Construction Partners Annual Report 2018

FY2018 Annual Report · Construction Partners

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Notice and Proxy Statement

and

Fiscal Year 2018 Annual Report

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, MARCH 8, 2019

NOTICE IS HEREBY GIVEN that the 2019 Annual Meeting of Stockholders (the “Annual Meeting”) of Construction
Partners, Inc. (the “Company”) will be held on Friday, March 8, 2019, at 9:00 a.m., Central Time, at the Hilton Garden Inn, located
at 171 Hospitality Lane, Dothan, Alabama 36303. The Annual Meeting is being held for the following purposes:

to elect two Class I directors to serve for a three-year term expiring at the 2022 annual meeting of stockholders;

to ratify the appointment of RSM US LLP as the Company’s independent registered public accountants for the fiscal
year ending September 30, 2019; and

to transact such other business as may properly come before the Annual Meeting or any adjournment or postponement
thereof.

The Board of Directors has established January 7, 2019 as the record date for the Annual Meeting. Only holders of the
Company’s Class A or Class B common stock at the close of business on the record date are entitled to notice of, and to vote at,
the Annual Meeting and at any adjournments or postponements thereof.

This proxy statement provides you with detailed information about the proposals to be voted on at the Annual

Meeting. With this proxy statement, we are also including a copy of our 2018 Annual Report on Form 10-K (the “Annual
Report”) in order to provide you with additional information about the Company. We encourage you to read this proxy
statement and the Annual Report carefully.

The Annual Meeting may be adjourned from time to time without notice other than announcement at the Annual

Meeting, and any business for which notice is hereby given may be transacted at any such adjournment.

By Order of the Board of Directors,

Ned N. Fleming, III

Executive Chairman of the Board of Directors

Dothan, Alabama

January 22, 2019

TABLE OF CONTENTS

Explanatory Note

Important Information about the Annual Meeting and Voting

Security Ownership of Certain Beneficial Owners and Management

Management and Corporate Governance

Our Board of Directors
Information about the Nominees and Other Directors
Information about Executive Officers Who Are Not Also Directors
Certain Director and Executive Officer Relationships
Director Independence and Controlled Company Exemption
Board Leadership Structure
Board Observer Rights
Meetings of the Board
Committees of the Board
Role of the Board in Risk Oversight
Code of Business Conduct and Ethics
Corporate Governance Guidelines
Nomination and Consideration of Director Candidates
Executive Sessions
Stockholder Communications with the Board

Executive Officer and Director Compensation

Compensation of Executive Officers
Summary Compensation Table
Employment Agreements
Non-Plan Stock Options
Construction Partners, Inc. 2016 Equity Incentive Plan
Construction Partners, Inc. 2018 Equity Incentive Plan
Incentive Compensation Recoupment Policy
Outstanding Equity Awards at Fiscal Year-End
Securities Authorized for Issuance Under Equity Compensation Plans
Retirement Benefits
Potential Payments upon Termination or a Change in Control
Role of Executive Officers in Determining Executive Compensation
Role of Compensation Consultant in Determining Executive Compensation
Director Compensation

Certain Relationships and Related Party Transactions
Review and Approval of Related Party Transactions
Transactions with Related Parties

Section 16(a) Beneficial Ownership Reporting Compliance

Report of the Audit Committee

Proposal 1: Election of Class I Directors

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Proposal 2: Ratification of Appointment of Independent Registered Public Accountants

General
Audit Committee Pre-Approval Policy
Change in Accountants
Fees Paid to RSM

Other Matters

Deadline for Stockholder Proposals

Annual Report on Form 10-K

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CONSTRUCTION PARTNERS, INC.

PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FRIDAY, MARCH 8, 2019

This proxy statement (the “Proxy Statement”), along with the accompanying Notice of Annual Meeting of

Stockholders (the “Notice”), is furnished on behalf of Construction Partners, Inc. (the “Company”) by its board of directors (the
“Board”) and management team in connection with the solicitation of your proxy to be voted at the 2019 Annual Meeting of
Stockholders of the Company (the “Annual Meeting”) to be held at 9:00 a.m., Central Time, on Friday, March 8, 2019, at the
Hilton Garden Inn, located at 171 Hospitality Lane, Dothan, Alabama 36303, and at any adjournments or postponements
thereof.

In this Proxy Statement, unless the context suggests or requires otherwise, references to “the Company,” “we,” “us”
and “our” mean Construction Partners, Inc. (formerly known as SunTx CPI Growth Company, Inc.), a Delaware corporation,
and, as appropriate, our subsidiaries. References to “SunTx” mean SunTx Capital Partners, a private equity firm based in
Dallas, Texas, and its affiliates, which collectively own a controlling interest in our common stock.

We began mailing this Proxy Statement and the accompanying Notice on or about January 22, 2019 to all stockholders

of the Company entitled to vote at the Annual Meeting.

________________________________________________________________

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MARCH 8, 2019

This Proxy Statement is available for viewing, downloading and printing at www.proxyvote.com. Additionally, you

can find a copy of our Annual Report on Form 10-K for the fiscal year ended September 30, 2018 (the “Annual Report”),
which includes our annual financial statements, on the website of the Securities and Exchange Commission (the “SEC”) at
http://www.sec.gov, or by following the “Investors - Financial Information” link on our website at http://
www.constructionpartners.net. You may also obtain a printed copy of our Annual Report, including our financial statements,
free of charge by sending a written request to the principal executive office of the Company at the following address:
Construction Partners, Inc., 290 Healthwest Drive, Suite 2, Dothan, Alabama 36303, Attention: Secretary. Exhibits will be
provided upon written request and payment of an appropriate processing fee.

EXPLANATORY NOTE

We are an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”) and a
“smaller reporting company” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). As such, we are permitted to take advantage of certain reduced reporting requirements that are otherwise applicable
generally to public companies. These provisions include, among other things, (i) an option to present only two years of audited
financial statements and related management’s discussion and analysis in our Annual Report; (ii) an exemption from the
requirement that our auditor attest to the effectiveness of our internal control over financial reporting, (iii) an exemption from
compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding mandatory audit
firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial
statements; (iv) reduced disclosure about our executive compensation arrangements; and (v) an exemption from the
requirements to obtain a non-binding advisory vote on executive compensation or a stockholder approval of any golden
parachute arrangements.

We have taken advantage of certain of the exemptions discussed above in this Proxy Statement, in our Annual Report
and elsewhere, and we intend to continue to do so for so long as we are eligible. We will remain an emerging growth company
until the earliest to occur of: (i) the last day of the fiscal year in which our total revenue exceeds $1.07 billion, (ii) September
30, 2023, which is the last day of the fiscal year following the fifth anniversary of our initial public offering, (iii) the date on
which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities and (iv)
the date on which we are deemed to be a “large accelerated filer” under the Exchange Act.

IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Why am I receiving these materials?

The Board, on behalf of the Company, is providing these proxy materials to you in connection with the Annual

Meeting. Stockholders are invited to attend the Annual Meeting and are requested to vote on the proposals described in this
Proxy Statement. This Proxy Statement, along with the accompanying Notice of Annual Meeting of Stockholders, summarizes
the purposes of the Annual Meeting and certain information that will assist you in determining how to vote at the Annual
Meeting.

Who is soliciting my proxy?

This proxy solicitation is being made on behalf of the Company by its Board and management. The cost of this

solicitation, including the cost of distributing the proxy materials, will be borne by the Company. Officers and employees of
the Company may solicit proxies, either through personal contact or by mail, telephone or other electronic means. These
officers and employees will not receive additional compensation for soliciting proxies. Brokerage houses, nominees,
fiduciaries, and other custodians will be requested to forward soliciting materials to beneficial owners and will be reimbursed
by the Company for their reasonable out-of-pocket expenses incurred in sending proxy materials to beneficial owners.

What is included in these materials?

These proxy materials include:

•

the Proxy Statement for our Annual Meeting;

a proxy card with a prepaid return envelope; and

our Annual Report, which includes our audited financial statements.

This Proxy Statement and form of proxy are being mailed or made available to our stockholders on or about January

22, 2019. The Annual Report does not form any part of the materials for solicitation of proxies.

What proposals will be voted on at the Annual Meeting?

There are two proposals scheduled to be voted on at the Annual Meeting: (i) the election of two Class I directors to

serve for a three-year term expiring at the 2022 annual meeting of stockholders (Proposal 1) and (ii) the ratification of the
appointment of RSM US LLP (“RSM”) as the Company’s independent registered public accountants for the fiscal year ending
September 30, 2019 (Proposal 2).

Who may vote at the Annual Meeting?

The Board has fixed January 7, 2019 as the record date (the “Record Date”) for determining stockholders of the

Company entitled to receive notice of and vote at the Annual Meeting. Only stockholders of record as of the close of business
on the Record Date are entitled to vote at the Annual Meeting. On the Record Date, there were 11,950,000 shares of Class A
common stock, par value $0.001, issued and outstanding, all of which were held in “street name” through a single stockholder
of record, and 39,464,619 shares of Class B common stock, par value $0.001, issued and outstanding, held by 16 stockholders
of record. The actual number of beneficial holders of our Class A common stock is significantly greater than the number of
stockholders of record and includes stockholders who are beneficial owners, but whose shares are held by banks, brokers and
other nominees.

What are my voting rights under the Company’s dual class equity structure?

On April 23, 2018, we amended and restated our certificate of incorporation to effectuate a dual class common stock

structure consisting of Class A and Class B common stock. This amendment and restatement resulted in the initial authorization
of Class A common stock and the automatic conversion of each share of our common stock, par value $0.001 per share,
into 25.2 shares of Class B common stock. In this Proxy Statement, we refer to these actions collectively as the
“Reclassification,” and we refer to the Class A and Class B common stock collectively as the “common stock.”

