Construction Partners Inc

Previous wording

At December 31, 2023, our contract backlog was $1.6 billion. Contract backlog is a financial measure that reflects the dollar value of work that the Company expects to perform in the future. We include a construction project in our contract backlog at the time it is awarded and to the extent we believe funding is probable. Our backlog consists of uncompleted work on contracts in progress and contracts for which we have executed a contract but have not commenced the work. For uncompleted work on contracts in progress, we include (i) executed change orders, (ii) pending change orders for which we expect to receive confirmation in the ordinary course of business and (iii) claims that we have made against our customers for which we have determined we have a legal basis under existing contractual arrangements and as to which we consider collection to be probable. Backlog of uncompleted work on contracts under which work was either in progress or had not yet begun was $1.3 billion at December 31, 2023. Our contract backlog also includes low bid/no contract projects, which consist of (i) public bid projects for which we were the low bidder and no contract has been executed and (ii) private work projects for which we have been notified that we are the low bidder or have been given a notice to proceed, but no contract has been executed. Low bid/no contract backlog was $0.3 billion at December 31, 2023.

Current wording

At March 31, 2024, our contract backlog was $1.8 billion. Contract backlog is a financial measure that reflects the dollar value of work that the Company expects to perform in the future. We include a construction project in our contract backlog at the time it is awarded and to the extent we believe funding is probable. Our backlog consists of uncompleted work on contracts in progress and contracts for which we have executed a contract but have not commenced the work. For uncompleted work on contracts in progress, we include (i) executed change orders, (ii) pending change orders for which we expect to receive confirmation in the ordinary course of business and (iii) claims that we have made against our customers for which we have determined we have a legal basis under existing contractual arrangements and as to which we consider collection to be probable. Backlog of uncompleted work on contracts under which work was either in progress or had not yet begun was $1.4 billion at March 31, 2024. Our contract backlog also includes low bid/no contract projects, which consist of (i) public bid projects for which we were the low bidder and no contract has been executed and (ii) private work projects for which we have been notified that we are the low bidder or have been given a notice to proceed, but no contract has been executed. Low bid/no contract backlog was $0.4 billion at March 31, 2024.

Previous wording

Adjusted EBITDA represents net income before, as applicable from time to time, (i) interest expense, net, (ii) provision (benefit) for income taxes, (iii) depreciation, depletion, accretion and amortization, (iv) share-based compensation expense, and (v) loss on the extinguishment of debt. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of revenues for each period. These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP. These measures have limitations as analytical tools and should not be considered in isolation or as an alternative to net income or any other performance measure derived in accordance with GAAP as an indicator of our operating performance. We present Adjusted EBITDA and Adjusted EBITDA Margin because management uses these measures as key performance indicators, and we believe that securities analysts, investors and others use these measures to evaluate companies in our industry. Our calculation of Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similarly named measures reported by other companies. Potential differences may include differences in capital structures, tax positions and the age and book depreciation of intangible and tangible assets.

Current wording

Adjusted EBITDA represents net income (loss) before, as applicable from time to time, (i) interest expense, net, (ii) provision (benefit) for income taxes, (iii) depreciation, depletion, accretion and amortization, (iv) share-based compensation expense, and (v) loss on the extinguishment of debt. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of revenues for each period. These metrics are supplemental measures of our operating performance that are neither required by, nor presented in accordance with, GAAP. These measures have limitations as analytical tools and should not be considered in isolation or as an alternative to net income or any other performance measure derived in accordance with GAAP as an indicator of our operating performance. We present Adjusted EBITDA and Adjusted EBITDA Margin because management uses these measures as key performance indicators, and we believe that securities analysts, investors and others use these measures to evaluate companies in our industry. Our calculation of Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similarly named measures reported by other companies. Potential differences may include differences in capital structures, tax positions and the age and book depreciation of intangible and tangible assets.

