Subsequent Events |
12 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Subsequent Events Georgia Reorganization
On October 1, 2021, the Company completed a reorganization of its Georgia operations by merging Everett Dykes Grassing Co., Inc., a wholly-owned subsidiary of the Company, with and into The Scruggs Company, another wholly-owned subsidiary of the Company. Following the merger, the combined company continues to operate as “The Scruggs Company.”
Acquisitions
On October 1, 2021, the Company acquired an asphalt and paving company headquartered in Liberty, South Carolina. The acquired platform company added three HMA plants in the Greenville, South Carolina metro area, providing opportunities for future expansion in the state.
On October 18, 2021, the Company acquired a grading and site work contractor based in Pensacola, Florida. The acquisition further enhances the Company’s vertical integration of construction services and supplements the Company’s capabilities in the greater Pensacola, Florida market area following the Company’s initial entry into that market last March.
The acquisitions will be accounted for as business combinations in accordance with ASC 805. The aggregate purchase price of $67.0 million (excluding working capital adjustments) was paid with cash from the Revolving Credit Facility. In each case, the provisional allocation of the purchase price to assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, was determined in accordance with the methodology described under Fair Value Measurements above in Note 2 - Significant Accounting Policies. The amount of the purchase price exceeding the preliminary net fair value of identifiable assets acquired and liabilities assumed is expected to be recorded as goodwill in the aggregate amount of approximately $35.0 million, which is deductible for income tax purposes. Goodwill primarily represents the assembled workforce and synergies expected to result from the acquisition. Upon finalizing the accounting for this transaction, management expects to ascribe value to other identifiable intangible assets, including customer relationships and customer backlog, which will reduce the preliminary amount allocated to goodwill.
Formation of Captive Insurance Company
On October 1, 2021, Construction Partners Risk Management, Inc., a captive insurance company and wholly-owned subsidiary of the Company (the “Captive”) commenced operations. The purpose of the Captive is to provide general liability, automobile liability and workers’ compensation insurance coverage to the Company and its subsidiaries.
Amendment to Credit Agreement
On October 1, 2021, the Company and each of its wholly-owned subsidiaries entered into an amendment to the Credit Agreement to incorporate certain provisions addressing the Company’s formation and operation of the Captive. Among other things, the amendment defines the permitted activities of the Captive and provides certain limitations on payments, distributions, investments, indebtedness and other transactions in which the Captive may engage. The amendment also prescribes the amounts that the Company may invest in the Captive and clarifies that the operations of the Captive will be excluded from the calculation of any financial ratios required by the Credit Agreement.
Restricted Stock Awards
In November 2021, the Company awarded a total of 79,049 restricted shares of Class A common stock to certain employees of the Company under the 2018 Equity Plan. The grant is classified as an equity award. The aggregate grant date fair value of these restricted stock awards was $3.2 million. Within that grant, 49,049 of the shares vest in one-fourth increments on September 30 of each calendar year following the calendar year in which the shares were granted. The remaining 30,000 shares vest in one-half increments on September 30, 2025 and 2026.
Conversion of Class B Common Stock to Class A Common Stock
Subsequent to September 30, 2021, certain stockholders of the Company converted a total of 4,059,569 shares of Class B common stock into shares of Class A common stock on a one-for-one basis. Following the conversions, there were 40,738,074 shares of Class A common stock and 11,632,270 shares of Class B common stock outstanding.
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