The rights of holders of our Class A common stock and our Class B common stock are identical, except with respect to

voting rights, conversion rights and certain transfer restrictions applicable to our Class B common stock. With respect to each
proposal to come before the stockholders at the Annual Meeting, including the election of directors, each share of Class A
common stock is entitled to one vote, and each share of Class B common stock is entitled to ten votes. As of the Record Date,
there were (i) 11,950,000 shares of Class A common stock outstanding, representing approximately 23.2% of our total equity
ownership and approximately 2.9% of the total voting power of our outstanding common stock, and (ii) 39,464,619 shares of
Class B common stock outstanding, representing approximately 76.8% of our total equity ownership and approximately 97.1%
of the total voting power of our outstanding common stock. Until the Class B common stock is converted to Class A common
stock, holders of our Class B common stock have the ability to elect all of the members of our Board and to control the
outcome of any other proposals to come before the stockholders at the Annual Meeting.

If I hold my shares through a brokerage firm, bank or other nominee, how do I vote at the Annual Meeting?

If your shares are held through a brokerage firm, bank or other nominee (collectively, “nominees”), then you are

considered the beneficial owner of shares held in “street name,” and these proxy materials are being forwarded to you by your
nominee who is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you are invited to
attend the Annual Meeting. However, you may vote shares held in “street name” in person at the Annual Meeting only if you
obtain a signed proxy from the record holder (your nominee) giving you the right to vote the shares. You also have the right to
direct your nominee how to vote these shares. Your nominee should have enclosed a voting instruction form explaining the
process for providing directions to your nominee about how to vote your shares.

May my nominee vote my shares without receiving an instruction from me as to how my shares should be voted?

A “broker non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular

proposal because the nominee has not received instructions from the beneficial owner about how to vote on the proposal and
does not have discretionary voting power for that proposal. If your shares are held in street name through a nominee and you do
not instruct your nominee about how to vote your shares, then your nominee may vote your shares only on routine matters or,
in its discretion, may leave your shares unvoted.

Proposal 1 (election of directors) is not considered a routine matter. As a result, without an instruction from the

beneficial holder, a nominee may not vote the shares that it holds with respect to Proposal 1. However, because of the plurality
voting standard for the election of directors, broker non-votes will have no effect on the outcome of the vote for Proposal 1.
Proposal 2 (ratification of the appointment of our independent registered public accounting firm) is considered a routine matter.
Therefore, nominees have the discretion to vote any uninstructed shares on Proposal 2, and broker non-votes are unlikely to
result from this Proposal. Broker non-votes will be counted as present for purposes of establishing a quorum.

If I am a stockholder of record, how do I vote at the Annual Meeting?

If your shares are registered directly in your name with the Company’s transfer agent, Continental Stock Transfer &

Trust Company, Inc. (“Continental”), then you are considered the stockholder of record with respect to those shares, and these
proxy materials are being sent directly to you. As the stockholder of record, you may vote your shares in person at the Annual
Meeting. If you choose to vote your shares in person at the Annual Meeting, please bring to the Annual Meeting proof of your
identity and your ownership of the Company’s common stock on the Record Date, such as the enclosed proxy card or a
statement of ownership from Continental. Even if you plan to attend the Annual Meeting, the Company recommends that you
vote your shares in advance as described below so that your vote will be counted if you later decide not to or are otherwise
unable to attend the Annual Meeting.

You also have the right to grant your voting proxy directly to the persons named as proxy holders, Ned N. Fleming,

III, our Executive Chairman, Charles E. Owens, our President and Chief Executive Officer, and R. Alan Palmer, our Executive
Vice President and Chief Financial Officer, by any of the following means:

• By Internet: Go to the website www.proxyvote.com and follow the instructions. You will need the control

number included on the enclosed proxy card in order to vote by internet.

• By Telephone: Dial toll-free 1-800-690-6903 and follow the recorded instructions. You will need the control

number included on the enclosed proxy card in order to vote by telephone.

• By Mail: Mark your selections on the enclosed proxy card, date and sign your name exactly as it appears on the

proxy card and mail the proxy card in the enclosed pre-paid envelope. Mailed proxy cards must be received no
later than March 7, 2019 in order to be counted at the Annual Meeting.

In accordance with the Company’s amended and restated by-laws, a complete list of stockholders of record who are

entitled to vote at the Annual Meeting will be available for inspection during the ten-day period prior to the Annual Meeting at
the main office of the Company during regular business hours and at the Annual Meeting.

May I revoke my proxy or change my voting instructions?

You may revoke your proxy or change your voting instructions prior to the vote at the Annual Meeting. If your shares

are held through a nominee, you must follow the instructions from your nominee on how to change or revoke your voting
instructions or how to vote in person at the Annual Meeting. If you are a stockholder of record, you may enter new voting
instructions by using the internet or telephone methods described above or by mailing a new proxy card bearing a later date.
Any of these methods will automatically revoke your earlier voting instructions if they are received by 11:59 p.m., Central
Time, on March 7, 2019. You may also enter a new vote by attending the Annual Meeting and voting in person. Your
attendance at the Annual Meeting in person will not cause your previously granted proxy to be revoked unless you specifically
so request.

What vote is required to approve each proposal?

For Proposal 1, the election of directors will be determined by a plurality of the votes cast by the stockholders present

in person or represented by proxy at the Annual Meeting and entitled to vote. Under a plurality voting standard, the directors
who are elected to serve on our Board will be the two nominees receiving the highest number of votes cast in the election. For
each nominee, stockholders may either vote “FOR” that nominee or “WITHHOLD” their vote with respect to that
nominee. Accordingly, shares electing to “WITHHOLD” from voting for a particular nominee will be counted as present for
purposes of establishing a quorum, but will have no effect on the election of directors.

Proposal 2, the ratification of the appointment of RSM as the Company’s independent registered public accounting

firm, requires the affirmative vote of a majority of the votes cast by the stockholders present in person or by proxy at the
Annual Meeting and entitled to vote. Under this standard, Proposal 2 will be approved if the number of votes cast in favor of
the Proposal exceeds the number of votes cast against it. Stockholders may either vote “FOR” or “AGAINST” the Proposal or
may “ABSTAIN” from voting on the Proposal. Shares abstaining from voting on Proposal 2 will be counted as present for
purposes of establishing a quorum but will have no effect on the outcome of the vote.

The holders of our common stock do not have cumulative voting rights with respect to the matters to be acted on at the

Annual Meeting. Therefore, stockholders holding a majority in voting power of the shares of our common stock entitled to
vote generally in the election of directors will be able to elect all of our directors.

What is the Board’s voting recommendation for each of the proposals?

The Board recommends that you vote your shares “FOR” each of the nominees to the Board and “FOR” the

ratification of the appointment of RSM as the Company’s independent registered public accounting firm for the fiscal year
ending September 30, 2019. Unless instructed to the contrary, shares represented by proxies at the Annual Meeting will be
voted in accordance with the Board recommendations described above. The Board urges you to review these proxy materials
carefully before you vote.

Where can I find the voting results of the Annual Meeting?

We will announce preliminary voting results at the Annual Meeting and publish preliminary results, or final results if
available, in a Current Report on Form 8-K within four business days after the Annual Meeting. If final results are unavailable
at the time at which we file the Form 8-K, then we will file an amended report on Form 8-K to disclose the final voting results
within four business days after the final voting results are known.

What happens if additional proposals are presented at the Annual Meeting?

Other than the proposals described in this Proxy Statement, we do not expect any matters to be presented for a vote at
the Annual Meeting. If you grant a proxy, the persons named as proxy holders, Ned N. Fleming, III, our Executive Chairman,
Charles E. Owens, our President and Chief Executive Officer, and R. Alan Palmer, our Executive Vice President and Chief
Financial Officer, will have the discretion to vote your shares on any additional matters properly presented for a vote at the
Annual Meeting. If, for any reason, one or more of the Company’s nominees is not available as a candidate for director, then
the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the
Board.

What is the quorum requirement for the Annual Meeting?

The presence in person or by proxy of the holders of shares representing a majority of the voting power of all

outstanding shares of the Company’s common stock entitled to vote at the Annual Meeting will constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes are counted as present for the purpose of determining the presence of a
quorum, but will have no effect on the outcome of the vote on the proposals to be presented at the Annual Meeting.

Who will count the vote?

We have engaged Broadridge Financial Solutions, Inc. to tabulate the votes represented by proxies from brokerage

firms, banks and other nominees and stockholders of record. A representative of the Company will act as the inspector of
election.

Is my vote confidential?

Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that

protects your voting privacy. Your vote will not be disclosed either within the Company or to third parties, except (i) as
necessary to meet applicable legal requirements, (ii) to allow for the tabulation and certification of the votes and (iii) to
facilitate a successful proxy solicitation by the Board.

May I propose actions for consideration at next year’s annual meeting of stockholders or nominate individuals to serve as
directors?

You may submit proposals and director nominations for consideration at future annual meetings of the Company’s

stockholders as follows:

Stockholder Proposals under Rule 14a-8: In order for a proposal by a stockholder of the Company to be eligible to be

included in the Company’s proxy statement for the 2020 annual meeting of stockholders pursuant to the proposal process
mandated by Rule 14a-8 under the Exchange Act (“Rule 14a-8”), the proposal must be received by the Company on or before
September 24, 2019 and must comply with the informational and other requirements set forth in Regulation 14A under the
Exchange Act.

Other Stockholder Proposals and Nomination of Director Candidates: The Company’s amended and restated by-laws

also permit stockholders to nominate directors or submit proposals for a vote at a meeting of stockholders outside of the
process provided by Rule 14a-8. In order for a stockholder to raise a proposal from the floor at an annual meeting or nominate
an individual for election as a director, the proposal or nomination must be received by the Company not more than 120 days or
less than 90 days before the first anniversary of the date of the preceding year’s annual meeting. Thus, in order for a proposal or
nomination to be timely for the 2020 annual meeting of stockholders, the proposal, together with the information required
under the applicable by-law provision, must be received by the Company not earlier than November 9, 2019 or later than
December 9, 2019.

