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3/25/22,9:42 AM
<br />Table of Contents
<br />Inventories
<br />road -20210930
<br />The Company's inventories are stated at the lower of cost or net realizable value and are accounted for on an average cost basis or a
<br />first -in, first -out cost basis. The cost of inventory includes the cost of material, labor, trucking and other equipment costs associated
<br />with procuring and transporting materials to HMA plants for production and delivery to customers. Inventories consist primarily of
<br />construction stone that has been removed from aggregates facilities and processed for future sale or internal use, raw materials,
<br />including asphalt cement, aggregates and millings that the Company expects to utilize on construction projects within one year.
<br />Inventories valued on the average cost basis totaled $46.1 million and $33.7 million, respectively, at September 30, 2021 and 2020.
<br />Inventories valued on the first -in, fust -out cost basis totaled $7.6 million and $4.8 million, respectively, at September 30, 2021 and
<br />2020.
<br />Revenues from Contracts with Customers
<br />The Company derives all of its revenues from contracts with its customers, predominantly by performing construction services for both
<br />public and private infrastructure projects, with an emphasis on highways, roads, bridges, airports and commercial and residential
<br />developments. These projects are performed for a mix of federal, state, municipal and private customers. In addition, the Company
<br />generates revenues from the sale of construction materials, including HMA, aggregates, liquid asphalt and ready -mix concrete, to third -
<br />party public and private customers pursuant to contracts with those customers. The following table reflects, for the periods presented,
<br />(i) revenues generated from public infrastructure construction projects and the sale of construction materials to public customers and
<br />(ii) revenues generated from private infrastructure construction projects and the sale of construction materials to private customers.
<br />% of Consolidated Revenues for the Fiscal
<br />Year Ended September 30,
<br />2021 2020 2019
<br />Public 61.3% 65.3% 69.3%
<br />Private 38.7% 34.7% 30.7%
<br />Revenues derived from construction projects are recognized over time as the Company satisfies its performance obligations by
<br />transferring control of the asset created or enhanced by the project to the customer. Recognition of revenues and cost of revenues for
<br />construction projects requires significant judgment by management, including, among other things, estimating total costs expected to
<br />be incurred to complete a project and measuring progress toward completion. Management reviews contract estimates regularly to
<br />assess revisions of estimated costs to complete a project and measurement of progress toward completion. No material adjustments to a
<br />contract were noted in the fiscal year ended September 30, 2021.
<br />Management believes the Company maintains reasonable estimates based on prior experience; however, many factors contribute to
<br />changes in estimates of contract costs. Accordingly, estimates made with respect to uncompleted projects are subject to change as each
<br />project progresses and better estimates of contract costs become available. All contract costs are recorded as incurred, and revisions to
<br />estimated total costs are reflected as soon as the obligation to perform is determined. Provisions are recognized for the full amount of
<br />estimated losses on uncompleted contracts whenever evidence indicates that the estimated total cost of a contract exceeds its estimated
<br />total revenue, regardless of the stage of completion. When the Company incurs additional costs related to work performed by
<br />subcontractors, the Company may be able to utilize contractual provisions to back charge the subcontractors for those costs. A
<br />reduction to costs related to back charges is recognized when estimated recovery is probable and the amount can be reasonably
<br />estimated. Contract costs consist of (i) direct costs on contracts, including labor, materials, and amounts payable to subcontractors and
<br />(ii) indirect costs related to contract performance, such as insurance, employee benefits, and equipment (primarily depreciation, fuel,
<br />maintenance and repairs).
<br />Progress toward completion is estimated using the input method, measured by the relationship of total cost incurred through the
<br />measurement date to total estimated costs required to complete the project (cost -to -cost method). The Company believes this method
<br />best depicts the transfer of goods and services to the customer because it represents satisfaction of the Company's performance
<br />obligation under the contract, which occurs as the Company incurs costs. The Company measures percentage of completion based on
<br />the performance of a single performance obligation under its construction projects. Each of the Company's construction contracts
<br />represents a single performance obligation to complete a defined construction project. This is because goods and services promised for
<br />delivery to a customer are not distinct, as the customer cannot benefit from any individual portion of the services on its own. All
<br />deliverables under a contract are part of a project defined by a customer and represent a series of integrated goods and services that
<br />have the same pattern of delivery to the customer and use the same measure of progress toward satisfaction of the performance
<br />obligation as the customer's asset is created or enhanced by the Company. The Company's obligation is not satisfied until the entire
<br />project is complete.
<br />https://www.sec.gov/Archives/edgar/data/0001718227/000171822721000107/road-20210930.htm 871144
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