Previous wording

The following table presents a reconciliation of net income, the most directly comparable measure calculated in accordance with GAAP, to Adjusted EBITDA and the calculation of Adjusted EBITDA Margin for the periods presented (unaudited, in thousands, except percentages):

Current wording

The following table presents a reconciliation of net income (loss), the most directly comparable measure calculated in accordance with GAAP, to Adjusted EBITDA and the calculation of Adjusted EBITDA Margin for the periods presented (unaudited, in thousands, except percentages):

Previous wording

(1)The Company has historically included within the definition of Adjusted EBITDA an adjustment for management fees and expenses related to the Company’s management services agreement with an affiliate of SunTx Capital Partners, a member of the Company’s control group. Effective October 1, 2023, the term of the management services agreement was extended to October 1, 2028. As a result of the term extension, the Company no longer views the management fees and expenses paid under the management services agreement as a non-recurring expense. Accordingly, periods commencing subsequent to September 30, 2023 do not include an adjustment for management fees and expenses, and the Company has recast comparative Adjusted EBITDA and Adjusted EBITDA Margin for the three months ended December 31, 2022 to conform to the current definition.

Current wording

(1)The Company has historically included within the definition of Adjusted EBITDA an adjustment for management fees and expenses related to the Company’s management services agreement with an affiliate of SunTx Capital Partners, a member of the Company’s control group. Effective October 1, 2023, the term of the management services agreement was extended to October 1, 2028. As a result of the term extension, the Company no longer views the management fees and expenses paid under the management services agreement as a non-recurring expense. Accordingly, periods commencing subsequent to September 30, 2023 do not include an adjustment for management fees and expenses, and the Company has recast comparative Adjusted EBITDA and Adjusted EBITDA Margin for the three and six months ended March 31, 2023 to conform to the current definition.

Previous wording

Revenues. Revenues for the three months ended December 31, 2023 increased $54.7 million, or 16.0%, to $396.5 million from $341.8 million for the three months ended December 31, 2022. The increase included $29.6 million of revenues attributable to acquisitions completed during or subsequent to the three months ended December 31, 2022 and an increase of approximately $25.1 million of revenues in our existing markets from contract work and sales of HMA and aggregates to third parties. The 7.3% increase in revenue in our existing markets was due to strong demand in both public and private work.

Current wording

Revenues. Revenues for the three months ended March 31, 2024 increased $46.5 million, or 14.3%, to $371.4 million from $324.9 million for the three months ended March 31, 2023. The increase included $25.1 million of revenues attributable to acquisitions completed during or subsequent to the three months ended March 31, 2023 and an increase of approximately $21.4 million of revenues in our existing markets from contract work and sales of HMA and aggregates to third parties. The 6.6% increase in revenue in our existing markets was due to strong demand in both public and private work.

Previous wording

Gross Profit. Gross profit for the three months ended December 31, 2023 increased $21.4 million, or 70.1%, to $51.9 million from $30.5 million for the three months ended December 31, 2022. The increase in gross profit was primarily the result of the 16.0% increase in revenues for the three months ended December 31, 2023 compared to the three months ended December 31, 2022 and a higher gross profit margin. The higher gross profit margin was due to (i) efficient utilization of our plants and equipment fleet and (ii) completion of new backlog with more favorable margins.

Current wording

Gross Profit. Gross profit for the three months ended March 31, 2024 increased $12.5 million, or 47.6%, to $38.8 million from $26.3 million for the three months ended March 31, 2023. The increase in gross profit was primarily the result of a 14.3% increase in revenues for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 and a higher gross profit margin. The higher gross profit margin was due to efficient utilization of our plants and equipment fleet and completion of new backlog with more favorable margins.

Previous wording

General and Administrative Expenses. General and administrative expenses for the three months ended December 31, 2023 increased $6.3 million, or 21.0%, to $36.0 million from $29.7 million for the three months ended December 31, 2022. The increase was the result of (i) a $0.5 million increase in share-based compensation expense, (ii) a $2.0 million increase attributable to general and administrative expenses associated with the operations of businesses acquired subsequent to December 31, 2022, (iii) a $1.9 million increase in management personnel payroll and benefits, and (iv) a $1.8 million increase in other general and administrative expenses.

