Quarterly report [Sections 13 or 15(d)]

Share-Based Compensation

v3.25.1
Share-Based Compensation
 6 Months Ended
Mar. 31, 2025
Share-Based Payment Arrangement [Abstract]  
Share-Based Compensation Share-Based Compensation
The Equity Incentive Plan was initially approved by the Company’s stockholders in 2016, was amended and restated in April 2018, and was further amended in May 2019. In connection with the 2018 amendment and restatement, the Company reserved 2,000,000 shares of Class A common stock for issuance pursuant to awards granted thereunder. In March 2024, the Company’s stockholders approved an increase in such share reserve by an additional 1,000,000 shares. At March 31, 2025, there were 961,350 shares of Class A common stock remaining available for issuance under the Equity Incentive Plan.
The Restricted Stock Plan was approved by the Company’s stockholders and adopted by the Company in March 2024. At that time, the Company reserved 2,000,000 shares of Class B common stock for issuance pursuant to awards granted thereunder. At March 31, 2025, there were 1,891,000 shares of Class B common stock remaining available for issuance under the Restricted Stock Plan.
The following table summarizes the components of share-based compensation expense included in general and administrative expenses and acquisition-related expenses in the Consolidated Statements of Comprehensive Income during the three and six months ended March 31, 2025 and 2024 (unaudited, in thousands):
For the Three Months Ended March 31,
2025 2024
Equity classified awards $ 3,369  $ 2,556 
Liability classified awards 1,111  776 
Employee stock purchase plan 192  221 
Total share-based compensation expense $ 4,672  $ 3,553 
For the Six Months Ended March 31,
2025 2024
Equity classified awards $ 17,043  $ 5,339 
Liability classified awards 1,840  882 
Employee stock purchase plan 514  378 
Total share-based compensation expense $ 19,397  $ 6,599 
Restricted Stock - Equity Classified Awards
The Company measures and recognizes stock-based compensation expense, net of forfeitures, over the requisite vesting periods for all stock-based payment awards made, and recognizes forfeitures as they occur. Stock-based compensation is included in general and administrative expenses in the Consolidated Statements of Comprehensive Income. A summary of the changes in the Company’s restricted stock units is as follows (in thousands, except share data):
For the Six Months Ended March 31,
2025 2024
RSUs Weighted Average Grant Date Fair Value Per RSU RSUs Weighted Average Grant Date Fair Value Per RSU
Unvested shares, beginning balance 509,171 31.59 824,280 28.08
Shares awarded 321,995 77.07 67,811 43.67
Shares vested (59,295) 47.82 (2,500) 27.72
Shares forfeited (2,091) 30.40 (524) 30.49
Unvested shares, ending balance 769,780 48.59 889,067 29.56
Aggregate grant date fair value of shares awarded $ 24,816  $ 2,961 
Compensation expense recorded upon vesting of awards $ 5,495  $ 3,829 
Unrecognized compensation expense at fiscal year-end $ 25,707  $ 8,899 
Weighted average recognition period remaining, in years 4.13 2.78
The restricted shares granted under the Equity Incentive Plan will vest, as applicable, as follows:
Fiscal Year Number of Shares
2025 330,266 
2026 88,066 
2027 45,309 
2028 170,299 
2029 135,840 
Total 769,780 
Market-Based Awards - Equity Classified Awards
During the six months ended March 31, 2025, the Company issued and awarded market-based restricted stock awards representing a target of 79,000 Class A shares and 61,000 Class B shares to certain members of Company management, directors and employees under the Equity Incentive Plan and the Restricted Stock Plan, respectively, as transaction bonuses in connection with the Lone Star Acquisition. These grants are classified as equity awards. The aggregate grant date fair value of these restricted stock awards was $9.8 million. During the six months ended March 31, 2025, the Company recorded compensation expense of $9.8 million which is recorded in acquisition-related expenses in the Company’s Consolidated Statements of Comprehensive Income.
Performance Stock Units - Equity Classified Awards
PSUs provide for the issuance of shares of Class A common stock upon vesting, which occurs at the end of the performance period based on achievement of certain Company performance metrics established by the Compensation Committee of the Company’s Board of Directors. The final number of shares of common stock issuable upon vesting of PSUs can range from 0% to 150% of the number of PSUs initially granted, depending on the level of achievement, as determined by the Compensation Committee of the Company’s Board of Directors. The achievement of performance goals is modified by the total stockholder return ranking of the Company against the Russell 2000 Index over the performance period and can increase or decrease the achieved award by up to 15%. The Company recognizes expense, net of estimated forfeitures, for PSUs based on the forecasted achievement of Company performance metrics, multiplied by the fair value of the total number of shares of common stock that the Company anticipates will be issued based on such achievement.
During the six months ended March 31, 2025, the Company awarded PSUs representing a target of 73,603 Class A shares and forecasted vesting of 55,202 of Class A shares to certain members of management. These grants are classified as equity awards. The aggregate grant date fair value of these PSU awards was $3.7 million. During the six months ended March 31, 2025 and 2024, the Company recorded compensation expense in connection with PSUs in the amount of $1.7 million and $0.6 million, respectively, which is reflected as general and administrative expenses in the Company’s Consolidated Statements of Comprehensive Income. At March 31, 2025, the Company forecasted 226,102 shares of Class A common stock underlying PSUs as unvested and approximately $6.5 million of unrecognized compensation expense related to PSU awards, which will be recognized over a remaining weighted-average period of 2.2 years. During the six months ended March 31, 2025, 136,917 shares of Class A and 61,000 shares of Class B common stock underlying PSUs were vested and issued.
Cash-Settled Restricted Stock Units - Liability Classified Awards
During the six months ended March 31, 2025, the Company granted 77,634 cash-settled restricted stock units (“RSUs”) to employees of the Company under the Equity Incentive Plan. The Company elects to account for forfeitures as they occur. Compensation expense associated with all liability classified awards for the three and six months ended March 31, 2025 was $1.1 million and $1.8 million, respectively, which is reflected as general and administrative expenses in the Consolidated Statements of Comprehensive Income. As of both March 31, 2025 and September 30, 2024 the liability for cash-settled RSUs was $3.7 million and is included in accrued expenses and other current liabilities and other long-term liabilities. At March 31, 2025, there was approximately $7.8 million of unrecognized compensation expense related to these awards, which will be recognized over a remaining weighted-average period of 3.2 years.
The grant date fair value of cash-settled RSU awards is based on the price of the Company’s Class A common stock and the number of RSUs awarded on the date of grant. The awards are settled in cash and are accounted for as liability-type awards. The expense is recognized over the requisite service period with remeasurement at the end of each reporting period at fair value until settlement. The requisite service period is based on the vesting provisions of the awards, which generally occurs in four equal annual installments beginning on the date of the first fiscal year-end after the grant date.
Employee Stock Purchase Plan
The Construction Partners, Inc. Employee Stock Purchase Plan (the “ESPP”) became effective on May 13, 2021. The ESPP provides eligible employees of the Company an opportunity to purchase shares of the Company’s Class A common stock at a discounted rate using funds withheld through payroll deductions. The maximum number of shares of Class A common stock offered under the ESPP is 1,000,000. The first offering period under the ESPP commenced on July 1, 2023. Since that date, participants have purchased 71,022 shares under the ESPP. Compensation expense associated with the ESPP was $0.2 million for the three months ended March 31, 2025 and 2024, and $0.5 million and $0.4 million for the six months ended March 31, 2025 and 2024, respectively. Compensation expense is included in general and administrative expenses in the Consolidated Statements of Comprehensive Income.