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<br />Table of Contents
<br />road -20210930
<br />surrounding the COVID-19 pandemic, we are unable to predict the impact that the COVID-19 pandemic will have on our
<br />financial position, operating results and cash flows in future periods.
<br />• bnflationary Trends. We are subject to the effects of inflation through wage pressures, increases in the cost of raw materials
<br />used to produce HMA, and increases in other items, such as fuel, concrete and steel. During the fiscal year ended September
<br />30, 2021, we began to experience an upward trend in several of these inflation -sensitive items. We seek to recover increasing
<br />costs by charging higher prices for our products or by including the anticipated price increases in our bids. Due to the
<br />relatively short-term duration of our construction contracts, we are generally able to reduce our exposure to price increases on
<br />new contracts, but we arc limited in our ability to pass through increased costs for projects already in our backlog. Going
<br />forward, continued cost inflation in these areas may require further price adjustments to maintain profit margin, and any price
<br />increases may have a negative effect on demand.
<br />Our Industry
<br />We operate in the large and growing highway and road construction industry and specifically within the asphalt paving materials and
<br />services segment. Asphalt paving mix is the most common roadway material used today due to its cost effectiveness, durability and
<br />reusability, and minimized traffic disruption during paving, as compared to concrete. Recent growth in our industry has been driven by
<br />federal, state and local Department of Transportation ("DOT") budgets, which annually earmark amounts for transportation and
<br />infrastructure spending. The federal Fixing America's Surface Transportation Act (the "FAST Act"), which was signed into law in
<br />2015, provided funding for surface transportation infrastructure through September 30, 2020, and a continuing resolution approved in
<br />October 2020 extended the FAST Act surface transportation programs by one year and added $13.6 billion to the federal Highway
<br />Trust Fund. In November 2021, the federal Infrastructure Investment and Jobs Act (the "IIJA") was signed into law. The IIJA provides
<br />for $548 billion in new infrastructure spending over the next five years through a reauthorization of traditional surface transportation
<br />programs and additional funding for highways, bridges and airports, among other things. In addition, certain states within our markets
<br />have in recent years approved legislation that supports funding for construction of local road, bridge and transit projects. The non -
<br />discretionary nature of highway and road construction services and materials supports stable and consistent industry funding.
<br />Projects and Customers
<br />We provide construction products and services to both public and private infrastructure projects, with an emphasis on highways, roads,
<br />bridges, airports, and commercial and residential sites in the southeastern United States. We provide a wide range of large sitework
<br />construction, including site development, paving, and utility and drainage systems construction, and supply the HMA required for the
<br />projects. Our projects consist of both new construction and maintenance services. Publicly and privately funded projects accounted for
<br />approximately 61.3% and 38.7%, respectively, of our fiscal 2021 construction contract revenues. Our public customers include federal
<br />agencies, state DOTs and local municipalities. Our private clients include commercial and residential developers and businesses.
<br />Our largest customers are state DOTS. However, no DOT accounted for more than 10% of our revenues for the fiscal year ended
<br />September 30, 2021, and projects performed for all DOTs accounted for 33.7% of our revenues. Our 25 largest projects accounted for
<br />20.5% of our revenues for the fiscal year ended September 30, 2021.
<br />Types of Contracts
<br />Our public customer contracts are primarily fixed unit price contracts. Pricing on a fixed unit price contract is typically based on
<br />approved quantities. Our private customer contracts are primarily fixed total price contracts, also known as lump sum contracts, which
<br />require that the total amount of work be performed for a single price. We also occasionally enter into design -build contracts, which
<br />generally are performed under fixed total price contracts. For the majority of our contracts, we receive our final payment upon
<br />completion and final acceptance of the services that we were contracted to perform and delivery of the necessary contract closing
<br />documents, and our obligations to the owner are complete at that point. For some contracts, we are required to furnish a warranty on
<br />our construction. These warranties, when required, are usually one year in length, but can extend up to three years according to the
<br />owners' specifications. Historically, warranty claims have not been material to our business.
<br />Contract Management
<br />We identify potential contracts through a variety of sources, including: (i) subscriber services that consolidate and alert us to contracts
<br />open for bidding; (ii) posted solicitations by federal, state and local governmental entities through agency websites, disclosure of long-
<br />term infrastructure plans or advertising and other general solicitations; (iii) our business development efforts; and (iv) communications
<br />with other participants in our industry. We consider several factors that can create variability in contract performance and our financial
<br />results compared to our bid assumptions and methodologies on a contract. As a result, after determining the potential contracts that are
<br />available, we decide which contracts to pursue based on a non-exclusive list of factors, which include relevant skills required by the
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