Core Insights - Conestoga Capital Advisors reported that equity markets reached new all-time highs in Q3 2025, but the Conestoga Small Cap Composite underperformed the Russell 2000 Growth Index, returning -1.4% compared to the Index's 12.2% gain [1] Company Overview: Construction Partners, Inc. (NASDAQ:ROAD) - Construction Partners, Inc. is a civil infrastructure company focused on roadway construction and maintenance, with a one-month return of -13.96% and a 52-week gain of 35.79% [2] - As of October 17, 2025, the stock closed at $115.01 per share, with a market capitalization of $6.451 billion [2] Financial Performance - Construction Partners, Inc. reported revenue of $779.3 million in fiscal Q3 2025, reflecting a 51% increase compared to fiscal Q3 2024 [4] Market Position and Strategy - The company benefits from federal and state infrastructure spending, which has led to backlog growth and improved revenue visibility [3] - Lower asphalt and fuel costs have supported margin recovery, alongside strong project execution in the Southeastern U.S. [3] - Management's disciplined acquisition strategy has expanded the company's market presence into Texas, Tennessee, and Oklahoma, enhancing long-term growth prospects [3]

Core Insights - Construction Partners, Inc. (CPI) has acquired P&S Paving, Inc., expanding its operations into Daytona Beach and Florida's East Coast, enhancing its service delivery capabilities in a rapidly growing market [1][2] Company Overview - Construction Partners, Inc. is a vertically integrated civil infrastructure company operating in local markets across the Sunbelt, including Alabama, Florida, Georgia, North Carolina, Oklahoma, South Carolina, Tennessee, and Texas [3] - The company focuses on the construction, repair, and maintenance of surface infrastructure, with a significant portion of its business derived from publicly funded projects such as roadways, highways, airport runways, and bridges [3] Acquisition Details - The acquisition of P&S Paving includes two hot-mix asphalt plants and will be integrated into CPI's platform company, C.W. Roberts Contracting, which operates throughout Florida [1][2] - The transaction is expected to provide CPI with immediate access to the high-growth Interstate 95 corridor, where there is strong demand for public and private infrastructure [2]

Group 1 - Construction Partners Inc (NASDAQ:ROAD) is identified as a promising AI stock benefiting from the infrastructure boom linked to the data center revolution [1][2] - The company has achieved mid-teens revenue growth through organic growth and mergers & acquisitions (M&A), with a notable M&A deal in Texas contributing to accelerated revenue growth [2] - Anecdotal evidence suggests significant infrastructure needs, such as a 16-mile temporary road for a new data center in Idaho, highlighting the demand for road construction services [2] Group 2 - Loomis Sayles Small Cap Growth Fund acknowledges the potential of Construction Partners Inc as an investment but suggests that other AI stocks may offer higher returns with limited downside risk [2] - The company operates primarily in the southern and southeastern regions of the United States, focusing on road building and paving services [2]

Core Insights - Construction Partners, Inc. (CPI) has completed the acquisition of eight hot-mix asphalt plants from Vulcan Materials Company, enhancing its operations in the Houston area [1][2][8] - The acquisition aligns with CPI's strategy to expand its geographic footprint in Texas and improve its operational capabilities [2][3] - CPI reported a record project backlog of $2.94 billion, reflecting a 58.1% year-over-year increase, ensuring strong revenue visibility for the upcoming fiscal year [5][8] Company Operations - The acquired asphalt plants will be integrated into Durwood Greene Construction Co., which CPI had previously acquired in August 2025 [2] - The acquisition not only adds new plants and equipment but also skilled workers who align with CPI's values of safety, quality, and customer service [2] - Management is focused on long-term growth through both organic expansion and selective acquisitions, maintaining a disciplined balance sheet [6] Market Position - CPI's stock has experienced a 71.1% increase over the past year, significantly outperforming the Zacks Building Products - Miscellaneous industry's decline of 7.5% [7] - The company is well-positioned for continued growth in 2025, supported by strong public infrastructure funding in the Sunbelt region [4][7] - Approximately 80% to 85% of CPI's expected revenue for the next 12 months is secured through its project backlog, providing strong visibility into fiscal 2026 performance [5]

Group 1: Company Performance - Construction Partners (ROAD) has gained approximately 43.2% year-to-date, significantly outperforming the average return of 8.1% for the Construction sector [4] - The Zacks Consensus Estimate for ROAD's full-year earnings has increased by 10.7% over the past three months, indicating improved analyst sentiment and a stronger earnings outlook [4] - Construction Partners currently holds a Zacks Rank of 2 (Buy), suggesting a favorable position for potential investors [3] Group 2: Industry Context - Construction Partners is part of the Building Products - Miscellaneous industry, which consists of 33 individual stocks and currently ranks 153 in the Zacks Industry Rank [6] - The average return for the Building Products - Miscellaneous industry is 2.5% year-to-date, highlighting that ROAD is performing better than its industry peers [6] - Another notable stock in the Construction sector is Tutor Perini (TPC), which has seen a year-to-date increase of 156.4% and holds a Zacks Rank of 1 (Strong Buy) [5][7]

Core Viewpoint - Construction Partners (ROAD) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on the consensus measure of EPS estimates from sell-side analysts, reflecting the company's changing earnings picture [1][2]. - A strong correlation exists between earnings estimate revisions and near-term stock price movements, with institutional investors playing a role in this relationship [4][6]. Company Performance and Outlook - The upgrade for Construction Partners suggests an improvement in the company's underlying business, which could lead to increased stock prices as investors respond positively [5][10]. - For the fiscal year ending September 2025, Construction Partners is expected to earn $2.03 per share, with a 10.7% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of generating significant returns for top-ranked stocks [7][9]. - The upgrade to Zacks Rank 2 places Construction Partners in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10].

