Quarterly report [Sections 13 or 15(d)]

Business Acquisitions

v3.25.1
Business Acquisitions
 6 Months Ended
Mar. 31, 2025
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]  
Business Acquisitions Business Acquisitions
Texas Acquisition - Provisional
On November 1, 2024, the Company acquired all of the outstanding membership units of Asphalt Inc., LLC (doing business as Lone Star Paving) (“Lone Star Paving” and such acquisition, the “Lone Star Acquisition”), a vertically integrated asphalt manufacturing and paving company headquartered in Austin, Texas, with 10 HMA plants, four aggregate facilities, and one liquid asphalt terminal supporting its operations. The aggregate consideration delivered at the closing of the Lone Star Acquisition consisted of (i) $654.2 million in cash (as adjusted pursuant to the purchase agreement) and (ii) 3,000,000 shares of Class A common stock having an aggregate fair market value of approximately $236.3 million at closing. In addition, the Company agreed to (i) pay cash to the selling unit holders in an amount equal to the working capital remaining in Lone Star Paving at closing, as finally determined (subject to adjustments and offsets to satisfy certain indemnification obligations and any purchase price overpayments), to be paid out in quarterly installments over four quarters following the closing and (ii) purchase from the selling unit holders for $30.0 million in cash an entity that owns certain real property following receipt of specified operational entitlements, which had not been received as of March 31, 2025. The total amount of consideration for the Lone Star Acquisition remains subject to post-closing adjustments with respect to settlement of working capital and other matters. At March 31, 2025, $84.4 million was reflected on the Company’s Consolidated Balance Sheets within accrued expenses and other current liabilities, representing the estimated working capital payable.
Oklahoma Acquisition - Provisional
On January 2, 2025, the Company acquired all the outstanding capital stock of Overland Corporation, an asphalt manufacturing and paving company headquartered in Ardmore, Oklahoma, for $121.1 million, which was paid from available cash on hand and a draw from the Revolving Credit Facility. The transaction established the Company’s first platform company in Oklahoma and added eight HMA plants across southern and western Oklahoma. Overland Corporation also provides paving services in northern Texas.
Alabama Acquisition - Provisional
On February 3, 2025, the Company acquired substantially all of the assets of Mobile Asphalt Company LLC, an asphalt manufacturing and paving company headquartered in Theodore, Alabama, for $55.1 million, which was paid from available cash on hand and a draw from the Revolving Credit Facility. The transaction added five HMA plants and expanded the Company’s operations in the greater Mobile and southwestern Alabama market areas.
Combined Acquisitions During the Six Months Ended March 31, 2025
The foregoing acquisitions were accounted for as business combinations in accordance with ASC Topic 805, Business Combinations ("Topic 805"). As of March 31, 2025, the purchase price allocations had not yet been finalized due to the recent timing of these acquisitions, as certain information was pending on such date to finalize estimates of fair value of certain assets acquired and liabilities assumed. The Company consulted with independent third parties to assist in the valuation process. The Company expects to finalize the estimate of fair values as soon as practicable and no later than one year from each respective acquisition dates.
Identifiable assets acquired and liabilities assumed were recorded at their estimated fair values based on the methodology described
under “Fair Value Measurements” in Note 2 - Significant Accounting Policies. The aggregate amount of the purchase price exceeding the net fair value of identifiable assets acquired and liabilities assumed was recorded as provisional goodwill in the amount of approximately $511.8 million, which is deductible for income tax purposes. Goodwill primarily represents the assembled work force and synergies expected to result from the acquisitions, which may change as estimates are finalized.
The following table summarizes the consideration for the acquisitions and the provisional amounts of identified assets acquired and liabilities assumed as of March 31, 2025 (unaudited, in thousands):
Lone Star Paving Overland Corporation Mobile Asphalt Company, LLC Total
Cash and cash equivalents $ 9,901  $ 2,426  $ —  $ 12,327 
Contracts receivable including retainage 96,740  5,658  6,084  108,482 
Cost and estimated earnings in excess of billings on uncompleted contracts 3,972  1,469  74  5,515 
Inventories 26,604  6,414  2,792  35,810 
Prepaid expenses and other current assets 547  1,757  538  2,842 
Property, plant and equipment 408,610  34,791  30,654  474,055 
Operating lease right-of-use assets 2,006  —  2,924  4,930 
Intangible assets 53,800  7,900  —  61,700 
Total assets 602,180  60,415  43,066  705,661 
Accounts payable 36,810  5,287  2,591  44,688 
Billings in excess of costs and estimated earnings on uncompleted contracts 10,293  483  168  10,944 
Accrued expenses and other current liabilities 4,573  1,597  —  6,170 
Operating lease liabilities 1,949  —  2,924  4,873 
Total liabilities 53,625  7,367  5,683  66,675 
Goodwill 426,332  68,333  17,101  511,766 
Total cash consideration transferred 654,200  121,057  55,126  830,383 
Fair value of Class A common stock transferred 236,250  —  —  236,250 
Total consideration payable (receivable) 84,437  324  (642) 84,119 
Total purchase price $ 974,887  $ 121,381  $ 54,484  $ 1,150,752 

The Consolidated Statements of Comprehensive Income include $130.1 million of revenue and $3.9 million of net loss attributable to the operations of these acquisitions for the three months ended March 31, 2025 and $191.1 million of revenue and $7.6 million of net loss attributable to the operations of these acquisitions for the six months ended March 31, 2025. The Company recorded certain costs related to 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 amount of $0.8 million for the three months ended March 31, 2025 and $19.7 million for the six months ended March 31, 2025.
The following tables present pro forma revenues and net income as though the acquisitions had occurred on October 1, 2023 (unaudited, in thousands):

For the Three Months Ended March 31,
2025 2024
Pro forma revenues $ 576,559  $ 528,138 
Pro forma net income (loss) $ 5,059  $ (2,164)

For the Six Months Ended March 31,
2025 2024
Pro forma revenues $ 1,241,903  $ 1,142,876 
Pro forma net income $ 24,016  $ 10,240 
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, 2023 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 three and six months ended March 31, 2025 and 2024;
            
(b)include additional depreciation, depletion and amortization expense related to the fair value of acquired property, plant and equipment and reserves at aggregates facilities and intangibles, as applicable, as if such assets were acquired on October 1, 2023 and consistently applied to the Company’s depreciation and depletion methodologies;

(c)include interest expense under the Term Loan B (as defined below) and Revolving Credit Facility as if the funds borrowed to finance the purchase prices were borrowed on October 1, 2023 (interest expense calculations further assume that no principal payments were made during the period from October 1, 2023 through March 31, 2025, and that the interest rate in effect on the date the Company completed the acquisitions was in effect for the period from October 1, 2023 through March 31, 2025); and

(d)exclude $19.7 million of acquisition-related expenses from the six months ended March 31, 2025, as though such expenses were incurred prior to the pro forma acquisition date of October 1, 2023.

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, 2023.
Provisional Accounting
During the six months ended March 31, 2025, there were no material measurement period adjustments to provisional acquisitions as reported in the 2024 Form 10-K.