Copy of Amended and Restated By-Law Provisions: Our amended and restated by-laws are available on the SEC’s

website at http://www.sec.gov. You may also contact our Secretary at our corporate headquarters for a copy of the relevant
provisions of our amended and restated by-laws regarding the requirements for making stockholder proposals and nominating
director candidates. Additionally, a copy of our amended and restated by-laws is available on our website at
www.constructionpartners.net under the “Investors - Corporate Governance” tab.

What does it mean if I receive more than one set of proxy materials?

If you received more than one set of proxy materials, then your shares are registered in different names or are in more
than one account. For each set of proxy materials that you receive, please submit your vote for the control number that has been
assigned to you in such materials.

How do I obtain a separate set of proxy materials if I share an address with other stockholders?

To reduce expenses, in some cases, we may deliver one set of proxy materials to certain stockholders who share an

address, unless otherwise requested by one or more of the stockholders. However, in such situations, a separate proxy card has
been included with the proxy materials for each stockholder. If you have received only one set of proxy materials, you may
request separate copies to be delivered promptly at no additional cost to you by calling us at (334) 673-9763 or by writing to us
at Construction Partners, Inc., 290 Healthwest Drive, Suite 2, Dothan, Alabama 36303, Attention: Secretary.

If I share an address with other stockholders of the Company, how can we receive only one set of proxy materials for future
meetings?

You may request that we send you and the other stockholders who share an address with you only one set of proxy
materials by calling us at (334) 673-9763 or by writing to us at Construction Partners, Inc., 290 Healthwest Drive, Suite 2,
Dothan, Alabama 36303, Attention: Secretary.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of our common stock as of the

Record Date by: (i) each of our directors; (ii) each of our named executive officers; (iii) all of our directors and executive
officers as a group; and (iv) each stockholder known by the Company to beneficially own more than 5% of our Class A or Class
B common stock. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or
investment power with respect to the securities. Shares of common stock that may be acquired by an individual or group within
60 days of the Record Date pursuant to derivative securities, such as options, are deemed to be outstanding for the purpose of
computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of
computing the percentage ownership of any other person shown in the table.

Percentage of ownership is based on a total of 11,950,000 shares of Class A common stock and 39,464,619 shares of

Class B common stock outstanding as of the Record Date. Each share of Class A common stock is entitled to one vote per
share, and each share of Class B common stock is entitled to ten votes per share. The Class A common stock and Class B
common stock vote together on all matters submitted to a vote of stockholders, unless otherwise required by applicable law, our
amended and restated certificate of incorporation or our amended and restated by-laws. Neither class of our common stock has
cumulative voting rights.

Except as indicated in the footnotes below, we believe, based on information furnished to us, that the persons and

entities named in the table below have sole voting and investment power with respect to all shares of our common stock that
they beneficially own. The Company does not know of any arrangements, including any pledge by any person of the
Company’s securities, the operation of which may at a subsequent date result in a change in control of the Company. Unless
otherwise indicated, the address for each director and executive officer is: c/o Construction Partners, Inc., 290 Healthwest
Drive, Suite 2, Dothan, Alabama 36303.

Common Stock Beneficially Owned
Class B
Class A

Name of Beneficial Holder
5% Stockholders
SunTx CPI Expansion Fund, L.P. (1)
SunTx Fulcrum Fund Prime, L.P. (1)
SunTx Fulcrum Dutch Investors Prime, L.P. (1)
Grace, Ltd. (2)
ArrowMark Colorado Holdings LLC (3)
Empyrean Capital Partners, LP (4)

% of
Class

1,306,398

767,428

10.9 %

6.8 %

Directors and Named Executive Officers
Ned N. Fleming, III (5) (6)
Craig Jennings (5)
Mark R. Matteson (5)
Michael H. McKay

Stefan L. Shaffer
Charles E. Owens (7)
R. Alan Palmer
F. Julius Smith, III (8)
All Directors and Executive Officers as a
Group (14 persons)

4,000

1,000

1,500

37,900

% of
Total
Voting
Power†

45.0 %

26.6 %

14.5 %

6.1 %

% of
Class

46.4 %

27.4 %

14.9 %

6.3 %

88.8 %

86.2 %

18,312,458

10,832,128

5,897,486

2,500,048

35,042,072

35,406

2,500,048

6.3 %

6.1 %

290,209

101,052

38,413,039

97.2 %

94.3 %

*
†

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

Represents less than 1%.
Represents the voting power with respect to all shares of Class A common stock and Class B common stock
outstanding as of the Record Date, voting as a single class.
SunTx CPI Expansion Fund GP, L.P. (“SunTx Expansion Fund GP”) is the general partner of SunTx
Expansion Fund, L.P. (“SunTx Expansion Fund”), and SunTx Capital Partners L.P. (“SunTx Partners GP”) is
the general partner of each of SunTx Fulcrum Fund Prime, L.P. (“SunTx Fulcrum Fund”) and SunTx
Fulcrum Dutch Investors Prime, L.P. (“SunTx Fulcrum Dutch Fund” and, together with SunTx Expansion
Fund and SunTx Fulcrum Fund, the “SunTx Funds”). Each of (i) Mr. Fleming, as the sole stockholder and
director of SunTx Capital Management Corp. (“SunTx Capital Management”), (ii) SunTx Capital
Management, as the general partner of each of SunTx Expansion Fund GP and SunTx Partners GP, (iii)
SunTx Expansion Fund GP, as the general partner of SunTx Expansion Fund, and (iv) SunTx Partners GP, as
the general partner of each of SunTx Fulcrum Fund and SunTx Fulcrum Dutch Fund, may be deemed to
beneficially own shares held by the SunTx Funds. Additionally, Messrs. Jennings and Matteson, as executive
officers of SunTx Capital Management, may be deemed to beneficially own shares held by the SunTx Funds.
Each of Messrs. Fleming, Jennings and Matteson, as well as SunTx Capital Management, SunTx Expansion
Fund GP and SunTx Partners GP, disclaims any beneficial ownership of such shares except to the extent of
any proportionate pecuniary interest therein. The address of each of Messrs. Fleming, Jennings and Matteson,
SunTx Management, SunTx Expansion Fund GP, SunTx Partners GP and the SunTx Funds is c/o SunTx
Capital Management Corp., 5420 LBJ Freeway, Suite 1000, Dallas, Texas 75240.
Charles E. Owens, our President and Chief Executive Officer, is the general partner of Grace Ltd. As the
general partner of Grace Ltd., Mr. Owens may be deemed to beneficially own shares held by Grace Ltd. The
business address of Grace Ltd. is 10 Chateau Place, Dothan, Alabama 36303.
Beneficial ownership information is as of July 31, 2018, as reported on a Schedule 13G filed by ArrowMark
Colorado Holdings LLC on August 10, 2018. The address of the business office of ArrowMark Colorado
Holdings LLC is 100 Fillmore Street, Suite 325, Denver, Colorado 80206.
Beneficial ownership information is as of May 4, 2018, as reported on a Schedule 13G filed by Empyrean
Capital Partners, LP on May 11, 2018. Based on the Schedule 13G, 720,999 shares of the reported Class A
common stock are owned by Empyrean Capital Overseas Master Fund, Ltd., a Cayman Islands exempted
company, and 46,429 shares of the Class A common stock are owned by P EMP Ltd., a British Virgin Islands
business company. Each of these entities shares voting and dispositive power with Empyrean Capital
Partners, LP, a Delaware limited partnership, which serves as investment manager to each of these entities,
and Amos Meron, a United States citizen, who serves as the managing member of Empyrean Capital, LLC,
the general partner of Empyrean Capital Partners, LP. The address of the business office of each of these
persons and entities is c/o Empyrean Capital Partners, LP, 10250 Constellation Boulevard, Suite 2950, Los
Angeles, California 90067.
Includes shares of Class B common stock held by the SunTx Funds. See footnote 1 above.
Includes 4,000 shares of Class A common stock owned by Mr. Fleming’s spouse.
Consists of shares of Class B common stock held by Grace Ltd. See footnote 2 above.
Includes a non-plan option to purchase 74,592 shares of Class B common stock at an exercise price of $0.04
per share, which was fully vested on the date of grant, March 7, 2017, but is only exercisable upon a change
of control of the Company, as defined in the option agreement. This option represents part of the
consideration paid in the Company’s acquisition of FSC II, LLC (“FSC”).

Our Board of Directors

MANAGEMENT AND CORPORATE GOVERNANCE

Our amended and restated certificate of incorporation provides that the number of members of the Board will be

determined from time to time by resolution of the Board. Currently, the Board consists of six members. The Board is divided
into three classes of two directors each, with the directors in each class serving staggered three-year terms. As a result, as
currently constituted, one-third of the Board is elected each year.

Our current directors are divided into the following classes:

• Class I, consisting of Ned N. Fleming, III and Charles E. Owens, whose terms will expire at the Annual Meeting;

• Class II, consisting of Craig Jennings and Mark R. Matteson, whose terms will expire at the 2020 annual meeting

of stockholders; and

• Class III, consisting of Michael H. McKay and Stefan L. Shaffer, whose terms will expire at the 2021 annual

meeting of stockholders.

Information about the Nominees and Other Directors

Set forth below are the biographies of each of the nominees and our other directors, including their names, ages,

offices in the Company, if any, principal occupations or employment for at least the past five years, the length of their tenure as
directors, and the names of other public companies in which such persons hold or have held directorships during the past five
years. Additionally, information about the specific experience, qualifications, attributes or skills that led to the Board’s
conclusion that each person listed below should serve as a director is set forth below. The stock ownership of each director is
set forth in the table above entitled “Security Ownership of Certain Beneficial Owners and Management.”

