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3/25/22, 9:42 AM
<br />Table of Contents
<br />Contract Backlog
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<br />At September 30, 2021, our contract backlog was $966.2 million, compared to $608.1 million at September 30, 2020. Contract backlog
<br />is a financial measure that generally reflects the dollar value of work that the Company expects to perform in the future. Although
<br />contract backlog is not a term recognized under generally accepted accounting principles in the United States ("GAAP"), it is a
<br />common measure used in our industry. We generally include a constriction project in our contract backlog at the time it is awarded and
<br />to the extent we believe funding is probable. Our backlog generally consists of uncompleted work on contracts in progress and
<br />contracts for which we have executed a contract but have not commenced the work. For uncompleted work on contracts in progress,
<br />we include (i) executed change orders, (ii) pending change orders for which we expect to receive confirmation in the ordinary course of
<br />business and (iii) claims that we have made against our customers for which we have determined we have a legal basis under existing
<br />contractual arrangements and as to which we consider collection to be probable. Backlog of uncompleted work on contracts under
<br />which work was either in progress or had not yet begun was $725.5 million and $469.7 million at September 30, 2021 and 2020,
<br />respectively.
<br />Our backlog also includes low bid/no contract jobs, which consist of (i) public bid jobs for which we were the low bidder and no
<br />contract has been executed and (ii) private work jobs for which we have been notified that we are the low bidder or have been given a
<br />notice to proceed, but no contract has been executed. Low bid/no contract backlog was $240.7 million and $138.4 million at September
<br />30, 2021 and 2020, respectively. At September 30, 2021, we expected approximately 82% of our contract backlog to be completed
<br />during the next 12 months.
<br />Certain customer contracts contain options that are exercisable at the discretion of our customer to award additional work to us, without
<br />requiring us to go through an additional competitive bidding process. In addition, some customer contracts also contain task orders that
<br />are signed under master contracts pursuant to which we perform work only when the customer awards specific task orders to us.
<br />Awarded contracts that include unexercised contract options and unissued task orders are included in contract backlog to the extent that
<br />such options are exercised or the issuance of such task orders is probable.
<br />Substantially all of the contracts in our contract backlog, as well as unexercised contract options and unissued task orders, may be
<br />canceled or modified at the election of the customer. Historically, we have not experienced material amounts of contract cancellations
<br />or modifications. Many projects are added to our contract backlog and completed within the same fiscal year and therefore may not be
<br />reflected in our beginning or year-end contract backlog. Contract backlog does not include external sales of HMA, aggregates, and
<br />liquid asphalt cement.
<br />Insurance and Bonding
<br />We maintain general and excess liability, property, workers' compensation and medical insurance, all in amounts consistent with
<br />industry practice.
<br />In the ordinary course of our business, we are required to provide various types of surety bonds that provide an additional measure of
<br />security to the customer for our performance under certain public and private sector contracts. Our ability to obtain surety bonds
<br />depends on our capitalization, working capital, past performance, management expertise and external factors, including the capacity of
<br />the overall surety market. Surety companies consider such factors in light of the amount of our contract backlog that we have bonded
<br />and their underwriting standards. The capacity of the surety market is subject to market-based fluctuations driven primarily by the level
<br />of surety industry losses and the degree of surety market consolidation.
<br />Competition
<br />We compete against multiple competitors in many of the markets in which we operate. Competition is constrained in our industry
<br />because participants are limited by the distance that materials can be efficiently transported, resulting in a fragmented market with
<br />thousands of participants nationwide, many of which are local or regional operators. Our competitors typically range from small,
<br />family-owned companies focused on a single material, product or market to multinational corporations that offer a wide array of
<br />construction materials, products and paving and related services. Factors influencing our competitiveness include price, estimating
<br />abilities, knowledge of local markets and conditions, project management, financial strength, reputation for quality, aggregate materials
<br />availability, and machinery and equipment. We believe that we are well-positioned to compete effectively in the markets in which we
<br />operate.
<br />Seasonality
<br />The activity of our business fluctuates due to seasonality because our business is primarily conducted outdoors. Therefore, seasonal
<br />changes and other weather-related conditions, in particular extended snowy, rainy or cold weather in the winter, spring or fall and
<br />major weather events, such as hurricanes, tornadoes, tropical storms and heavy snows, can adversely affect our business and operations
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