Business Acquisitions |
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Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Acquisitions | Business Acquisitions During the fiscal year ended September 30, 2024, the Company and its subsidiaries made the following business acquisitions:
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
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 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 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):
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):
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, 2022, 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, 2024 and 2023.
(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 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 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.
Combined Acquisitions During the Fiscal Year Ended September 30, 2023
The following table summarizes the finalized consideration for the combined acquisitions during the fiscal year ended September 30, 2023, and the amounts of identified assets acquired and liabilities assumed (in thousands):
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.
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