Current wording

General and Administrative Expenses. General and administrative expenses for the three months ended March 31, 2024 increased $4.8 million, or 14.9%, to $36.8 million from $32.0 million for the three months ended March 31, 2023. The increase was the result of (i) a $0.9 million increase in share-based compensation expense, (ii) a $2.1 million increase attributable to general and administrative expenses associated with the operations of businesses acquired subsequent to March 31, 2023, (iii) a $0.6 million increase in management personnel payroll and benefits, and (iv) a $1.2 million increase in other general and administrative expenses.

Previous wording

Gain on Sale of Property, Plant and Equipment. Gain on sale of property, plant and equipment for the three months ended December 31, 2023 increased $0.6 million, or 397.6%, to $0.8 million from $0.2 million for the three months ended December 31, 2022. The increase is attributable to higher disposals of equipment and components during the quarter.

Current wording

Gain on Sale of Property, Plant and Equipment. Gain on sale of property, plant and equipment for the three months ended March 31, 2024 decreased $2.1 million, or 67.4%, to $1.0 million from $3.2 million for the three months ended March 31, 2023. The decrease was attributable to lower disposals of equipment and components during the quarter.

Previous wording

Interest Expense, Net. Interest expense, net for the three months ended December 31, 2023 decreased $0.3 million, or 5.4%, to $3.7 million compared to $4.0 million for the three months ended December 31, 2022. The decrease in interest expense, net was primarily due to an increase in interest income from an overnight sweep program established during the three months ended December 31, 2023. This was partially offset by an increase in interest expense due to an increase in the average principal debt balance outstanding during the three months ended December 31, 2023 compared to the three months ended December 31, 2022.

Current wording

Interest Expense, Net. Interest expense, net for the three months ended March 31, 2024 decreased $0.2 million, or 4.9%, to $4.6 million compared to $4.8 million for the three months ended March 31, 2023. The decrease in interest expense, net was primarily due to an increase in interest income from an overnight sweep program established in fiscal year 2024. This increase in interest income was primarily offset by an increase in interest expense due to an increase in the average principal debt balance outstanding during the three months ended March 31, 2024 compared to the corresponding period in 2023.

Previous wording

Provision for Income Taxes. Our effective tax rate increased to 24.1% for the three months ended December 31, 2023, from 21.2% for the three months ended December 31, 2022. Our higher effective tax rate during the three months ended December 31, 2023 was due to differences in state tax rates at our operating subsidiaries.

Current wording

Provision for Income Taxes. Our effective tax rate increased to 22.2% for the three months ended March 31, 2024, from 21.1% for the three months ended March 31, 2023. Our higher effective tax rate during the three months ended March 31, 2024 was due to differences in state tax rates at our operating subsidiaries.

Previous wording

Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA Margin were $40.9 million and 10.3%, respectively, for the three months ended December 31, 2023, compared to $27.2 million and 8.0%, respectively, for the three months ended December 31, 2022. The increase in Adjusted EBITDA and Adjusted EBITDA Margin resulted from an increase in gross profit and gain on sale of property, plant and equipment, partially offset by higher general and administrative expenses and decreased gain on facility exchange, all as described above. See the description of Adjusted EBITDA and Adjusted EBITDA Margin, as well as a reconciliation of Adjusted EBITDA to net income, under the heading “How We Assess Performance of Our Business”.

Current wording

Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA Margin were $29.5 million and 7.9%, respectively, for the three months ended March 31, 2024, compared to $20.4 million and 6.3%, respectively, for the three months ended March 31, 2023. The increase in Adjusted EBITDA and Adjusted EBITDA Margin resulted from an increase in gross profit, partially offset by higher general and administrative expenses and decreased gains on sale of property, plant and equipment, all as described above. See the description of Adjusted EBITDA and Adjusted EBITDA Margin, as well as a reconciliation of Adjusted EBITDA to net income, under the heading “How We Assess Performance of Our Business”.

