Annual report pursuant to Section 13 and 15(d)

Business Acquisitions

v3.24.3
Business Acquisitions
12 Months Ended
Sep. 30, 2024
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):
Acquisitions (Final) SJ&L General Contractor, LLC Acquisition (Provisional) Sunbelt Asphalt Surfaces, Inc. Acquisition (Provisional) Hudson Paving, Inc. Acquisition (Provisional) Robinson Paving Company Acquisition (Provisional) John G. Walton Construction Company, Inc. Acquisition (Provisional) Total
Contracts receivable including retainage $ —  $ 16,006  $ 6,645  $ 6,222  $ 7,600  $ 4,565  $ 41,038 
Cost and estimated earnings in excess of billings on uncompleted contracts —  309  365  506  2,738  284  4,202 
Inventories 2,530  214  354  459  1,887  1,742  7,186 
Prepaid expenses and other current assets 943  644  30  100  —  854  2,571 
Property, plant and equipment 15,877  35,361  13,245  11,604  33,237  24,994  134,318 
Operating lease right-of-use assets 548  157  438  —  38  —  1,181 
Deferred tax assets 36  1,820  —  —  —  —  1,856 
Intangible assets 258  220  1,400  —  1,300  —  3,178 
Total assets 20,192  54,731  22,477  18,891  46,800  32,439  195,530 
Accounts payable —  (3,166) (1,443) (3,057) (2,854) (2,445) (12,965)
Billings in excess of costs and estimated earnings on uncompleted contracts —  (6,380) (650) (1,957) (2,672) (3,608) (15,267)
Accrued expenses and other current liabilities (681) (3,816) (43) (125) (297) —  (4,962)
Operating lease liabilities (548) (157) (438) —  (38) —  (1,181)
Other long-term liabilities (418) —  —  —  —  —  (418)
Total liabilities (1,647) (13,519) (2,574) (5,139) (5,861) (6,053) (34,793)
Goodwill 9,304  15,857  9,268  5,396  18,600  12,529  70,954 
Total cash consideration transferred 27,849  57,069  28,655  18,714  60,301  39,256  231,844 
Total consideration (receivable) payable —  —  516  434  (762) (341) (153)
Total purchase price $ 27,849  $ 57,069  $ 29,171  $ 19,148  $ 59,539  $ 38,915  $ 231,691 
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):

For the Fiscal Year Ended September 30,
2024 2023
Pro forma revenues $ 1,992,037  $ 1,846,235 
Pro forma net income $ 79,428  $ 58,912 

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):
Provisional amounts as of September 30, 2023 Finalized amounts as of September 30, 2024
Cash and cash equivalents $ 33  $ 33 
Contracts receivable including retainage 12,991  12,924 
Cost and estimated earnings in excess of billings on uncompleted contracts 598  598 
Inventories 3,088  3,088 
Prepaid expenses and other current assets 799  799 
Property, plant and equipment 45,937  45,937 
Deferred tax assets —  488 
Intangible assets 5,900  5,900 
Operating lease right-of-use assets 433  433 
Total assets 69,779  70,200 
Accounts payable 3,718  3,718 
Billings in excess of costs and estimated earnings on uncompleted contracts 2,329  3,354 
Accrued expenses and other current liabilities 895  1,790 
Operating lease liabilities 433  433 
Total liabilities 7,375  9,295 
Goodwill 29,589  31,021 
Total purchase price $ 91,993  $ 91,926 
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.