Name
Ned N. Fleming, III (2) (3)
Charles E. Owens (3)
Craig Jennings
Mark R. Matteson (1) (2) (3)
Michael H. McKay (1)
Stefan L. Shaffer (1) (2)

Age
58
68
60
55
57
62

Position
Executive Chairman of the Board and Director
President, Chief Executive Officer and Director
Director
Director
Director
Director

(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Nominating and Corporate Governance Committee

Class I Nominees for Election - Terms Expire at the Annual Meeting

Ned N. Fleming, III is one of the founders of our Company and has served as Executive Chairman of the Board since

our inception. He has served as Managing Partner of SunTx since 2001. He also serves as chairman of the boards of directors
of NationsBuilders Insurance Services, Inc. and Big Outdoor LLC, and as a member of the board of directors of Veritex
Holdings, Inc. (Nasdaq: VBTX). Mr. Fleming previously served as a member of the board of directors of DF&R Restaurants,
Inc., a formerly publicly traded restaurant operator, and Spinnaker Industries, Inc., a publicly traded material manufacturing
company. Prior to co-founding SunTx in 2001, Mr. Fleming served as President and Chief Operating Officer of Spinnaker
Industries, Inc. until its sale in 1999. Prior to that, Mr. Fleming worked at a Dallas-based private investment firm, where he led
acquisitions in the food and beverage and defense industries. Mr. Fleming received a Master of Business Administration with
distinction from Harvard Business School and a Bachelor of Arts in Political Science from Stanford University. As a result of
his role with our Company since our inception, Mr. Fleming has significant knowledge of us and our industry, which we
believe makes him well-qualified to serve as a director of our Company.

Charles E. Owens is one of the founders of our Company and has served as our President and Chief Executive Officer

since its inception. He has been a member of the Board since 2001 and has overseen the successful acquisition and integration
of 16 companies in this role. From 1990 until its sale in 1999, Mr. Owens was President and Chief Executive Officer of
Superfos Construction U.S., Inc. (“Superfos”), the North American operation of Superfos a/s, a publicly held Danish company.
During his tenure at Superfos, he oversaw the successful acquisition and integration of approximately 35 companies, leading
Superfos to become one of the largest highway construction companies in the United States. Prior to 1990, Mr. Owens was
President of Couch Construction, Inc., a subsidiary of Superfos headquartered in Dothan, Alabama. Mr. Owens received a
Bachelor of Business Administration from Troy University. As a result of his role with our Company since our inception,
Mr. Owens has significant knowledge of us and our industry, which we believe makes him well-qualified to serve as a director
of our Company.

Class II Continuing Directors - Terms Expire in 2020

Craig Jennings has served as a member of the Board since 2017. Since 2001, he has been a partner and Chief
Financial Officer of SunTx. He also serves as chairman of the board of directors of Interface Security Systems Holdings, Inc.
Prior to co-founding SunTx, Mr. Jennings was Vice President of Finance and Treasurer of Spinnaker Industries, Inc., a publicly
traded materials manufacturing company, until its sale in 1999. Prior to that, Mr. Jennings held senior finance positions at a
publicly traded oil field services company and a publicly traded food and beverage company. Prior to that, Mr. Jennings was a
Senior Audit Manager with Ernst & Young LLP. Mr. Jennings received his Bachelor of Business Administration from the
University of Toledo and is a Certified Public Accountant. We believe that Mr. Jennings’ investment, financial and directorship
experience makes him well-qualified to serve as a director of our Company.

Mark R. Matteson has served as a member of the Board since our inception and was appointed as chairman of our

Audit Committee in 2008. Since 2001, he has been a partner of SunTx. Prior to co-founding SunTx in 2001, Mr. Matteson was
Vice President of Corporate Development of Spinnaker Industries, Inc., a publicly traded materials manufacturing company,
until its sale in 1999. He currently serves as chairman of the board of directors of Freedom Truck Finance, LLC and as a
member of the boards of directors of Anchor Partners, LLC and NationsBuilders Insurance Services, Inc. Mr. Matteson
received a Master of Business Administration from Georgetown University and a Bachelor of Arts in Foreign Service and
International Politics from The Pennsylvania State University. As a result of his role with our Company since our inception,
Mr. Matteson has significant knowledge of us and our industry, which we believe makes him well-qualified to serve as a
director of our Company.

Class III Continuing Directors - Terms Expire in 2021

Michael H. McKay has served as a member of the Board since 2002 and was appointed to our Audit Committee in
2008. Mr. McKay has been an Advisory Partner at Bain & Company since 2009. He also serves as a member of the board of
directors of Big Outdoor Holdings, LLC and Hubbardton Forge, LLC. Since joining Bain & Company in 1987, he helped found
its Private Equity Group and has evaluated and developed strategies for hundreds of businesses. From 2004 to 2006,
Mr. McKay served as Chief Investment Officer of a principal investment firm based in Washington D.C., making public and
private investments, and was Managing Partner of a Boston-based hedge fund from 2006 to 2009. Mr. McKay is also a Senior
Lecturer at the Brandeis International Business School, where he has served on the faculty since 2010. Mr. McKay received a
Master of Business Administration from The University of Chicago Graduate School of Business, where he received the Mayer
Prize as top graduating student, and a Bachelor of Arts with high distinction in Economics from Harvard University. We believe
that Mr. McKay’s experience analyzing, financing and investing in public and private companies makes him well-qualified to
serve as a director of our Company.

Stefan L. Shaffer has served as a member of the Board since 2018. Mr. Shaffer is the Managing Partner of SPP
Capital Partners, a middle market investment banking and asset management firm that he co-founded in 1989. Prior to founding
SPP Capital Partners, Mr. Shaffer was a Vice President in the Private Placement Group at Bankers Trust Company from 1986 to
1989, and worked as an attorney with the law firm of White & Case LLP from 1982 to 1986. Mr. Shaffer received a Juris
Doctor from Cornell University Law School and a Bachelor of Arts from Colgate University. We believe that Mr. Shaffer’s
experience analyzing, financing and advising public and private companies makes him well-qualified to serve as a director of
our Company.

Information about Executive Officers Who Are Not Also Directors

The following table sets forth certain information about our executive officers who are not also directors.

Name
R. Alan Palmer
Todd K. Andrews
M. Brett Armstrong
J. Ryan Brooks
Robert P. Flowers
John L. Harper
F. Julius Smith, III
John A. Walker

Age
66
56
57
30
59
54
49
62

Position
Executive Vice President and Chief Financial Officer
Chief Accounting Officer
Senior Vice President
Senior Vice President, Legal
Senior Vice President
Senior Vice President
Senior Vice President
Senior Vice President

R. Alan Palmer is one of the founders of our Company and has served as our Executive Vice President and Chief

Financial Officer since 2006. Between 2001 and 2006, Mr. Palmer provided consulting services to the Company. Prior to 2000,
Mr. Palmer was Vice President and Chief Financial Officer of Couch Construction, Inc. and Superfos. Mr. Palmer has been
principally involved in the acquisition and integration of approximately 50 companies alongside Mr. Owens over the course of
his career. Mr. Palmer is a Certified Public Accountant and received a Bachelor of Science in Accounting from Auburn
University.

Todd K. Andrews was appointed as our Chief Accounting Officer in December 2018. Prior to his appointment, Mr.

Andrews served as the Company’s Controller, a role that he held since 2008. Before joining the Company, Mr. Andrews served
for more than nine years as Chief Financial Officer of Graceba Total Communications, Inc., a provider of cable television and
broadband internet services, and in accounting roles at two banking institutions. Mr. Andrews is a Certified Public Accountant
and holds Bachelor of Science degrees in Accounting and Computer Science from Troy University.

M. Brett Armstrong has served as our Senior Vice President since 2017 and has served as Chief Operating Officer of

Wiregrass Construction Company, Inc. (“WCC”), a subsidiary of our Company, since 2008. Mr. Armstrong served as Vice
President and Area Manager of WCC from 2000 to 2008. Mr. Armstrong has more than 30 years of construction management
experience. Prior to joining WCC, he was Area Manager over the Columbus, Georgia division of Ashland Paving and
Construction, Inc. Prior to that, he was Area Manager over the Columbus, Georgia division of Superfos. Mr. Armstrong holds a
Bachelor of Science in Civil Engineering from Auburn University.

J. Ryan Brooks has served as our Senior Vice President, Legal, since August 2018. Prior to joining the Company, Mr.

Brooks was in private law practice at Maynard, Cooper & Gale, P.C. in Birmingham, Alabama, where he represented both
public and private companies in a variety of corporate matters, including mergers and acquisitions, securities offerings and
regulatory compliance. Mr. Brooks holds a Bachelor of Science in Accounting from Auburn University and a Juris Doctor
from Vanderbilt University Law School.

Robert P. Flowers has served as our Senior Vice President since 2017 and has served as President of C.W. Roberts
Contracting, Inc., a subsidiary of our Company, since joining our Company in 2013. Mr. Flowers has more than 30 years of
construction management experience. Prior to joining our Company, he was Executive Vice President of Estimating and
Construction for Barlovento, LLC, a general contractor performing civil and commercial construction throughout the United
States. Prior to that, Mr. Flowers was the Georgia Platform President of Superfos.

John L. Harper has served as our Senior Vice President since 2017 and has served as President of WCC, a subsidiary

of our Company, since 1996. Mr. Harper has more than 30 years of construction management experience. Prior to becoming
President of WCC, he served as Vice President of Estimating/Project Management of WCC. An active member of several state
and national highway construction organizations, Mr. Harper currently serves as the Chairman of the National Asphalt
Pavement Association. Mr. Harper received a Bachelor of Science in Finance from Auburn University.

F. Julius Smith, III has served as our Senior Vice President since 2017 and has served as President of Fred Smith

Construction, Inc., a subsidiary of our Company acquired in 2011, since 2009. With more than 20 years of construction
management experience, Mr. Smith previously served as Chief Operating Officer of Fred Smith Construction, Inc. from 2005
to 2009. Prior to that, he held various other positions within Fred Smith Construction, Inc. and also served in the supply corps
of the U.S. Navy. Mr. Smith received a Master of Business Administration and a Bachelor of Arts in History from Wake Forest
University.

John A. Walker has served as our Senior Vice President since 2017 and previously served as Vice President of

Business Development since joining our Company in 2009. Mr. Walker has more than 30 years of experience in the
construction industry. Before joining our Company, he was a Regional Vice President at Oldcastle Materials, Inc. Prior to that,
he was the Alabama Platform President of Superfos. Mr. Walker is a Licensed Professional Engineer and holds a Bachelor of
Science in Civil Engineering from Auburn University.