Previous wording

Gain on Facility Exchange. Gain on facility exchange for the three months ended December 31, 2023 was $0.0 million compared to $5.4 million for the three months ended December 31, 2021. The gain was the result of the disposition of a quarry located near Goldston, North Carolina. In connection with this transaction, the Company acquired three HMA manufacturing plants and certain related assets located in the Nashville, Tennessee metro area.

Current wording

Gain on Facility Exchange. There was no gain on facility exchange for the six months ended March 31, 2024 compared to $5.4 million for the six months ended March 31, 2023. The gain was the result of the disposition of a quarry located near Goldston, North Carolina. In connection with this transaction, the Company acquired three HMA manufacturing plants and certain related assets located in the Nashville, Tennessee metro area.

Previous wording

Net Income. Net income increased $7.9 million, or 420.2%, to $9.8 million for the three months ended December 31, 2023, compared to $1.9 million for the three months ended December 31, 2022. The increase in net income was primarily a result of higher gross profit, and gain on sale of property, plant and equipment, partially offset by an increase in general and administrative expenses and decreased gain on facility exchange, all as described above.

Current wording

Net Income (Loss). Net income increased $12.3 million to net income of $8.7 million for the six months ended March 31, 2024, compared to a net loss of $3.6 million for the six months ended March 31, 2023. The increase in net income was primarily a result of higher gross profit, partially offset by an increase in general and administrative expenses and decreased gains on the facility exchange and sale of property, plant and equipment, all as described above.

Previous wording

During the three months ended December 31, 2023, cash provided by operating activities, net of acquisitions, was $60.4 million, primarily as a result of:

Current wording

During the six months ended March 31, 2024, cash provided by operating activities, net of acquisitions, was $78.6 million, primarily as a result of:

Previous wording

•net income of $9.8 million, including $21.1 million of depreciation, depletion, accretion and amortization and $2.9 million of share-based compensation expense, gain on sale of property, plant and equipment of $0.8 million;

Current wording

•net income of $8.7 million, including $44.0 million of depreciation, depletion, accretion and amortization, $6.2 million of share-based compensation expense and $1.9 million of gain on sale of property, plant and equipment;

Previous wording

•a decrease in contracts receivable including retainage, net of $63.5 million due to normal fluctuations resulting from the timing of processing transactions in our accounts receivable cycle;

Current wording

•a decrease in contracts receivable including retainage, net of $43.4 million due to normal fluctuations resulting from the timing of processing transactions in our accounts receivable cycle;

Previous wording

•an increase in inventories of $9.9 million due to increased inventories from acquisitions, growth in existing markets, higher inventory costs and normal fluctuations in our inventory cycle;

Current wording

•an increase in inventories of $16.0 million due to increased inventories from acquisitions, growth in existing markets, higher inventory costs and normal fluctuations in our inventory cycle;

Previous wording

•a decrease in accounts payable and accrued expenses and other current liabilities of $34.7 million due to the timing of processing transactions in our accounts payable cycle; and

Current wording

•a decrease in accounts payable and accrued expenses and other current liabilities of $24.5 million due to the timing of processing transactions in our accounts payable cycle; and

Previous wording

•a net increase in the difference between costs and estimated earnings in excess of billings on uncompleted contracts and billings in excess of costs and estimated earnings on uncompleted contracts of $6.4 million due to the timing of performing and closing projects.

Current wording

•a net increase in the difference between costs and estimated earnings in excess of billings on uncompleted contracts and billings in excess of costs and estimated earnings on uncompleted contracts of $14.6 million due to the timing of performing and closing projects.