Group 1: Fund Performance - Loomis Sayles Small Cap Growth Fund returned 9.37% in Q2 2025, underperforming the Russell 2000 Growth Index's 11.97% return due to security selection issues in the information technology and financial sectors [1] - The second quarter began with significant volatility but ended at an all-time high for the S&P 500 [1] Group 2: Company Highlight - Construction Partners, Inc. - Construction Partners, Inc. (NASDAQ:ROAD) is a civil infrastructure company focused on constructing and maintaining roadways, with a one-month return of 6.04% and a 52-week gain of 82.15% [2] - As of September 29, 2025, Construction Partners, Inc. had a market capitalization of $7.18 billion, with shares closing at $127.14 [2] - The company achieved a revenue of $779.3 million in fiscal Q3 2025, reflecting a 51% increase compared to fiscal Q3 2024 [4] Group 3: Growth and M&A Activity - Construction Partners, Inc. has experienced mid-teens revenue growth through a combination of organic growth and mergers and acquisitions (M&A) [3] - The company outperformed during the quarter due to a significant M&A deal in Texas and other transactions in existing markets, which accelerated revenue growth and led to higher earnings revisions [3] Group 4: Hedge Fund Interest - At the end of Q2 2025, 27 hedge fund portfolios held shares of Construction Partners, Inc., an increase from 15 in the previous quarter [4]

Core Viewpoint - Agnico Eagle Mines Limited has divested its entire stake in Royal Road Minerals Limited by selling 47,944,981 ordinary shares for a total of C$5,513,673, representing a strategic decision to monetize its investment [1][2][3]. Group 1: Transaction Details - The sale involved 47,944,981 ordinary shares at a price of C$0.115 per share, resulting in total proceeds of C$5,513,673 [1]. - Prior to the sale, Agnico Eagle owned approximately 18% of the issued and outstanding ordinary shares of Royal Road on a non-diluted basis [2]. Group 2: Strategic Focus - Agnico Eagle is concentrating on high-quality internal growth projects while also pursuing strategic acquisitions in opportunities with high geological potential [3]. - The company periodically reviews its investments against strategic priorities and may divest certain holdings as part of its strategy [3]. Group 3: Company Overview - Agnico Eagle is Canada's largest mining company and the second-largest gold producer globally, with operations in Canada, Australia, Finland, and Mexico [5]. - The company has a history of consistent shareholder value creation, having declared cash dividends every year since 1983 [5].

Company Overview - Construction Partners, Inc. (CPI) is a vertically integrated civil infrastructure company specializing in the construction and maintenance of roadways in local markets throughout the Sunbelt [4] - The company operates in several states including Alabama, Florida, Georgia, North Carolina, Oklahoma, South Carolina, Tennessee, and Texas [4] - CPI's business primarily consists of publicly funded projects, which include local and state roadways, interstate highways, airport runways, and bridges [4] Upcoming Analyst Day - CPI will host an in-person 2025 Analyst Day and hot-mix asphalt facility tour on October 22, 2025, in Raleigh, North Carolina [1] - The event will feature discussions led by the President and CEO, Fred J. (Jule) Smith, III, along with other senior leadership team members, focusing on strategic initiatives, growth priorities, organizational achievements, and business outlook [2] - The Analyst Day presentation will begin at approximately 10:00 a.m. Eastern Time, following the facility tour, and will include a question-and-answer session [2] Event Participation - Analysts and institutional investors interested in attending the event in person are encouraged to contact the company's Investor Relations representatives [3] - The event will also be webcast live on the company's website, with additional details regarding registration and webcast information to be provided later [3]

[Cautionary Statement Regarding Forward-Looking Statements](index=2&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) The report contains forward-looking statements based on management's beliefs, subject to various risks that could cause actual results to differ materially - The report contains forward-looking statements identified by words like 'seek,' 'anticipate,' 'plan,' 'estimate,' and 'expect,' which are not guarantees of future performance and are based on management's beliefs[5](index=5&type=chunk) - Important factors that could cause actual results to differ materially include declines in public infrastructure funding, competition, capital-intensive business risks, government regulations, unfavorable economic conditions, and the ability to manage acquisitions and supply chains[6](index=6&type=chunk) - Other risks include adverse weather, climate change regulations, substantial indebtedness, inflation on costs, banking industry developments, litigation, cybersecurity incidents, and maintaining effective internal controls[8](index=8&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the Company's unaudited consolidated financial statements and related disclosures for the periods ended June 30, 2025, and September 30, 2024 [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the Company's unaudited consolidated financial statements, including the balance sheets, statements of comprehensive income, statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining significant accounting policies, business acquisitions, debt, equity, and other financial disclosures for the periods ended June 30, 2025, and September 30, 2024 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the Company's financial position, detailing