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

Annual report pursuant to Section 13 and 15(d)

Investment in Derivative Instruments

Investment in Derivative Instruments

12 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

The Company’s operations expose it to a variety of market risks, including the effects of changes in commodity prices and changes in interest rates. As part of its risk management process, the Company began entering into commodity swap transactions through regulated commodity exchanges in February 2020. To manage interest rate exposure, the Company has entered into derivative instruments using interest rate swaps. The objective of entering into interest rate swaps is to eliminate the variability of cash

flows associated with movements in interest rates over the life of the loans.

The following table represents the approximate amount of realized and unrealized gains (losses) and changes in fair value recognized in earnings on commodity derivative contracts for the fiscal years ended September 30, 2020 and 2019 and the fair value of these derivatives as of September 30, 2020 and 2019 (in thousands):


	For the Fiscal Year Ended September 30,
			2020						2019
	Change in						Change in
Income Statement Classification	Realized Gain (Loss)		Unrealized Gain (Loss)		Total Gain (Loss)		Realized Gain (Loss)		Unrealized Gain (Loss)		Total Gain (Loss)
Cost of revenues	$	(432)	$	(503)	$	(935)	$	—	$	—	$	—
Interest expense, net	(388)		(1,397)		(1,785)		5		(565)		(560)
Total	$	(820)	$	(1,900)	$	(2,720)	$	5	$	(565)	$	(560)


	September 30,
Balance Sheet Classification	2020		2019


Accrued expense and other current liabilities - commodity swaps	$	(183)	$	—
Other long-term liabilities - commodity swaps	(320)		—
Other long-term liabilities - interest rate swaps	(1,708)		(311)
Net unrealized (loss) position	$	(2,211)	$	(311)