Previous wording

During the three months ended December 31, 2022, cash provided by operating activities, net of acquisitions, was $28.9 million, primarily as a result of:

Current wording

During the six months ended March 31, 2023, cash provided by operating activities, net of acquisitions, was $45.7 million, primarily as a result of:

Previous wording

•a decrease in contracts receivable including retainage, net of $47.1 million due to normal fluctuations resulting from the timing of processing transactions in our accounts receivable cycle;

Current wording

•a decrease in contracts receivable including retainage, net of $34.1 million due to normal fluctuations resulting from the timing of processing transactions in our accounts receivable cycle;

Previous wording

•an increase in inventories of $3.5 million due to increased inventories from acquisitions, growth in existing markets, higher inventory costs and normal fluctuations in our inventory cycle;

Current wording

•an increase in inventories of $10.2 million due to increased inventories from acquisitions, growth in existing markets, higher inventory costs and normal fluctuations in our inventory cycle;

Previous wording

•a decrease in accounts payable and accrued expenses and other current liabilities of $33.2 million due to the timing of processing transactions in our accounts payable cycle; and

Current wording

•a decrease in accounts payable and accrued expenses and other current liabilities of $19.1 million due to the timing of processing transactions in our accounts payable cycle; and

Previous wording

•a net decrease in the difference between costs and estimated earnings in excess of billings on uncompleted contracts and billings in excess of costs and estimated earnings on uncompleted contracts of $0.2 million due to the timing of performing and closing projects.

Current wording

•a net increase of $8.2 million in the difference between costs and estimated earnings in excess of billings on uncompleted contracts and billings in excess of costs and estimated earnings on uncompleted contracts due to the timing of performing and closing projects.

Previous wording

During the three months ended December 31, 2023, cash used in investing activities was $104.7 million, of which $81.4 million related to acquisitions completed in the period and $26.8 million was invested in property, plant and equipment, partially offset by $2.5 million of proceeds from the sale of property, plant and equipment and $1.0 million of proceeds from the sale of restricted investments.

Current wording

During the six months ended March 31, 2024, cash used in investing activities was $138.4 million, of which $87.9 million related to acquisitions completed in the period, $55.5 million was invested in property, plant and equipment and $1.9 million was invested in restricted investments by the Captive, partially offset by $5.0 million of proceeds from the sale of property, plant and equipment and $1.9 million of proceeds from the sale of restricted investments.

Previous wording

During the three months ended December 31, 2022, cash used in investing activities was $70.7 million, of which $77.2 million related to acquisitions completed in the period and $31.7 million was invested in property, plant and equipment, partially offset by $1.6 million of proceeds from the sale of property, plant and equipment and $36.4 million of proceeds from the facility exchange.

Current wording

During the six months ended March 31, 2023, cash used in investing activities was $97.2 million, of which $77.8 million related to acquisitions completed in the period, $60.4 million was invested in property, plant and equipment and $5.1 million was invested in restricted investments by the Captive, partially offset by $8.3 million of proceeds from the sale of property, plant and equipment and $37.0 million of proceeds from the facility exchange.

Previous wording

During the three months ended December 31, 2023, cash provided by financing activities was $64.9 million. We received $90.0 million of proceeds from our Revolving Credit Facility, which were primarily used for acquisitions completed in the period. This cash flow was partially offset by $23.8 million of principal payments on long-term debt and purchase of treasury stock of $1.3 million.

Current wording

During the six months ended March 31, 2024, cash provided by financing activities was $61.2 million. We received $90.0 million of proceeds from our Revolving Credit Facility, which were primarily used for acquisitions completed in the period. This cash flow was partially offset by $27.5 million of principal payments on long-term debt and purchase of treasury stock of $1.3 million.

Previous wording

During the three months ended December 31, 2022, cash provided by financing activities was $49.7 million. We received $53.0 million of proceeds from our Revolving Credit Facility, which were primarily used for acquisitions completed in the period. This cash flow was partially offset by $3.1 million of principal payments on long-term debt.

Current wording

During the six months ended March 31, 2023, cash provided by financing activities was $46.6 million. We received $38.0 million of proceeds from our Revolving Credit Facility and $15.0 million from our Term Loan, which were primarily used for acquisitions completed in the period. This cash flow was partially offset by $6.3 million of principal payments on long-term debt and purchase of treasury stock of $0.1 million.

Previous wording

We and each of our subsidiaries are parties to the Credit Agreement, which provides for the Term Loan and the Revolving Credit Facility. At December 31, 2023 and September 30, 2023, we had $280.0 million and $283.8 million, respectively, of principal outstanding under the Term Loan, $163.1 million and $93.1 million, respectively, of principal outstanding under the Revolving Credit Facility, and availability of $153.6 million and $221.1 million, respectively, under the Revolving Credit Facility, including reduction for outstanding letters of credit.

Current wording

We and each of our subsidiaries are parties to the Credit Agreement, which provides for the Term Loan and the Revolving Credit Facility. At March 31, 2024 and September 30, 2023, there was $276.3 million and $283.8 million, respectively, of principal outstanding under the Term Loan, $163.1 million and $93.1 million, respectively, of principal outstanding under the Revolving Credit Facility, and availability of $153.7 million and $222.1 million, respectively, under the Revolving Credit Facility, including a reduction for outstanding letters of credit.

Previous wording

The Credit Agreement requires the Company to satisfy certain financial covenants, including a minimum fixed charge coverage ratio of 1.20-to-1.00 and a maximum consolidated leverage ratio of 3.50-to-1.00, subject to certain adjustments. At December 31, 2023 and September 30, 2023, our fixed charge coverage ratio was 3.35-to-1.00 and 2.56-to-1.00, respectively, and our consolidated leverage ratio was 1.78-to-1.00 and 1.72-to-1.00, respectively.

Current wording

The Credit Agreement requires the Company to satisfy certain financial covenants, including a minimum fixed charge coverage ratio of 1.20-to-1.00 and a maximum consolidated leverage ratio of 3.50-to-1.00, subject to certain adjustments. At March 31, 2024 and September 30, 2023, our fixed charge coverage ratio was 3.39-to-1.00 and 2.56-to-1.00, respectively, and our consolidated leverage ratio was 1.81-to-1.00 and 1.72-to-1.00, respectively.

Previous wording

From time to time, the Company has entered into interest rate swap agreements to hedge against the risk of changes in interest rates. At December 31, 2023 and September 30, 2023, the aggregate notional value of the interest rate swap agreement was $300.0 million, and the fair value was $17.6 million and $26.9 million, respectively, which amounts are included within other assets on the Company’s Consolidated Balance Sheets.

Current wording

The Company has entered into an interest rate swap agreement to hedge against the risk of changes in interest rates. At March 31, 2024 and September 30, 2023, the notional value of the interest rate swap agreement was $300.0 million, and the fair value was $21.0 million and $26.9 million, respectively, which amounts are included within other assets on the Company’s Consolidated Balance Sheets.

Previous wording

During the three months ended December 31, 2023 and 2022, our capital expenditures were approximately $26.8 million and $31.7 million, respectively. Our capital expenditures are typically made during the fiscal year in which they are approved. At December 31, 2023, our commitments for capital expenditures were not material to our financial condition or results of operations on a consolidated basis. For fiscal 2024, we expect total capital expenditures to be $90.0 million to $95.0 million. Our capital expenditure budget is an estimate and is subject to change.

Current wording

During the six months ended March 31, 2024 and 2023, our capital expenditures were approximately $55.5 million and $60.4 million, respectively. Our capital expenditures are typically made during the fiscal year in which they are approved. At March 31, 2024, our commitments for capital expenditures were not material to our financial condition or results of operations on a consolidated basis. For fiscal year 2024, we expect total capital expenditures to be $90.0 million to $95.0 million. Our capital expenditure budget is an estimate and is subject to change.

Previous wording

Historically, we have required significant amounts of cash in order to make capital expenditures, purchase materials and fund our organic expansion into new markets. Our working capital needs are driven by the seasonality and growth of our business, with our cash requirements increasing in periods of growth. Additional cash requirements resulting from our growth include the costs of additional personnel, production and distribution facilities, enhancements to our information systems, integration costs related to any acquisitions and our compliance with laws and rules applicable to public companies.

Current wording

Historically, we have required significant amounts of cash in order to make capital expenditures, purchase materials, execute our growth strategy through acquisitions and fund our organic expansion into new markets. Our working capital needs are driven by the seasonality and growth of our business, with our cash requirements increasing in periods of growth. Additional cash requirements resulting from our growth include the costs of additional personnel, production and distribution facilities, enhancements to our information systems, integration costs related to any acquisitions and our compliance with laws and rules applicable to public companies. Furthermore, on April 12, 2024, we announced that our Board of Directors authorized a stock repurchase program under which up to $40 million is available to purchase shares of our outstanding Class A common stock through September 30, 2025. We intend to utilize the stock repurchase program to minimize the dilutive impact of awards granted under our equity incentive plans and to repurchase shares opportunistically. Shares of Class A common stock may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws, including Rule 10b5-1 plans. The stock repurchase program does not obligate the Company to repurchase any shares of Class A common stock, and the stock repurchase program may be modified, suspended, extended or terminated at any time by the Board of Directors. The actual timing, number and value of shares of Class A common stock repurchased will be determined by a committee of the Board of Directors at its discretion and will depend on a number of factors, including the market price of the Class A common stock, capital allocation alternatives, general market and economic conditions and other corporate considerations.

Previous wording

We believe that our operating cash flow and available borrowings under the Credit Agreement will be sufficient to fund our operations and planned capital expenditures for at least the next 12 months. However, future cash flows are subject to a number of variables, including the potential impacts of inflation and supply chain constraints, and significant additional capital expenditures will be required to conduct our operations. There can be no assurance that operations and other capital resources will provide sufficient cash to maintain planned or future levels of capital expenditures. In the event that we make one or more acquisitions and the amount of capital required is greater than the amount of cash on hand we have available for acquisitions at that time, we could be required to reduce the expected level of capital expenditures and/or seek additional capital. If we seek additional capital, we may do so through borrowings under the Credit Agreement, joint ventures, asset sales, offerings of debt or equity securities or other means. However, our ability to engage in any such transactions may be constrained by economic conditions and other factors outside of our control. We cannot guarantee that additional capital will be available on acceptable terms or at all. If we are unable to obtain the funds we need, we may not be able to complete acquisitions that may be favorable to us or finance the capital expenditures necessary to conduct our operations.

Current wording

We believe that our operating cash flow and available borrowings under the Credit Agreement will be sufficient to fund our operations, make planned capital expenditures and opportunistically repurchase shares of Class A common stock for at least the next 12 months. However, future cash flows are subject to a number of variables, including the potential impacts of inflation and supply chain constraints, and significant additional capital expenditures will be required to conduct our operations. There can be no assurance that operations and other capital resources will provide sufficient cash to maintain planned or future levels of capital expenditures. In the event that we make one or more acquisitions and the amount of capital required is greater than the amount of cash on hand we have available for acquisitions at that time, we could be required to reduce the expected level of capital expenditures and/or seek additional capital. If we seek additional capital, we may do so through borrowings under the Credit Agreement, joint ventures, asset sales, offerings of debt or equity securities or other means. However, our ability to engage in any such transactions may be constrained by economic conditions and other factors outside of our control. We cannot guarantee that additional capital will be available on acceptable terms or at all. If we are unable to obtain the funds we need, we may not be able to complete acquisitions that may be favorable to us or finance the capital expenditures necessary to conduct our operations.

Previous wording

As of December 31, 2023, we had aggregate letters of credit outstanding in the amount of $8.3 million, future purchase commitments of diesel fuel and natural gas of $2.9 million and $0.4 million, respectively, and $2.5 million of minimum royalty payments related to aggregates facilities. Other than the letters of credit, future purchase commitments and minimum royalty payments, we do not currently have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, changes in our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. See Note 17 - Commitments to our unaudited consolidated financial statements included elsewhere in this report for additional information.

Current wording

As of March 31, 2024, we had aggregate letters of credit outstanding in the amount of $8.2 million, future purchase commitments of diesel fuel and natural gas of $2.3 million and $0.1 million, respectively, and $2.5 million of minimum royalty payments related to aggregates facilities. Other than the letters of credit, future purchase commitments and minimum royalty payments, we do not currently have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, changes in our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. See Note 17 - Commitments to our unaudited consolidated financial statements included elsewhere in this report for additional information.