Certain Director and Executive Officer Relationships

None of our current directors or director nominees were selected pursuant to any arrangement or understanding, other
than with our directors and executive officers acting within their capacities as such. There are no family relationships between
or among any of our directors and executive officers. Mr. Fleming, who serves as a member of the board of directors of Veritex
Holdings, Inc., is the only director or executive officer of the Company who serves as a director of a company that (i) has a
class of securities registered under, or that is subject to the periodic reporting requirements of, the Exchange Act, or (ii) is an
investment company registered under the Investment Company Act of 1940. None of our directors or executive officers has
been involved in any legal proceedings during the past 10 years that are material to an evaluation of the ability or integrity of
such person. In addition, none of our directors, executive officers or 5% stockholders or any associate of any of the foregoing
has been involved in any legal proceedings in which such person has or had a material interest adverse to the Company or any
of our subsidiaries. The principal occupation and employment during the past five years of each of our directors was carried on,
in each case except as specifically identified above, with a corporation or organization that is not a parent, subsidiary or other
affiliate of the Company.

Director Independence and Controlled Company Exemption

Because SunTx beneficially owns a majority of the voting power of our outstanding common stock, we are a
“controlled company” under the listing rules of The Nasdaq Stock Market LLC (“Nasdaq”). As a controlled company, we are
exempt from certain Nasdaq governance requirements that would otherwise apply to the composition and function of our
Board. For example, we are not required to comply with certain rules that would otherwise require, among other things, (i) our
Board to have a majority of independent directors, (ii) the compensation of our executive officers to be determined by a
majority of the independent directors or a committee of independent directors, and (iii) director nominees to be selected or
recommended either by a majority of the independent directors or a committee of independent directors. Notwithstanding our
status as a controlled company, we remain subject to the requirements that our independent directors hold regular executive
sessions and that our Audit Committee consist entirely of independent directors by May 4, 2019, the one-year anniversary of
the listing of our Class A common stock on the Nasdaq Global Select Market.

If at any time we cease to be a controlled company, we will take all action necessary to comply with the Nasdaq listing

rules, including appointing a majority of independent directors to our Board and ensuring that our Compensation Committee
and our Nominating and Corporate Governance Committee are each composed entirely of independent directors, subject to any
permitted “phase-in” periods. We will no longer qualify as a controlled company once SunTx ceases to own a majority of the
voting power of our outstanding common stock.

To qualify as “independent” under the Nasdaq listing rules, a director must meet certain objective criteria set forth in

the Nasdaq listing rules, and our Board must affirmatively determine that the director has no material relationship with us
(either directly or as a partner, stockholder or officer of an organization that has a relationship with us) that would interfere with
his or her exercise of independent judgment in carrying out his or her responsibilities as a director. Among other things, the
Nasdaq independence criteria include that the director not be our employee and not have engaged in various types of business
dealings with the Company.

Our Board has reviewed all direct or indirect business relationships between each director (including his or her

immediate family members) and the Company, as well as each director’s relationships with charitable organizations, to assess
director independence as defined in the Nasdaq listing rules. Based on this review, our Board has determined that Stefan L.
Shaffer and Michael H. McKay are “independent” directors under the Nasdaq listing rules. Additionally, our Board has
determined that Messrs. Shaffer and McKay satisfy the heightened independence requirements of Rule 10A-3 under the
Exchange Act for purposes of Audit Committee membership.

Board Leadership Structure

The Board oversees the business and affairs of the Company and monitors the performance of its management.
Although the Board is not involved in the Company’s day-to-day operations, the directors keep themselves informed about the
Company through meetings of the Board, reports from management and discussions with the Company’s executive officers.
Directors also communicate with the Company’s outside advisors, as necessary.

Members of the Board are elected by our stockholders. The basic responsibility of the Board is to lead the Company

by exercising its business judgment to act in what each director reasonably believes to be the best interests of the Company and
its stockholders. Leadership is important to facilitate the Board acting effectively as a working group so that the Company and
its performance may benefit.

The role of Executive Chairman of the Board includes providing continuous feedback on the direction, performance

and strategy of the Company, presiding as chairman of Board meetings, setting the Board’s agenda with management and
leading the Board in anticipating and responding to opportunities and challenges faced by the Company. Ned N. Fleming, III
currently serves as the Executive Chairman of our Board. Our Board does not have a formal policy regarding the combination
of the roles of Executive Chairman and Chief Executive Officer because the Board believes that it is in the best interests of the
Company to have the flexibility to determine, from time to time, whether the positions should be held by the same person or by
separate persons. The Board believes that the current separation of the roles of Executive Chairman and Chief Executive
Officer allows the Company to benefit from the knowledge and leadership of two experienced business veterans and is
advantageous to independence, oversight and objectivity. The Board may reconsider this leadership structure from time to time
based on the leadership needs of our Board and the Company at any particular time.

Board Observer Rights

SunTx CPI Expansion Fund, L.P. (the “Expansion Fund”), a limited partnership controlled by SunTx, is one of our

largest stockholders. The Northwestern Mutual Life Insurance Company (“Northwestern Mutual”) and the USS-Constitution
Partnership Fund, L.P. are significant limited partner investors in the Expansion Fund. The Company is a party to letter
agreements with these two entities pursuant to which each of them has the right to designate one representative to attend each
meeting of our Board and any committee thereof. In certain limited circumstances, we have agreed to reimburse Northwestern
Mutual for reasonable out-of-pocket costs incurred by its representative in connection with traveling to and from and attending
these meetings.

Meetings of the Board

Our Board conducts its business through meetings of the full Board and its committees. Under our Corporate

Governance Guidelines, directors are expected to prepare for and attend all meetings of the Board and committees on which
they serve. During our fiscal year ended September 30, 2018, the Board met three times, and no director attended fewer than
75% of the aggregate of (i) the total number of meetings of the Board and (ii) the total number of meetings of committees of
the Board for the period during which the director served on the Board or such committee. We encourage our directors to
attend annual meetings of the Company’s stockholders. The Company did not hold an annual meeting of stockholders during
the fiscal year ended September 30, 2018.

Committees of the Board

On November 17, 2017, the Board established three standing committees to assist it in carrying out its responsibilities:

the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each of the
standing committees operates under its own written charter adopted by our Board, all of which are available on the Company’s
investor relations website at http://ir.constructionpartners.net under the heading “Corporate Governance - Committee Charters.”
In addition, special committees may be established under the direction of our Board when necessary to address specific issues.
The standing committees annually review and assess the adequacy of their respective charters and recommend any revisions to
the Board.

The membership and functions of each of the standing committees, as well as the number of meetings that each of

them held during the 2018 fiscal year, are described below.

Audit Committee

The purpose of the Audit Committee is to oversee our accounting and financial reporting processes, the audits of our

financial statements, the qualifications and performance of our independent registered public accounting firm and the execution
of our internal audit function. The Audit Committee is responsible for, among other things:

•

reviewing and discussing with management and our independent registered public accounting firm our annual
audited and interim unaudited financial statements and related disclosures to be included in our quarterly earnings
releases and periodic reports filed with the SEC;

recommending to the Board whether our audited financial statements will be included in our Annual Report on
Form 10-K;

•

reviewing and discussing the scope and results of the independent registered public accounting firm’s annual audit
and quarterly reviews of our financial statements, and any other matters required to be communicated to the Audit
Committee by the independent registered public accounting firm;

reviewing and discussing with management, our independent registered public accounting firm and any internal
personnel or third parties serving an internal audit function the adequacy and effectiveness of our disclosure
controls and procedures, our internal controls and procedures for financial reporting and our risk assessment and
risk management policies (including those related to significant business risk exposures, such as data privacy and
network security);

appointing, compensating, retaining and overseeing the work of our independent registered public accounting
firm, including their independence;

reviewing and preapproving all audit, review or attest services and permitted non-audit services that may be
performed by our independent registered public accounting firm;

establishing and maintaining guidelines relating to our hiring of employees and former employees of our
independent registered public accounting firm;

reviewing and discussing the scope and staffing of our internal audit function, including any difficulties
encountered by the internal audit function and restrictions on the scope of its work or access to required
information, and reviewing significant internal audit reports and management’s responses;

confirming the regular rotation of the audit partners with our independent auditor and considering whether there
should be regular rotation of our auditors;

preparing an annual Audit Committee report to be included in our proxy statement;

reviewing legal and regulatory matters that may have a material impact on our financial statements and reviewing
our compliance policies and procedures, including the implementation and effectiveness of our compliance
programs;

participating in the selection of the Company’s lead audit partner;

reviewing the Company’s significant financing transactions and related documentation that may have a material
impact on the Company’s ability to borrow to ensure that the Company is able to finance its ongoing and future
operations, and evaluating whether to recommend that the Board approve or ratify any such financing transaction;

considering all of the relevant facts and circumstances available for related party transactions submitted to the
Audit Committee in accordance with our written policy governing related party transactions;

establishing and maintaining procedures for the receipt, retention and treatment of complaints received by the
Company regarding accounting, internal accounting controls and auditing matters for the confidential, anonymous
submission by our employees of concerns regarding questionable accounting and auditing matters;

reviewing and discussing all critical accounting policies and practices to be used, all alternative treatments of
financial information within GAAP that have been discussed with management, ramifications of the use of such
alternative disclosures and treatments, the treatment preferred by the independent auditor, and other material
written communications between the independent auditor and management; and

reviewing and recommending to the Board director and officer indemnification and insurance policies and
procedures.

The Audit Committee currently consists of Messrs. Matteson (Chairperson), McKay and Shaffer. The Board has

determined that (i) Messrs. McKay and Shaffer are independent under the Nasdaq listing rules, (ii) Messrs. McKay and Shaffer
each satisfy the heightened independence requirements of Rule 10A-3 under the Exchange Act, (iii) each of Messrs.
Matteson, McKay and Shaffer is financially literate and (iv) Mr. McKay qualifies as an “audit committee financial expert”
under the criteria set forth in the rules and regulations of the SEC. The Audit Committee met three times during the 2018 fiscal
year.

