|12 Months Ended|
Sep. 30, 2019
Reclassification of Common Stock and Initial Public Offering
On April 23, 2018, the Company amended and restated its certificate of incorporation to effectuate a dual class common stock structure consisting of Class A common stock and Class B common stock. Each share of common stock issued at that time was split into 25.2 shares (the “Stock Split”) and reclassified as Class B common stock (the “Reclassification”), resulting in 41,817,537 shares of Class B common stock outstanding and 3,170,034 shares of Class B common stock held by the Company in treasury. All share and per share amounts have been retroactively adjusted for all periods presented to give effect to the Reclassification and Stock Split.
Shares of Class A common stock and Class B common stock are identical in all respects, except with respect to voting rights, conversion rights and transfer restrictions applicable to shares of Class B common stock. The holders of Class A common stock are entitled to one vote per share, and the holders of Class B common stock are entitled to ten votes per share. The holders of Class A common stock and Class B common stock vote together as a single class on all matters submitted to a vote of stockholders, including the election of directors, unless otherwise required by applicable law or the Company’s certificate of incorporation or bylaws. Shares of Class B common stock are convertible into shares of Class A common stock at any time at the option of the holder or upon any transfer, subject to certain limited exceptions. In addition, upon the election of the holders of a majority of the then-outstanding shares
of Class B common stock, all outstanding shares of Class B common stock will be converted into shares of Class A common stock. Once converted into shares of Class A common stock, shares of Class B common stock will not be reissued. Class A common stock is not convertible into any other class of the Company’s capital stock.
On May 8, 2018, the Company completed its IPO, in which the Company and certain selling stockholders sold a total of 11,250,000 shares of Class A common stock at a price of $12.00 per share, less underwriting discounts and commissions. Of these shares, 9,000,000 were sold by the Company and 2,250,000 were sold by holders of Class B common stock, which shares upon sale automatically converted into 2,250,000 shares of Class A common stock. On May 24, 2018, the underwriters of the IPO partially exercised their over-allotment option to purchase an additional 700,000 shares of Class A common stock at a price of $12.00 per share, less underwriting discount and commissions. Of these shares, 350,000 were sold by the Company and 350,000 were sold by holders of Class B common stock, which shares upon sale automatically converted into 350,000 shares of Class A common stock.
Conversion of Class B Common Stock to Class A Common Stock
During the fiscal year ended September 30, 2019, certain stockholders of the Company converted a total of 20,355,202 shares of Class B common stock into shares of Class A common stock on a one-for-one basis. Following the conversions, there were 32,597,736 shares of Class A common stock and 19,184,009 shares of Class B common stock outstanding.
Restricted Stock Awards and Options
During the fiscal year ended September 30, 2018, certain employees of the Company exercised non-plan options granted in 2010, resulting in the purchase of 768,984 shares of Class B common stock at a price of $5.70 per share. These shares were issued from treasury shares at an average cost of $3.64 per share. The transaction was executed as a net exercise. In addition, the Company sold to certain employees a total of 126,000 restricted shares of common stock at a purchase price of $0.04 per share, which shares were converted to shares of Class B common stock in connection with the Reclassification. All such shares vested during the fiscal year ended September 30, 2018.
During the fiscal year ended September 30, 2019, the Company awarded a total of 292,534 restricted shares of Class A common stock to its non-employee directors under the Construction Partners, Inc. 2018 Equity Incentive Plan (the “Equity Incentive Plan”). In addition, an employee of the Company exercised an option to purchase 74,592 shares of Class B common stock at an exercise price of $0.0357 per share.
Additional information about these transactions is set forth in Note 14 - Equity-Based Compensation.
Amendment to the Equity Incentive Plan
On May 24, 2019, the Company adopted an amendment to the Equity Incentive Plan relating to exceptions from the $750,000 limit on the aggregate dollar value of equity-based awards granted during any calendar year to a non-employee director. Prior to the adoption of the amendment, the limit could be multiplied by two with respect to awards granted in the calendar year in which a non-employee director first joined the Company’s board of directors. The amendment changed the period within which the aggregate value of equity-based awards may be multiplied by two to be the calendar year in which a non-employee director is first granted equity-based awards under the Equity Incentive Plan.
Secondary Offering of Class A Common Stock
In September 2019, certain stockholders of the Company (the “Selling Stockholders”) completed an underwritten secondary offering (the “Secondary Offering”) of 5,000,000 shares of Class A common stock at a public offering price of $14.25 per share. The Company did not receive any proceeds from the sale of shares by the Selling Stockholders and, pursuant to a registration rights agreement with the Selling Stockholders, incurred approximately $0.7 million in expenses in connection with the Secondary Offering.
Registration Rights Agreement
The Company is a party to a registration rights agreement (the “Registration Rights Agreement”) with certain of the Company’s directors and officers and affiliates of SunTx (collectively, the “RRA Holders”). Under the Registration Rights Agreement, the RRA Holders have “demand” registration rights, meaning that the Company must register under the Securities Act shares of the Company’s common stock owned by such RRA Holders upon their demand under certain circumstances, and “piggyback” registration rights, meaning that, if the Company proposes to register an offering of securities, it generally must give written notice to the RRA Holders to allow each to include its shares in the registration. In general, the Company must pay all out-of-pocket expenses in connection with a registration under the Registration Rights Agreement, including filing and registration fees, printing costs, fees and expenses of the Company’s legal counsel and independent registered public accountants and fees and expenses for one legal counsel for the applicable RRA Holders. The RRA Holders whose shares are registered must pay all incremental selling expenses relating to any offering, such as underwriters’ commissions and discounts, brokerage fees, underwriter marketing costs and any additional legal counsel that they may engage. As of September 30, 2019, a total of 33,075,417 shares of the Company’s common stock were subject to the registration rightsagreement, of which 14,225,000 shares had been previously registered but not yet sold. The Registration Rights Agreement expires on May 4, 2023.
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef