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3/25/22, 9:42 AM
<br />Table of Contents
<br />FART I
<br />Item 1. Business
<br />Overview
<br />road -20210930
<br />We are a civil infrastructure company that specializes in the construction and maintenance of roadways across Alabama, Florida,
<br />Georgia, North Carolina and South Carolina. Through our wholly owned subsidiaries, we provide a variety of products and services to
<br />both public and private infrastructure projects, with an emphasis on highways, roads, bridges, airports, and commercial and residential
<br />developments. Consistent with our vertical integration strategy, our primary operations consist of (i) manufacturing and distributing hot
<br />mix asphalt ("HMA") for both internal use and sales to third parties in connection with construction projects, (ii) paving activities,
<br />including the construction of roadway base layers and application of asphalt pavement, (iii) site development, including the installation
<br />of utility and drainage systems, (iv) mining aggregates, such as sand, gravel and construction stone, that are used as raw materials in
<br />the production of HMA, and (v) distributing liquid asphalt cement for both internal use and sales to third parties in connection with
<br />HMA production.
<br />Construction Partners, Inc. was formed as a Delaware corporation in 2007 as a holding company for its wholly owned subsidiary,
<br />Construction Partners Holdings, Inc., to facilitate an acquisition growth strategy in the HMA paving and construction industry. On
<br />December 31, 2019, Construction Partners Holdings, Inc. merged with and into Construction Partners, Inc., with Construction Partners,
<br />Inc. surviving the merger.
<br />As used in this report, the terms "Company," "we," "our" and "us" refer to Construction Partners, Inc. and its subsidiaries, except when
<br />the context requires that those terms mean only the parent company or a particular subsidiary.
<br />2021 Fiscal Year Developments
<br />• North Carolina Acquisitions. We completed seven acquisitions in North Carolina during the fiscal year, resulting in the
<br />addition of fourteen HMA plants primarily in central and eastern North Carolina, providing us with access to additional
<br />markets and expanding our footprint in the state. We also acquired a crushed stone and aggregates facility located near
<br />Goldston, North Carolina, that will be used to support our HMA production operations.
<br />• Alabama Acquisition. We acquired an HMA production and paving company and its affiliated aggregates company
<br />headquartered in Cullman, Alabama. As a result of the acquisition, we added four HMA plants, four aggregates facilities, and
<br />a diverse fleet of trucks and construction equipment to support our operations in central and northern Alabama.
<br />• Amendment to Credit Agreement. On June 24, 2021, we entered into a Second Amended and Restated Credit Agreement with
<br />BBVA USA, as administrative agent, joint lead arranger, sole bookrunner and lender, Regions Bank and BofA Securities, Inc.,
<br />each as a joint arranger, and certain other lenders (as amended and restated, the "Credit Agreement"). The Credit Agreement
<br />provides for a term loan in an initial aggregate principal amount of $200 mullion (the "Term Loan") and a revolving credit
<br />facility in an initial aggregate principal amount of $225 million (the "Revolving Credit Facility"). For more information about
<br />the Credit Agreement, see Note 11 - Debt to our consolidated financial statements included elsewhere in this report.
<br />• COVID-19. We did not incur significant disruptions from the COVID-19 pandemic during the fiscal year ended September 30,
<br />2021. However, we continue to closely monitor the impact of the pandemic on all aspects of our business, including its impact
<br />on our customers, employees, suppliers and vendors. Among the primary risks to our business arising from the pandemic are
<br />(i) employee absences, which could adversely affect our productivity and our ability to complete projects in accordance with
<br />our contractual obligations, and could require us to temporarily close our facilities or project sites, (ii) potential disruptions in
<br />our supply chains for raw materials or equipment, whether as a result of facility closures or otherwise, which could increase
<br />our labor and materials costs and impair our ability to manufacture HMA or the ability of our subcontractors to complete their
<br />required tasks, and (iii) the impact of the COVID-19 pandemic on our customers, which could cause these customers to cancel
<br />or delay current or prospective projects or become delinquent in their payments to us for work that we have performed. These
<br />risks have materialized in varying degrees since the beginning of the pandemic, but none of these risks, individually or in the
<br />aggregate, have significantly impacted our operations to date. In addition, we continue to monitor the impact of the COVID-
<br />19 pandemic on fuel and sales tax revenues, which in turn drive funding levels for public projects in our markets.
<br />The extent to which our operations may be impacted by the COVID-19 pandemic will depend on future developments, which
<br />are highly uncertain, including the duration of the pandemic, the emergence of different COVID-19 variants, the efficacy and
<br />adoption rates of vaccines, and actions by government authorities to contain the outbreak or mitigate the impact of the
<br />pandemic. For example, vaccination requirements imposed by our customers or governmental authorities could increase
<br />employee turnover, thereby impairing our ability to perform our construction projects. Due to the continued uncertainties
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