Both the SEC and Nasdaq have implemented rules requiring us to have an audit committee composed of at least three

directors, each of whom meets the independence and experience standards established by Nasdaq and the Exchange Act,
subject to transitional relief during the one-year period following the completion of our initial public offering. Accordingly, the
Audit Committee will be composed solely of independent directors by May 4, 2019, the one-year anniversary of the date on
which the Company’s Class A common stock was first listed on the Nasdaq Global Select Market.

Compensation Committee

The primary purposes of the Compensation Committee are to establish salaries, incentives and other forms of
compensation for our officers and other employees and to administer the Company’s incentive compensation and benefit plans.
More specifically, the Compensation Committee is responsible for, among other things:

•

reviewing and approving annually the corporate goals and objectives relevant to the compensation of our
executive officers, evaluating the performance of our executive officers in light of those goals and setting the
compensation levels of our executive officers based on such evaluation;

reviewing the competitiveness of our compensation programs for executive officers to (i) attract and retain
executive officers, (ii) motivate our executive officers to achieve our business objectives, and (iii) align the
interests of our executive officers and key employees with the long-term interests of our stockholders;

reviewing trends in management compensation, overseeing the development of new compensation plans and,
when necessary, revising existing plans;

periodically reviewing the compensation paid to non-employee directors through annual retainers and any other
cash or equity components of compensation and perquisites, and making recommendations to the Board for any
adjustments;

reviewing and approving the employment agreements, salaries, bonuses, equity or equity-based awards and
severance, termination, indemnification and change in control agreements for all of our executive officers;

reviewing and approving compensation packages for new executive officers and termination packages for
executive officers as may be suggested by management or the Board;

reviewing and approving our policies and procedures with respect to expense accounts and perquisites for our
executive officers;

reviewing and discussing with the Board and our executive officers plans for executive officer development and
corporate succession plans for the Company’s executive officers;

reviewing and making recommendations concerning long-term incentive compensation plans, including the use of
stock options and other equity-based plans;

overseeing our employee benefit plans;

reviewing periodic reports from management on matters relating to personnel appointments and practices;

reviewing and assessing the Company’s policies and practices for compensating its employees, including its
executive officers, as they relate to risk management practices, risk-taking incentives and identified major risk
exposures to the Company; and

• making recommendations concerning policies to mitigate risks arising from compensation policies and practices,
including policies providing for the recovery of incentive or equity-based compensation and limiting hedging
activities related to the Company’s common stock.

Pursuant to its charter, the Compensation Committee is authorized to retain and terminate advisors to assist the

Compensation Committee in discharging its duties and responsibilities to the extent that the Compensation Committee deems
necessary. This includes the authority to approve fees and the other terms and conditions of the advisors’ retention. In addition,
any of the responsibilities described above may be delegated to one or more subcommittees, as the Compensation Committee
may deem necessary or appropriate.

Our Compensation Committee consists of Messrs. Fleming (Chairperson), Matteson, and Shaffer. Our Board has

determined that Mr. Shaffer is the only member of the Compensation Committee who is independent under the Nasdaq listing
rules. The Compensation Committee met one time during the 2018 fiscal year.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee identifies, evaluates and recommends qualified nominees to

serve on our Board, develops and oversees our internal corporate governance processes and maintains a management
succession plan. Among other things, the Nominating and Corporate Governance Committee is responsible for:

•

reviewing and making recommendations regarding the size, composition and organization of the Board;

developing and recommending to the Board specific criteria for the selection of directors;

• with respect to director nominees, (i) identifying individuals qualified to become members of the Board

(consistent with criteria approved by the Board), (ii) reviewing the qualifications of any such person submitted to
be considered as a director, and (iii) selecting the director nominees for the annual meeting of stockholders or to
fill vacancies on the Board;

•

developing and periodically reassessing policies and procedures with respect to the consideration of any director
candidate recommended by stockholders or otherwise;

reviewing and making recommendations to the Board with respect to the size, composition and organization of
Board committees (other than the Nominating and Corporate Governance Committee);

recommending procedures for the effective functioning of the Board;

assisting the Board in determining whether individual directors have material relationships with the Company that
may interfere with their independence;

overseeing the Board’s annual self-evaluation process and reporting annually to the Board with an assessment of
the Board’s performance;

developing and maintaining an orientation program for new directors and continuing education programs for
directors; and

reviewing and discussing, as appropriate, with management the Company’s public disclosures and its disclosures
to stock exchanges relating to independence, governance and director nomination matters, including in the
Company’s proxy statement.

The Nominating and Corporate Governance Committee consists of Messrs. Fleming (Chairperson), Owens and

Matteson. Our Board has determined that none of the members of our Nominating and Corporate Governance Committee are
independent under the Nasdaq listing rules. The Nominating and Corporate Governance Committee did not meet during the
2018 fiscal year.

Role of the Board in Risk Oversight

Our Board, as a whole and through its committees, has responsibility for the oversight of risk management at the

Company. In its risk oversight role, our Board has the responsibility to satisfy itself that the risk management processes
designed and implemented by management are adequate and functioning as designed. The Board receives reports from
management on financial, operational, legal compliance and reputation risks and the degree of exposure to those risks. The
Board helps ensure that management is properly focused on risk by, among other things, reviewing and discussing the
performance of senior management and business units of the Company.

Our Board oversees an enterprise-wide approach to risk management, which is designed to (i) support the achievement
of organizational objectives, including strategic objectives, (ii) improve long-term organizational performance and (iii) enhance
stockholder value. Several Board committees are responsible for risk oversight in specific areas. For example, the Audit
Committee oversees financial, accounting and internal control risk management policies and approves the independent auditor
and its annual audit plan. The Audit Committee also reports periodically to the Board on the effectiveness of risk management
processes in place and the overall risk assessment of the Company’s activities. The Compensation Committee assesses and
monitors risks in the Company’s compensation program. For more information on the responsibilities of the committees of our
Board, see the discussion about the respective committees under the heading “Committees of the Board.”

Code of Business Conduct and Ethics

We are committed to having sound corporate governance principles. Such principles are essential to running our

business efficiently and maintaining our integrity in the marketplace. We have adopted a Code of Business Conduct and Ethics
that applies to all of our employees, including our executive officers, and the members of our Board. The Code of Business
Conduct and Ethics is available on our Investor Relations website at http://ir.constructionpartners.net/ under the heading
“Corporate Governance - Governance Documents.” Any future changes or amendments to the Code of Business Conduct and
Ethics, and any waiver thereof that applies to our Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer,
will be posted on our website and otherwise reported in accordance with SEC and Nasdaq rules.

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines to assist the Board and its committees in the exercise of

their responsibilities. The Corporate Governance Guidelines set forth guiding principles and provide a flexible framework for
the governance of the Company. The Corporate Governance Guidelines address, among other things, board composition,
director qualifications and responsibilities, and stockholder communications with the Board. The Nominating and Corporate
Governance Committee is responsible for regularly reviewing and providing recommendations to the Board on the Corporate
Governance Guidelines, and the full Board will approve changes as it deems appropriate. A copy of the Corporate Governance
Guidelines is available on our Investor Relations website at http://ir.constructionpartners.net/ under the heading “Corporate
Governance - Governance Documents.”

Nomination and Consideration of Director Candidates

Procedures of the Board and Nominating and Corporate Governance Committee - General

The Nominating and Corporate Governance Committee of the Board is responsible for identifying and evaluating

qualified candidates for election to the Board. Following its evaluation, the Nominating and Corporate Governance Committee
recommends to the full Board a slate of director candidates for inclusion in the Company’s proxy statement. These
recommendations are based on an evaluation that is consistent with the criteria for selecting directors described below and are
also consistent with the Company’s organizational documents and applicable law and listing rules. The backgrounds and
qualifications of the directors, considered as group, are intended to provide a significant mix of experience, knowledge and
abilities to allow the Board to fulfill its responsibilities.

In evaluating the suitability of director candidates, the Board and the Nominating and Corporate Governance

Committee consider many factors, including the nominee’s integrity and judgment; independence; knowledge and skills;
experience and accomplishments; contribution to board diversity; contribution to board interaction; availability and willingness
to commit to participate in Board and committee activities; compatibility with the Company’s management team and culture;
understanding of the Company’s business; and other factors that the Nominating and Corporate Governance Committee
concludes are pertinent in light of the then-current needs of the Board. The Board believes that its membership should reflect a
diversity of experience, gender, race, ethnicity and age. The Nominating and Corporate Governance Committee selects
qualified nominees and reviews its recommendations with the Board, which decides whether to nominate a particular candidate
for election or invite such candidate to join the Board. When evaluating the suitability of an incumbent director for nomination
or re-election, the Board and the Nominating and Corporate Governance Committee also consider the director’s past
performance, including attendance at meetings and participation in and contributions to the activities of the Board. The
Nominating and Corporate Governance Committee may consider individuals recommended by Board members, management,
stockholders and, if it deems appropriate, a professional search firm.

The Board may also consider candidates to fill a vacancy in the Board outside of the stockholder meeting process. In
such a case, the Nominating and Corporate Governance Committee uses the same criteria used to evaluate a director nominee
to be elected by stockholders. In the event of a vacancy to be filled by the Board, the Nominating and Corporate Governance
Committee will recommend to the Board one or more candidates for election by the Board, and proxies will not be solicited.

Recommendations of Director Candidates by Stockholders

In December 2018, the Board adopted a formal policy governing the manner in which the Nominating and Corporate

Governance Committee will consider director candidates recommended by the Company’s stockholders. Candidates
recommended by stockholders will be evaluated in the same manner as candidates recommended by directors or management
according to the criteria set forth above.

Stockholders who wish to recommend candidates for the Nominating and Corporate Governance Committee’s
consideration must submit a written recommendation to the Secretary of the Company at 290 Healthwest Drive, Suite 2,
Dothan, Alabama 36303. Recommendations must be sent by certified or registered mail and received by October 1 for
consideration at the following year’s annual meeting of stockholders. Recommendations must include the following:

•

the recommending stockholder’s name, number of shares owned, length of period held, proof of ownership and
written certification that such recommending stockholder intends to continue to remain a stockholder through the
date of the annual meeting with respect to which the candidate is to be nominated;

the candidate’s name, address, phone number, e-mail address and age;

a resume describing, at a minimum, the candidate’s educational background, occupation, employment history and
material outside commitments (e.g., memberships on other boards and committees, charitable foundations, etc.);

a supporting statement that describes the stockholder’s and candidate’s reasons for nomination to the Board and
demonstrates the candidate’s ability to satisfy the director qualifications described above;

the candidate’s consent to a background investigation;

a notarized affidavit executed by the candidate to the effect that, if nominated and elected, he or she will serve, is
eligible for election as a member of the Board, and consents to being named in the proxy statement as a nominee,
if he or she will in fact be so named;

a description of all direct and indirect compensation and other material monetary agreements, arrangements and
understandings during the past three years between the nominating stockholder and the candidate;

a description of any voting commitments and/or any other arrangements or obligations by which the candidate is
or will be bound as a director;

a completed questionnaire regarding the candidate, which may be obtained from the Secretary of the Company,
relating to the stock exchange listing requirements for director independence that are applicable to the Company;
and

any other information relating to the recommended stockholder and the candidate that would be required to be
disclosed in a proxy statement on Schedule 14A for solicitation of proxies for election of directors under the
Exchange Act and pursuant to Nasdaq rules and any other applicable laws, rules or regulations.

The Secretary will promptly forward these materials to the Chairperson of the Nominating and Corporate Governance
Committee. The Nominating and Corporate Governance Committee may contact recommended candidates to request additional
information necessary for its evaluation or for disclosure under applicable SEC rules, including, without limitation, information
relating to such candidate that is required to be disclosed in solicitations of proxies for election of directors pursuant to
Regulation 14A under the Exchange Act. The Nominating and Corporate Governance Committee will consider a
recommendation only if appropriate biographical information and background material is provided on a timely basis.

In considering a candidate, the Nominating and Corporate Governance Committee will consider the size and duration

of a recommending stockholder’s ownership interest in the Company. In addition, any candidate proposed by a stockholder
must be independent of the nominating stockholder in all respects (i.e., free of any material personal, professional, financial or
business relationships from the nominating stockholder) as determined by the Nominating and Corporate Governance
Committee or by applicable law and must also meet the definition of an “independent director” under applicable Nasdaq rules.
The candidate must be expected to contribute in a positive manner to the function of the Board in light of the factors for
consideration described above.

Except as may be required by applicable law, rule or regulation, the Nominating and Corporate Governance

Committee will have no obligation to acknowledge receipt of the recommendation and accompanying materials described
above or otherwise communicate with the stockholder submitting the same.

Stockholder Nominations of Director Candidates at Meetings of Stockholders

Separate procedures apply if a stockholder wishes to nominate a director candidate for election at a meeting of
stockholders. These procedures, as well as the Company’s director qualifications, are specified in the Company’s amended and
restated by-laws and are summarized below. Nothing in the above-described procedures for stockholders to recommend
candidates to the Nominating and Corporate Governance Committee supersedes any requirements set forth in the amended and
restated by-laws for the nomination of a director candidate by a stockholder of the Company.

Section 3.2 of the Company’s amended and restated by-laws provides procedures pursuant to which stockholders may

nominate director candidates at meetings of stockholders. To provide timely notice of a director nomination at an annual
meeting of stockholders, the stockholder’s notice must be received by the Secretary of the Company at the principal executive
offices of the Company, located at 290 Healthwest Drive, Suite 2, Dothan, Alabama 36303: (i) with respect to an annual
meeting, not earlier than the 120th day before, and not later than the 90th day before, the first anniversary of the date of the
preceding year’s annual meeting, (ii) if the date of the applicable annual meeting is more than 30 days before or 60 days after
the first anniversary of the prior year’s annual meeting, not earlier than the 120th day before the date of such annual meeting,
and not later than the later of (x) the 90th day before the meeting or (y) the 10th day following the day on which public
announcement of the date of the annual meeting is first made by the Company, and (iii) with respect to any special meeting of
stockholders called for the purpose of electing directors, not earlier than the 120th day prior to such special meeting and not
later than the later of (x) the 90th day before the meeting or (y) the 10th day following the day on which public announcement
of the date of the special meeting is first made by the Company. However, if the number of directors to be elected at an annual
meeting is greater than the number of directors whose terms expire on the date of the annual meeting and there is no public
announcement by the Company naming all of the nominees for the additional directors to be elected or specifying the size of
the increased Board before the 90th day prior to the anniversary date of the immediately preceding annual meeting of
stockholders, a stockholder’s notice will also be considered timely if received not later than the 10th day following the date on
which the public announcement was first made by the Company, but only with respect to nominees for the additional
directorships created by such increase that are to be filled by election at such annual meeting.

A nominating stockholder’s notice must also satisfy the information requirements specified in Section 3.2(d) of our

amended and restated by-laws with respect to the nominee for director and the nominating stockholder. Additionally, in order
to be eligible for nomination, a potential nominee must deliver to the Secretary of the Company (i) a completed questionnaire
providing information concerning the background and qualifications of that person and (ii) a written representation and
agreement in a form to be provided by the Secretary pertaining to, among other things, any voting commitments made by the
potential nominee and compensation that the nominee expects to receive other than from the Company as a result of his or her
service as a director. The Company may require any proposed nominee or stockholder who nominates the proposed nominee to
furnish such other information as the Company may reasonably require to determine the eligibility of the proposed nominee to
serve as a director of the Company or that could be material to a reasonable stockholder’s understanding of the independence,
or lack thereof, of the proposed nominee. The chairman of the meeting of stockholders will determine whether or not a
nomination was made in accordance with the procedures set forth in our amended and restated by-laws. If the chairman
determines that a nomination is defective, he will declare to the meeting that such nomination is defective, and the nomination
will be disregarded.

Our amended and restated by-laws are available on the SEC’s website at http://www.sec.gov. You may also obtain a

copy of the relevant provisions of our amended and restated by-laws regarding the requirements for nominating director
candidates at no charge by contacting our Secretary at 290 Healthwest Drive, Suite 2, Dothan, Alabama 36303. Additionally, a
copy of our amended and restated by-laws is available on our website at www.constructionpartners.net under the “Investors -
Corporate Governance” tab.

Executive Sessions

The Company’s Corporate Governance Guidelines require non-management directors to meet regularly in executive

sessions without management present. These sessions may be chaired by the Chairman of the Board or the chairperson on any
committee of the Board, so long as such person is not a member of management.

Stockholder Communications with the Board

The Board will give appropriate attention to written communications that are submitted by stockholders and will

respond as the Board deems appropriate. Interested parties who wish to contact an individual director, the Board as a group, or
a specified Board committee or group, including the independent directors as a group, should address such communications to:

Construction Partners, Inc.
c/o Secretary
290 Healthwest Drive, Suite 2
Dothan, Alabama 36303

Each communication should specify the applicable addressee(s) to be contacted, as well as the general topic of the

communication. The Secretary of the Company will initially receive and process communications before forwarding them to
the addressee.

EXECUTIVE OFFICER AND DIRECTOR COMPENSATION

Compensation of Executive Officers

We are an “emerging growth company” and “smaller reporting company” under applicable SEC rules and are
providing disclosure regarding our executive compensation arrangements pursuant to the rules applicable to smaller reporting
companies, which means that we are not required to provide a compensation discussion and analysis and certain other
disclosures regarding our executive compensation.

Our executive compensation program is designed to attract, motivate and retain high-quality leadership and
incentivize our executive officers to achieve performance goals over the short- and long-term, which also aligns the interests of
our executive officers with those of our stockholders. The following discussion relates to the compensation of Charles E.
Owens, our President and Chief Executive Officer, and our two most highly compensated executive officers during the 2018
fiscal year other than Mr. Owens: R. Alan Palmer, our Executive Vice President and Chief Financial Officer, and F. Julius
Smith, III, our Senior Vice President. Messrs. Owens, Palmer and Smith are collectively referred to herein as our “named
executive officers.” All information presented gives pro forma effect to the Reclassification.

Summary Compensation Table

The following table sets forth, for the fiscal years ended September 30, 2018 and 2017, a summary of the

compensation paid to or earned by our named executive officers.

Name and Principal Position

Charles E. Owens

President and Chief Executive Officer

Year
2018
2017

Salary
($)
450,000
450,000

Bonus
($)(1)
1,074,000
715,000

-
-

Stock
Awards
($)(2)

Option
Awards
($)(3)

R. Alan Palmer

Executive Vice President and Chief
Financial Officer

2018
2017

310,000
307,692

837,000
360,000

273,014
-

All
Other
Compensation
($)(4)

33,041
22,244

Total
($)
1,557,041
1,187,244

34,672
24,168

1,454,686
691,860

-
-

F. Julius Smith, III

Senior Vice President

2018
2017

400,000
396,250

677,000
565,000

-
-

-
412,062

77,289
22,042

1,154,289
1,395,354

(1)

(2)

(3)

(4)

The amounts in this column consist of the named executive officers’ respective cash bonus awards, which are
awarded on a discretionary basis. In addition, for Mr. Smith, the amount shown includes $300,000 of cash
retention payments made pursuant to his employment and non-competition agreement during each of the 2017
and 2018 fiscal years.
The amount in this column represents the grant date fair value of an award of 35,280 restricted shares of our
Class B common stock to Mr. Palmer on February 23, 2018, of which 17,640 shares vested on the grant date
and 17,640 shares vested on July 1, 2018, computed in accordance with Accounting Standards Codification
Topic 718, Compensation - Stock Compensation (“ASC Topic 718”).
The amount in this column represents the grant date fair value of a non-plan option award granted to Mr.
Smith on March 7, 2017 to purchase 74,592 shares of our Class B common stock at an exercise price of $0.04
per share, computed in accordance with ASC Topic 718 and excluding the effect of estimated forfeiture. For
assumptions used in determining the fair value of option awards, see Note 15 (Equity-Based Compensation) to
our consolidated financial statements included in our Annual Report. This option represents part of the
consideration paid in the Company’s acquisition of FSC II, LLC (“FSC”).
The amounts in this column include the following items: (a) for each of the named executive officers, the
value of his personal use of a Company-owned vehicle, 401(k) plan matching contributions, mobile device
subscription fees paid on the officer’s behalf, and Company-paid premiums for health and life insurance; (b)
for each of Messrs. Owens and Palmer, Company-paid premiums for long-term care benefits (2017 only) and
long-term disability insurance; and (c) for Mr. Smith, Company-paid club dues. The value to the named
executive officers of their personal use of Company-owned automobiles is based on the incremental cost to the
Company of such use, which the Company has calculated as the total variable expense associated with
operation of such automobiles during the applicable period.