assets, liabilities, and equity at specific points in time | Metric | June 30, 2025 (in thousands) | September 30, 2024 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :----------------------------- | :-------------------------------- | :-------------------- | :------- | | Cash and cash equivalents | $114,336 | $74,686 | $39,650 | 53.1% | | Contracts receivable including retainage, net | $464,529 | $350,811 | $113,718 | 32.4% | | Property, plant and equipment, net | $1,147,613 | $629,924 | $517,689 | 82.2% | | Goodwill | $775,756 | $231,656 | $544,100 | 234.9% | | Total assets | $2,925,841 | $1,542,135 | $1,383,706 | 89.7% | | Total liabilities | $2,072,513 | $968,395 | $1,104,118 | 114.0% | | Total stockholders' equity | $853,328 | $573,740 | $279,588 | 48.7% | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the Company's revenues, expenses, and net income, reflecting financial performance over specific periods | Metric (9 Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------ | :------------------ | :------------------ | :-------------------- | :------- | | Revenues | $1,912,507 | $1,285,726 | $626,781 | 48.7% | | Gross profit | $279,731 | $174,173 | $105,558 | 60.6% | | Operating income | $124,040 | $65,472 | $58,568 | 89.5% | | Interest expense, net | $(64,961) | $(12,987) | $(51,974) | 400.2% | | Net income | $45,211 | $39,627 | $5,584 | 14.1% | | Basic EPS | $0.82 | $0.76 | $0.06 | 7.9% | | Diluted EPS | $0.82 | $0.75 | $0.07 | 9.3% | | Metric (3 Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------ | :------------------ | :------------------ | :-------------------- | :------- | | Revenues | $779,277 | $517,794 | $261,483 | 50.5% | | Gross profit | $131,810 | $83,492 | $48,318 | 57.9% | | Operating income | $82,943 | $45,657 | $37,286 | 81.7% | | Interest expense, net | $(25,239) | $(4,673) | $(20,566) | 440.1% | | Net income | $44,047 | $30,908 | $13,139 | 42.5% | | Basic EPS | $0.80 | $0.60 | $0.20 | 33.3% | | Diluted EPS | $0.79 | $0.59 | $0.20 | 33.9% | [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in the Company's equity accounts, including common stock, additional paid-in capital, and retained earnings | Metric | September 30, 2024 (in thousands) | June 30, 2025 (in thousands) | Change (in thousands) | % Change | | :----------------------------------- | :-------------------------------- | :--------------------------- | :-------------------- | :------- | | Total Stockholders' Equity | $573,740 | $853,328 | $279,588 | 48.7% | | Class A Common Stock (shares) | 44,062,830 | 47,963,617 | 3,900,787 | 8.85% | | Class B Common Stock (shares) | 11,784,650 | 11,463,770 | (320,880) | -2.72% | | Additional Paid-in Capital | $278,065 | $535,259 | $257,194 | 92.5% | | Retained Earnings | $315,210 | $360,421 | $45,211 | 14.3% | - During the nine months ended June 30, 2025, the Company issued **3,000,000 shares of Class A common stock** for approximately **$236.3 million** in connection with the Lone Star Acquisition[15](index=15&type=chunk)[92](index=92&type=chunk) - The Company repurchased **119,370 shares of Class A common stock** for approximately **$8.7 million** through open market transactions during the nine months ended June 30, 2025[15](index=15&type=chunk)[94](index=94&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods | Cash Flow Activity (9 Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------ | :------------------ | :------------------ | :-------------------- | :------- | | Net cash provided by operating activities | $179,318 | $113,181 | $66,137 | 58.4% | | Net cash used in investing activities | $(1,033,130) | $(199,098) | $(834,032) | 418.9% | | Net cash provided by financing activities | $893,433 | $95,280 | $798,153 | 837.7% | | Net change in cash, cash equivalents and restricted cash | $39,621 | $9,363 | $30,258 | 323.2% | - Cash used in investing activities was primarily driven by **$935.7 million for business acquisitions** in 2025, a significant increase from **$135.2 million** in 2024[18](index=18&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) - Financing activities in 2025 included **$833.5 million from long-term debt issuance** (Term Loan B) and **$218.4 million from the revolving credit facility**, largely for acquisitions[18](index=18&type=chunk)[184](index=184&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the consolidated financial statements [Note 1 - General](index=10&type=section&id=Note%201%20-%20General) This note describes the Company's business operations, geographic focus, and the seasonal nature of its activities - The Company specializes in civil infrastructure, including roadway construction and maintenance, HMA manufacturing, paving, site development, and aggregate mining across the Sunbelt region (Alabama, Florida, Georgia, North Carolina, Oklahoma, South Carolina, Tennessee, and Texas)[19](index=19&type=chunk) - Operations are seasonal, with lower activity in the first and second fiscal quarters due to adverse weather conditions (snow, rain, cold) and higher activity in the warmer, drier third and fourth fiscal quarters[21](index=21&type=chunk) [Note 2 - Significant Accounting Policies](index=10&type=section&id=Note%202%20-%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements, including revenue recognition - The consolidated financial statements are prepared in accordance with GAAP, requiring management estimates for revenue recognition, asset valuations, and contingent liabilities[22](index=22&type=chunk)[23](index=23&type=chunk) - Revenue from construction projects is recognized over time using the cost-to-cost input method, while material sales are recognized at a point in time when control transfers to the customer[41](index=41&type=chunk)[43](index=43&type=chunk)[48](index=48&type=chunk) | Revenue Source | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Private | 35.1% | 35.6% | 39.0% | 39.2% | | Public | 64.9% | 64.4% | 61.0% | 60.8% | - Projects for various departments of transportation accounted for **46.1%** and **40.8%** of consolidated revenues for the three and nine months ended June 30, 2025, respectively, indicating a significant reliance on public sector contracts[39](index=39&type=chunk) [Note 3 - Accounting Standards](index=17&type=section&id=Note%203%20-%20Accounting%20Standards) This note discusses the impact of recently issued accounting pronouncements on the Company's financial statements - No recently issued accounting pronouncements are expected to have a material impact on the Company's financial statements[62](index=62&type=chunk) [Note 4 - Business Acquisitions](index=17&type=section&id=Note%204%20-%20Business%20Acquisitions) This note details the Company's recent acquisitions, their financial contributions, and the resulting goodwill recognized - The Company completed **four acquisitions** during the nine months ended June 30, 2025: Lone Star Paving (Texas), Overland Corporation (Oklahoma), Mobile Asphalt Company LLC (Alabama), and PRI (Tennessee), significantly expanding its operations[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - These acquisitions contributed **$385.0 million in revenue** and **$3.4 million in net income** for the nine months ended June 30, 2025, and resulted in approximately **$542.4 million in provisional goodwill**[68](index=68&type=chunk)[70](index=70&type=chunk) | Pro Forma Financials (9 Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------------------- | :------------------ | :------------------ | | Pro forma revenues | $2,061,082 | $1,942,147 | | Pro forma net income | $70,196 | $59,291 | [Note 5 - Contracts Receivable Including Retainage, Net](index=21&type=section&id=Note%205%20-%20Contracts%20Receivable%20Including%20Retainage,%20Net) This note provides a breakdown of contracts receivable, including retainage and the allowance for credit losses | Contracts Receivable (in thousands) | June 30, 2025 | September 30, 2024 | | :-------------------------------- | :------------ | :----------------- | | Contracts receivable | $404,325 | $299,156 | | Retainage receivable | $62,414 | $52,728 | | Allowance for credit losses | $(2,210) | $(1,073) | | Total, net | $464,529 | $350,811 | [Note 6 - Contract Assets and Liabilities](index=22&type=section&id=Note%206%20-%20Contract%20Assets%20and%20Liabilities) This note presents the Company's contract-related assets and liabilities, including costs, estimated earnings, and billings on uncompleted contracts | Contract Balances (in thousands) | June 30, 2025 | September 30, 2024 | | :------------------------------- | :------------ | :----------------- | | Costs on uncompleted contracts | $3,405,243 | $2,224,511 | | Estimated earnings to date | $412,813 | $271,719 | | Billings to date | $(3,887,644) | $(2,590,329) | | Net billings in excess | $(69,588) | $(94,099) | - The Company has approximately **$2.2 billion** in unsatisfied performance obligations, with **$0.7 billion** expected to be recognized in the remainder of fiscal year 2025 and **$1.5 billion** thereafter[76](index=76&type=chunk) [Note 7 - Property, Plant and Equipment](index=23&type=section&id=Note%207%20-%20Property,%20Plant%20and%20Equipment) This note details the composition of the Company's property, plant, and equipment, along with related depreciation expenses | Property, Plant & Equipment (in thousands) | June 30, 2025 | September 30, 2024 | Change (in thousands) | % Change | | :--------------------------------------- | :------------ | :----------------- | :-------------------- | :------- | | Construction equipment | $755,626 | $570,044 | $185,582 | 32.6% | | Plants | $394,522 | $255,214 | $139,308 | 54.6% | | Mineral reserves | $221,095 | $69,334 | $151,761 | 219.0% | | Total property, plant and equipment, net | $1,147,613 | $629,924 | $517,689 | 82.2% | - Depreciation, depletion, and amortization expense increased to **$104.7 million** for the nine months ended June 30, 2025, from **$67.6 million** in the prior year, reflecting the expanded asset base[77](index=77&type=chunk) [Note 8 - Debt](index=23&type=section&id=Note%208%20-%20Debt) This note outlines the Company's long-term debt structure, including new borrowings and compliance with debt covenants | Long-term Debt (in thousands) | June 30, 2025 | September 30, 2024 | Change (in thousands) | | :---------------------------- | :------------ | :----------------- | :-------------------- | | Term Loan A | $600,000 | $392,188 | $207,812 | | Term Loan B | $845,750 | $0 | $845,750 | | Revolving Credit Facility | $0 | $122,850 | $(122,850) | | Total long-term debt | $1,445,750 | $515,038 | $930,712 | - The Term Loan B Credit Agreement, providing **$850.0 million**, was entered into on November 1, 2024, primarily to finance the Lone Star Acquisition[85](index=85&type=chunk) - The Company was in compliance with all covenants under the Term Loan A / Revolver Credit Agreement at June 30, 2025, with a consolidated interest coverage ratio of **6.45-to-1.00** and a net leverage ratio of **3.17-to-1.00**[83](index=83&type=chunk) [Note 9 - Equity](index=25&type=section&id=Note%209%20-%20Equity) This note describes changes in the Company's equity, including stock conversions, issuances, repurchases, and restricted share awards - During the nine months ended June 30, 2025, **429,880 shares of Class B common stock** were converted to Class A common stock, and **3,000,000 shares of Class A common stock** were issued for the Lone Star Acquisition[91](index=91&type=chunk)[92](index=92&type=chunk) - The Company repurchased **119,370 shares of Class A common stock** for approximately **$8.7 million** under its