023	Level 1		Level 2		Level 3
Assets:
Commodity swap contracts	$	—	$	204	$	—
Interest rate swaps	—		26,909		—
Corporate debt securities	—		5,605		—
U.S. government securities	—		6,549		—
Municipal government securities	—		1,748		—
Other debt securities	—		1,177		—
Total Assets	$	—	$	42,192	$	—

Liabilities:
Commodity swap contracts	$	—	$	20	$	—
Total Liabilities	$	—	$	20	$	—


	Fair Value Measurement at Reporting Date Using
September 30, 2022	Level 1		Level 2		Level 3
Assets:
Commodity swap contracts	$	—	$	1,187	$	—
Interest rate swaps	—		24,719		—
Corporate debt securities	—		2,537		—
U.S. government securities	—		2,481		—
Municipal government securities	—		1,055		—
Other debt securities	—		793		—
Total Assets	$	—	$	32,772	$	—

Liabilities:
Commodity swap contracts	$	—	$	661	$	—
Total Liabilities	$	—	$	661	$	—

The fair value of interest rate swap contracts is based on a model-driven valuation using the observable components (e.g., interest rates), which are observable at commonly quoted intervals for the full term of the contracts. The fair value of the Company’s commodity swap contracts is based on an analysis of the expected cash flow of the contract in combination with observable forward price inputs obtained from a third-party pricing source. The calculations are adjusted for credit risk. Therefore, the Company’s derivative assets and liabilities are classified within Level 2 of the fair value hierarchy. 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. Debt securities primarily consist of corporate bonds and U.S. Government and agency obligations. The fair value of these investments is determined based on market quotes. These investments are included within “Restricted Investments” on the Company’s Consolidated Balance Sheets.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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