stock repurchase plan[94](index=94&type=chunk) - The Company awarded **333,995 restricted shares of Class A common stock** and **48,000 restricted shares of Class B common stock**, including **240,000 Class A shares** for key employees of acquired businesses[95](index=95&type=chunk) [Note 10 - Earnings Per Share](index=26&type=section&id=Note%2010%20-%20Earnings%20Per%20Share) This note provides the basic and diluted earnings per share calculations for the reported periods | EPS (3 Months Ended June 30) | 2025 | 2024 | Change | % Change | | :--------------------------- | :--- | :--- | :----- | :------- | | Basic EPS | $0.80 | $0.60 | $0.20 | 33.3% | | Diluted EPS | $0.79 | $0.59 | $0.20 | 33.9% | | EPS (9 Months Ended June 30) | 2025 | 2024 | Change | % Change | | :--------------------------- | :--- | :--- | :----- | :------- | | Basic EPS | $0.82 | $0.76 | $0.06 | 7.9% | | Diluted EPS | $0.82 | $0.75 | $0.07 | 9.3% | [Note 11 - Provision for Income Taxes](index=26&type=section&id=Note%2011%20-%20Provision%20for%20Income%20Taxes) This note details the Company's effective income tax rates and the factors influencing changes in these rates | Effective Income Tax Rate | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Effective Tax Rate | 24.0% | 24.6% | 24.1% | 24.6% | - The decrease in the effective tax rate was primarily due to differences in state tax rates at the Company's operating subsidiaries[100](index=100&type=chunk) [Note 12 - Related Parties](index=27&type=section&id=Note%2012%20-%20Related%20Parties) This note discloses transactions and balances with related parties, including notes receivable and various service agreements - The Company has notes receivable from an immediate family member of an executive officer and a disposed entity, with remaining balances of **$0.2 million** and **$0.1 million**, respectively, at June 30, 2025[101](index=101&type=chunk)[102](index=102&type=chunk)[104](index=104&type=chunk) - Related party transactions include subcontracting services, an access agreement with Island Pond Corporate Services, LLC (owned by the Executive Chairman), and a management services agreement with SunTx[103](index=103&type=chunk) | Related Party Transaction (9 Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------------------------- | :------------------ | :------------------ | | Subcontracting Services (expense) | $(7,584) | $(5,214) | | Island Pond (expense) | $(300) | $(300) | | SunTx (expense) | $(2,291) | $(1,405) | [Note 13 - Share-Based Compensation](index=28&type=section&id=Note%2013%20-%20Share-Based%20Compensation) This note outlines the Company's share-based compensation plans, including expense recognition and outstanding awards | Share-Based Compensation Expense (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :---------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Equity classified awards | $3,904 | $2,893 | $20,947 | $8,232 | | Liability classified awards | $4,076 | $1,092 | $5,916 | $1,974 | | Employee stock purchase plan | $584 | $54 | $1,098 | $380 | | Total share-based compensation expense | $8,564 | $4,039 | $27,961 | $10,586 | - The Company awarded **381,995 restricted stock units (RSUs)** in 2025, with an aggregate grant date fair value of **$30.0 million**, and **73,603 target Class A shares** for Performance Stock Units (PSUs)[109](index=109&type=chunk)[112](index=112&type=chunk) - Unrecognized compensation expense for RSUs and PSUs at June 30, 2025, was approximately **$27.6 million** and **$5.8 million**, respectively[109](index=109&type=chunk)[112](index=112&type=chunk) [Note 14 - Leases](index=31&type=section&id=Note%2014%20-%20Leases) This note provides information on the Company's operating leases, including right-of-use assets, liabilities, and lease expenses | Lease Metrics (in thousands) | June 30, 2025 | September 30, 2024 | | :--------------------------- | :------------ | :----------------- | | Operating lease right-of-use assets | $70,323 | $38,932 | | Current portion of operating lease liabilities | $17,548 | $9,065 | | Operating lease liabilities, net of current portion | $53,225 | $30,661 | | Lease Expense (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 9 Months Ended June 30, 2025 | 9 Months Ended June 30, 2024 | | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating lease cost | $5,052 | $2,080 | $12,091 | $4,454 | | Short-term lease cost | $6,972 | $6,189 | $21,004 | $17,471 | | Total lease expense | $12,024 | $8,269 | $33,095 | $21,925 | - As of June 30, 2025, the weighted-average remaining lease term was **4.4 years**, and the weighted-average discount rate was **6.01%**[118](index=118&type=chunk) [Note 15 - Investment in Derivative Instruments](index=33&type=section&id=Note%2015%20-%20Investment%20in%20Derivative%20Instruments) This note describes the Company's use of derivative instruments to manage interest rate and commodity price risks - The Company uses interest rate swap contracts as cash flow hedges and commodity swap contracts to manage market risks, not for speculative purposes[120](index=120&type=chunk)[121](index=121&type=chunk)[127](index=127&type=chunk) | Derivative Gains (Losses) (9 Months Ended June 30, in thousands) | 2025 | 2024 | | :--------------------------------------------------------------- | :--- | :--- | | Realized Gain (Loss) - Interest expense, net | $5,922 | $7,919 | | Unrealized Gain (Loss) - Interest expense, net | $0 | $0 | | Realized Gain (Loss) - Cost of revenues (Commodity Swaps) | $0 | $(61) | | Unrealized Gain (Loss) - Cost of revenues (Commodity Swaps) | $0 | $(184) | - The notional value of the interest rate swap agreement was **$300.0 million** at June 30, 2025, with a fair value of **$9.4 million**[84](index=84&type=chunk)[129](index=129&type=chunk) [Note 16 - Fair Value Measurements](index=34&type=section&id=Note%2016%20-%20Fair%20Value%20Measurements) This note details assets measured at fair value, categorizing them by valuation input levels | Assets Measured at Fair Value (June 30, 2025, in thousands) | Level 2 | | :-------------------------------------------------------- | :------ | | Interest rate swaps | $9,379 | | U.S. government securities | $14,182 | | Corporate debt securities | $5,355 | | Municipal government securities | $1,303 | | Other debt securities | $1,114 | | Total assets | $31,333 | - Fair values for interest rate swaps and commodity swap contracts are based on model-driven valuations using observable market inputs, classifying them as Level 2[130](index=130&type=chunk) [Note 17 - Commitments](index=34&type=section&id=Note%2017%20-%20Commitments) This note outlines the Company's various contractual commitments, including letters of credit, purchase agreements, and royalty payments - At June 30, 2025, the Company had **$6.5 million** in aggregate letters of credit outstanding, primarily for insurance policies[131](index=131&type=chunk) | Purchase Commitments (in thousands) | Remainder of 2025 | 2026 | Total | | :---------------------------------- | :---------------- | :--- | :---- | | Diesel fuel and natural gas | $952 | $1,264 | $2,216 | | Minimum Royalty Payments (in thousands) | Remainder of 2025 | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | | :-------------------------------------- | :---------------- | :--- | :--- | :--- | :--- | :--------- | :---- | | Aggregates facilities | $11 | $396 | $384 | $359 | $347 | $1,977 | $3,474 | [Note 18 - Restricted Investments](index=35&type=section&id=Note%2018%20-%20Restricted%20Investments) This note describes the Company's restricted investments, primarily debt securities held for casualty insurance claims | Restricted Investments (Fair Value, in thousands) | June 30, 2025 | September 30, 2024 | | :------------------------------------------------ | :------------ | :----------------- | | U.S. government securities | $14,182 | $8,338 | | Corporate debt securities | $5,355 | $6,872 | | Municipal government securities | $1,303 | $1,598 | | Other debt securities | $1,114 | $1,212 | | Total | $21,954 | $18,020 | - These debt securities are classified as available-for-sale and are held in a fiduciary capacity by the Captive for the payment of casualty insurance claims[28](index=28&type=chunk) [Note 19 - Other Comprehensive Income (Loss)](index=36&type=section&id=Note%2019%20-%20Other%20Comprehensive%20Income%20(Loss)) This note presents the components of other comprehensive income (loss), primarily related to derivative instruments and available-for-sale securities | AOCI (in thousands) | June 30, 2025 | September 30, 2024 | | :------------------ | :------------ | :----------------- | | Interest rate swap contract, net of blend and extend arrangement | $7,272 | $9,852 | | Unrealized loss on available-for-sale securities | $35 | $34 | | Less tax effect | $(1,822) | $(2,384) | | Total | $5,485 | $7,502 | - Net OCI changes for the nine months ended June 30, 2025, resulted in a **loss of $2.0 million**, primarily from the interest rate hedge[138](index=138&type=chunk) [Note 20 - Subsequent Events](index=37&type=section&id=Note%2020%20-%20Subsequent%20Events) This note discloses significant events that occurred after the reporting period, including further acquisitions - On August 1, 2025, the Company acquired Durwood Greene Construction Co. and G&S Asphalt, Inc. for **$200.0 million**, expanding operations in the Houston, Texas metropolitan area[140](index=140&type=chunk) - The acquisition added three HMA plants and related crews and equipment, with the consideration subject to post-closing adjustments[140](index=140&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, highlighting key performance drivers, recent developments, and a detailed comparison of financial results for the three and nine months ended June 30, 2025, versus 2024. It also discusses liquidity, capital resources, and contractual obligations [Overview](index=38&type=section&id=Overview) This section provides an overview of the Company's business, focusing on its civil infrastructure specialization and reliance on public projects - The Company is a civil infrastructure company specializing in building and maintaining transportation networks across the Sunbelt, including highways, roads, bridges, and airports[142](index=142&type=chunk) - Public projects, funded by federal, state, and local governments, represent a significant and historically stable share of the U.S. construction market, primarily through the Highway Trust Fund[143](index=143&type=chunk) [Contract Backlog](index=38&type=section&id=Contract%20Backlog) This section details the Company's contract backlog, including uncompleted work and low-bid projects, indicating future revenue potential | Contract Backlog (June 30, 2025) | Amount (in billions) | | :------------------------------- | :------------------- | | Total Contract Backlog | $2.9 | | Uncompleted work on contracts in progress | $2.2 | | Low bid/no contract projects | $0.7 | - Contract backlog includes executed change orders, pending change orders with probable confirmation, and claims with a legal basis and probable collection[145](index=145&type=chunk) [Recent Developments](index=38&type=section&id=Recent%20Developments) This section highlights key recent events, including strategic acquisitions and amendments to credit agreements - Acquired PRI of East Tennessee, Inc. on May 1, 2025, establishing a platform company in Tennessee with HMA plants and pavement preservation services[146](index=146&type=chunk) - Acquired Durwood Greene Construction Co. on August 1, 2025, expanding Texas operations with three HMA plants in the Houston metropolitan area[147](index=147&type=chunk) - On June 30, 2025, the Term Loan A / Revolver Credit Agreement was amended to increase the Revolving Credit Facility to **$500.0 million** and Term Loan A to **$600.0 million**, extend maturity, and modify covenants[148](index=148&type=chunk) [How We Assess Performance of Our Business](index=39&type=section&id=How%20We%20Assess%20Performance%20of%20Our%20Business) This section explains the key financial metrics and non-GAAP measures used by management to evaluate the Company's business performance - Revenues are derived from construction services (recognized over time using cost-to-cost method) and material sales (recognized at point of transfer)[149](index=149&type=chunk) - Gross profit is influenced by direct and indirect contract costs, raw material prices (liquid asphalt, diesel fuel), and price adjustment provisions in contracts[150](index=150&type=chunk) - Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted Net Income are non-GAAP measures used by management and investors to evaluate operating performance, excluding items like interest, taxes, depreciation, share-based compensation, and transformative acquisition expenses[156](index=156&type=chunk) | Non-GAAP Metrics (3 Months Ended June 30, in thousands) | 2025 | 2024 | Change | % Change | | :------------------------------------------------------ | :---------- | :---------- | :---------- | :------- | | Adjusted EBITDA | $131,710 | $73,235 | $58,475 | 79.8% | | Adjusted EBITDA Margin | 16.9% | 14.1% | 2.8 pp | 19.9% | | Adjusted Net Income | $45,248 | $30,908 | $14,340 | 46.4% | | Non-GAAP Metrics (9 Months Ended June 30, in thousands) | 2025 | 2024 | Change | % Change | | :------------------------------------------------------ | :---------- | :---------- | :---------- | :------- | | Adjusted EBITDA | $269,780 | $143,573 | $126,207 | 87.9% | | Adjusted EBITDA Margin | 14.1% | 11.2% | 2.9 pp | 25.9% | | Adjusted Net Income | $62,901 | $39,627 | $23,274 | 58.7% | [Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=42&type=section&id=Three%20Months%20Ended%20June%2030,%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030,%202024) This section provides a comparative analysis of the Company's financial performance for the three months ended June 30, 2025, versus 2024 | Metric (3 Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------ | :------------------ | :------------------ | :-------------------- | :------- | | Revenues | $779,277 | $517,794 | $261,483 | 50.5% | | Gross profit | $131,810 | $83,492 | $48,318 | 57.9% | | Operating income | $82,943 | $45,657 | $37,286 | 81.7% | | Interest expense, net | $(25,239) | $(4,673) | $(20,566) | 440.1% | | Net income | $44,047 | $30,908 | $13,139 | 42.5% | | Adjusted EBITDA | $131,710 | $73,235 | $58,475 | 79.8% | | Adjusted Net Income | $45,248 | $30,908 | $14,340 | 46.4% | - The **50.5% increase in revenues** included **$235.7 million from acquisitions** and **$25.8 million from existing markets** due to strong demand[159](index=159&type=chunk) - Gross profit margin improved due to efficient utilization of plants, terminals, and equipment, and completion of new backlog with more favorable margins[160](index=160&type=chunk) [Nine Months Ended June 30, 2025 Compared to Nine Months Ended June 30, 2024](index=44&type=section&id=Nine%20Months%20Ended%20June%2030,%202025%20Compared%20to%20Nine%20Months%20Ended%20June%2030,%202024) This section provides a comparative analysis of the Company's financial performance for the nine months ended June 30, 2025, versus 2024 | Metric (9 Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------ | :------------------ | :------------------ | :-------------------- | :------- | | Revenues | $1,912,507 | $1,285,726 | $626,781 | 48.7% | | Gross profit | $279,731 | $174,173 | $105,558 | 60.6% | | Operating income | $124,040 | $65,472 | $58,568 | 89.5% | | Interest expense, net | $(64,961) | $(12,987) | $(51,974) | 400.2% | | Net income | $45,211 | $39,627 | $5,584 | 14.1% | | Adjusted EBITDA | $269,780 | $143,573 | $126,207 | 87.9% | | Adjusted Net Income | $62,901 | $39,627 | $23,274 | 58.7% | - The **48.7% revenue increase** included **$529.6 million from acquisitions** and **$97.2 million from existing markets** due to strong demand[170](index=170&type=chunk) - Acquisition-related expenses increased by **$20.0 million to $22.2 million**, primarily due to the Lone Star Acquisition[173](index=173&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's cash flow, capital expenditures, and ability to meet its financial obligations and fund future operations | Cash Flow Activity (9 Months Ended June 30, in thousands) | 2025 | 2024 | Change | % Change | | :-------------------------------------------------------- | :---------- | :---------- | :---------- | :------- | | Net cash provided by operating activities | $179,318 | $113,181 | $66,137 | 58.4% | | Net cash used in investing activities | $(1,033,130)| $(199,098) | $(834,032) | 418.9% | | Net cash provided by financing activities | $893,433 | $95,280 | $798,153 | 837.7% | - Capital expenditures for fiscal 2025 are projected to be **$130.0 million to $140.0 million**[186](index=186&type=chunk) - The Company believes operating cash flow and available borrowings under the Term Loan A / Revolver Credit Agreement will be sufficient for the next 12 months, including funding acquisitions and a **$40 million stock repurchase program** (of which **$8.7 million has been used**)[190](index=190&type=chunk)[192](index=192&type=chunk) | Contractual Obligations (June 30, 2025, in thousands) | Total | 2025 (Remainder) | 2026 | 2027 | 2028 | 2029 | 2030 and Thereafter | | :---------------------------------------------------- | :------------ | :--------------- | :------------ | :------------ | :------------ | :------------ | :------------------ | | Debt obligations | $1,445,750 | $9,625 | $38,500 | $38,500 | $38,500 | $38,500 | $1,282,125 | | Purchase agreement obligations (Lone Star) | $69,435 | $23,145 | $46,290 | $0 | $0 | $0 | $0 | | Lease obligations | $80,839 | $5,579 | $21,367 | $20,470 | $15,808 | $9,479 | $8,136 | | Purchase commitments | $2,216 | $952 | $1,264 | $0 | $0 | $0 | $0 | | Royalty payments | $3,474 | $11 | $396 | $384 | $359 | $347 | $1,977 | | Asset retirement obligations | $2,523 | $0 | $0 | $0 | $0 | $0 | $2,523 | | Total | $1,604,237 | $39,312 | $107,817 | $59,354 | $54,667 | $48,326 | $1,294,761 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the Company's exposure to market risks, primarily interest rate risk on its variable rate debt, and outlines its strategies for managing these risks, including the use of derivative instruments - The Company has **$1.45 billion of variable rate debt** outstanding, exposing it to interest rate risk[197](index=197&type=chunk) - A hypothetical **1% change in borrowing rates** would result in a **$14.5 million change in annual interest expense**[197](index=197&type=chunk) - The Company uses interest rate swap agreements to hedge this risk, with a notional amount of **$300.0 million** and a fair value of **$9.4 million** at June 30, 2025[197](index=197&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the Company's disclosure controls and procedures and confirms that there were no material changes in internal control over financial reporting during the quarter - As of June 30, 2025, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective to provide reasonable assurance for timely and accurate reporting of material information[200](index=200&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025[201](index=201&type=chunk) [PART II. OTHER INFORMATION](index=50&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity sales [Item 1. Legal Proceedings](index=50&type=section&id=Item%201.%20Legal%20Proceedings) This section discloses the Company's involvement in routine litigation and disputes, as well as a specific ongoing inquiry from the Environmental Protection Agency (EPA) regarding alleged Clean Water Act violations - The Company is involved in routine litigation and disputes, including workers' compensation, employment, and contract claims, which management believes will not have a material adverse effect[203](index=203&type=chunk) - The Company is negotiating with the EPA regarding alleged Clean Water Act violations, which may result in a civil penalty exceeding **$300,000** and remediation requirements[204](index=204&type=chunk) [Item 1A. Risk Factors](index=50&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the comprehensive discussion of risk factors in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024, for a detailed understanding of potential material impacts on the business - Readers should refer to the 'Risk Factors' section in the 2024 Form 10-K for a comprehensive discussion of factors that could materially affect the Company's business, financial condition, or operating results[205](index=205&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=50&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports that the Company did not engage in any unregistered sales of equity securities and details the repurchase of Class A common stock under its authorized stock repurchase program during the quarter - No unregistered sales of equity securities occurred during the period covered by this report[206](index=206&type=chunk) | Period (Quarter Ended June 30, 2025) | Total Shares Purchased | Average Price Paid Per Share | Maximum Remaining for Purchase (Approx. Dollar Value) | | :----------------------------------- | :--------------------- | :--------------------------- | :---------------------------------------------------- | | April 1, 2025 - April 30, 2025 | 3,649 | $74.78 | $29,748,923 | | May 1, 2025 - May 31, 2025 | — | — | $29,748,923 | | June 1, 2025 - June 30, 2025 | 3,744 | $106.82 | $29,348,980 | | Total | 7,393 | $91.01 | — | [Item 3. Defaults Upon Senior Securities](index=51&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that the Company did not experience any defaults upon senior securities during the reporting period - There were no defaults upon senior securities[208](index=208&type=chunk) [Item 4. Mine Safety Disclosures](index=51&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that information concerning mine safety violations and other regulatory matters is provided in Exhibit 95.1 of the Quarterly Report - Mine safety disclosures are included in Exhibit 95.1 to this Quarterly Report on Form 10-Q[209](index=209&type=chunk) [Item 5. Other Information](index=51&type=section&id=Item%205.%20Other%20Information) This section states that no director or officer of the Company adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No director or officer changed any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[210](index=210&type=chunk) [Item 6. Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including various agreements, corporate documents, and certifications - Key exhibits include the Unit Purchase Agreement (Exhibit 2.1), Amended and Restated Credit Agreement (Exhibit 10.1), and certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2)[211](index=211&type=chunk) [SIGNATURES](index=53&type=section&id=SIGNATURES) This section confirms the official signing of the report by the Company's President, CEO, Senior Vice President, and CFO - The report was signed by Fred J. Smith, III, President and Chief Executive Officer, and Gregory A. Hoffman, Senior Vice President and Chief Financial Officer, on August 7, 2025[214](index=214&type=chunk)[215](index=215&type=chunk)