Employment Agreements

On June 27, 2014, FSC, our indirect wholly owned subsidiary, entered into an employment and non-competition

agreement with Mr. Smith, pursuant to which Mr. Smith serves as President of FSC. The initial term of the agreement continues
until June 30, 2019. The agreement provides for Mr. Smith to receive during the initial term an annual base salary of not less
than $350,000 (which was increased to $400,000 effective January 1, 2017 and to $420,000 effective January 1, 2019). At the
end of the initial term, the agreement automatically extends on a month-to-month basis, unless either party provides written
notice of termination before the end of the month in which the agreement is to be terminated. In addition, Mr. Smith receives
monthly retention payments of $25,000 until June 30, 2019, unless his employment is terminated earlier by either party. Mr.
Smith is eligible to receive discretionary bonuses as the Compensation Committee may determine.

Mr. Smith is eligible for the benefits and holidays offered to other FSC employees. Mr. Smith is entitled to family

medical coverage and dental insurance at the expense of FSC under any health or dental insurance plan maintained by FSC for
its employees, and to 15 days of paid vacation each year. Mr. Smith also is entitled to use a cellular phone provided by FSC and
an FSC-provided automobile in his conduct of FSC business, for which FSC bears the maintenance costs. For as long as FSC is
making retention payments to Mr. Smith, FSC will maintain and pay for a term life insurance policy on Mr. Smith’s life in the
amount of $2.0 million, for which Mr. Smith may designate the beneficiary or beneficiaries.

Non-Plan Stock Options

On March 31, 2010, we granted non-plan stock options to Grace, Ltd., a limited partnership for which Mr. Owens

serves as general partner, and to Mr. Palmer. The options provided for the purchase of 238,773 shares and 394,308 shares of our
Class B common stock by Grace, Ltd. and Mr. Palmer, respectively, at an exercise price of $5.70 per share. These options were
exercised in full by Grace, Ltd. and Mr. Palmer on June 29, 2018.

On March 7, 2017, we granted a non-plan stock option to Mr. Smith. The option provides for the purchase of 74,592

shares of our Class B common stock at an exercise price of $0.04 per share. The option was fully vested upon the date of grant,
but is exercisable only during the ten-day period immediately preceding a change in control of the Company, as defined in the
option agreement, which has not occurred. The option expires on the earliest of (i) the termination of Mr. Smith’s services,
whether as our employee, director or consultant, (ii) March 7, 2027, and (iii) the occurrence of a change in control, after which
all unexercised options will be canceled.

Construction Partners, Inc. 2016 Equity Incentive Plan

On August 19, 2016, our Board adopted and our stockholders approved the Construction Partners, Inc. 2016 Equity

Incentive Plan (the “2016 Equity Plan”) to facilitate the recruitment and retention of employees, consultants and directors who
would contribute to our long-term success and to provide incentives linked directly to increases in share value, which would
inure to the benefit of all of our stockholders. As described below, the 2016 Equity Plan was amended and restated during our
2018 fiscal year and is no longer an active equity incentive plan of the Company. The 2016 Equity Plan provided for the grant
of awards of options, restricted stock and restricted stock units, performance awards, stock appreciation rights and other stock-
based awards, and was administered by our Compensation Committee. The maximum number of shares available for awards
under the 2016 Equity Plan was 378,000 shares of our Class B common stock.

On February 23, 2018, we granted certain officers and other employees a total of 126,000 restricted shares of our

Class B common stock under the 2016 Equity Plan, 63,000 of which vested on the date of grant and 63,000 of which vested on
July 1, 2018. In connection with this grant, Mr. Palmer was awarded 35,280 restricted shares of our Class B common stock, of
which 17,640 shares vested on the date of grant and 17,640 shares vested on July 1, 2018.

The 2016 Equity Plan provided that if an award under the 2016 Equity Plan was canceled, expired or otherwise

terminated, or was forfeited or settled for cash and not in shares, then the shares subject to such award would revert to, and
again be available for new awards under, the 2016 Equity Plan. As of September 30, 2018, there were no shares of our Class B
common stock subject to outstanding awards or available for additional awards under the 2016 Equity Plan.

Construction Partners, Inc. 2018 Equity Incentive Plan

On April 22, 2018, our Board and a majority of our stockholders adopted an amendment and restatement of the 2016

Equity Plan and renamed it the Construction Partners, Inc. 2018 Equity Incentive Plan (the “2018 Equity Plan”) pursuant to
which our employees, directors and consultants (and those of our affiliates), including our named executive officers, are
eligible to receive awards. The 2018 Equity Plan provides for the grant of options, stock appreciation rights, restricted stock,
restricted stock units, other stock-based awards and performance awards intended to align the interests of participants with
those of our stockholders.

Eligibility. Employees, non-employee directors and consultants of the Company and our affiliates are eligible to

receive awards under the 2018 Equity Plan.

Administration. The 2018 Equity Plan is administered by our Compensation Committee. The Compensation

Committee has the power to determine when and to whom awards are granted, determine the number of shares for awards,
prescribe and interpret the terms and provisions of each award agreement (the terms of which may vary), accelerate the exercise
terms of an award, delegate duties under the 2018 Equity Plan and execute all other responsibilities permitted or required
thereunder.

Shares Available for Issuance. Subject to adjustment in the event of any distribution, recapitalization, stock split,

merger, consolidation or similar corporate event, 2,000,000 shares of our Class A common stock (the “Share Pool”) are
available for issuance pursuant to awards under the 2018 Equity Plan. If an award under the 2018 Equity Plan is forfeited,
settled for cash or expires without the actual delivery of shares, any shares subject to such award will revert to the Share Pool
and again be available for new awards under the 2018 Equity Plan.

Types of Awards.

Options. We may grant options to eligible persons, including: (i) incentive options (only to our employees or those of

our affiliates) that comply with Section 422 of the Internal Revenue Code of 1986 (the “Code”); and (ii) nonqualified options
that are not intended to be incentive options. The exercise price of each option granted under the 2018 Equity Plan will be
stated in the award agreement and may vary; however, the exercise price for an option will not be less than the fair market
value per share of our Class A common stock as of the date of grant (or 110% of the fair market value for incentive options
granted to holders of more than 10% of the voting power of all classes of our and our affiliates’ common stock), nor will the
option be re-priced without the prior approval of our stockholders. The fair market value per share of our Class A common
stock will be determined based on reported transactions on the Nasdaq Global Select Market. Options may be exercised as the
Compensation Committee determines, but not later than ten years from the date of grant. The Compensation Committee will
determine the methods and form of payment for the exercise price of an option (including, in the discretion of the
Compensation Committee, payment by promissory note or by withholding of otherwise deliverable shares) and the methods
and forms in which our Class A common stock will be delivered to a participant.

Stock Appreciation Rights. A stock appreciation right is the right to receive an amount equal to the excess of the fair

market value of one share of our Class A common stock on the date of exercise over the grant price of the stock appreciation
right, payable in either cash or shares of Class A common stock or any combination thereof as determined by the Compensation
Committee. The per share grant price of a stock appreciation right will be determined by the Compensation Committee, but in
no event will the grant price be less than the fair market value of our Class A common stock on the date of grant, determined as
described for options above. The Compensation Committee will have the discretion to determine other terms and conditions of
a stock appreciation rights award.

Restricted Stock Awards. A restricted stock award is a grant of shares of our Class A common stock subject to a risk
of forfeiture, performance conditions, restrictions on transferability and any other restrictions imposed by the Compensation
Committee in its discretion. Restrictions may lapse at such times and under such circumstances as determined by the
Compensation Committee. Except as otherwise provided under the terms of the award agreement, the holder of a restricted
stock award will have rights as a stockholder, including the right to vote the shares subject to the restricted stock award or to
receive dividends on the shares subject to the restricted stock award during the restriction period. The Compensation
Committee will provide, in the award agreement, whether the restricted stock will be forfeited upon certain terminations of
employment. Unless otherwise determined by the Compensation Committee, Class A common stock distributed in connection
with a stock split or stock dividend, and other property distributed as a dividend, will be subject to restrictions and a risk of
forfeiture to the same extent as the restricted stock award with respect to which such Class A common stock or other property
has been distributed.

Restricted Stock Units. Restricted stock units are rights to receive shares of our Class A common stock, cash or a

combination of both stock and cash at the end of a specified period. The Compensation Committee may subject restricted stock
units to restrictions (which may include a risk of forfeiture) to be specified in the award agreement, which restrictions may
lapse at such times determined by the Compensation Committee. Restricted stock units may be settled by delivery of shares of
our Class A common stock, cash equal to the fair market value of the specified number of shares covered by the restricted stock
units or any combination thereof determined by the Compensation Committee at the date of grant or thereafter. The participant
will not be entitled to receive dividends or dividend equivalents unless the award agreement specifically provides therefor.

Performance Awards. The vesting, exercise or settlement of awards may be subject to achievement of specified

objective or subjective performance goals based on one or more business criteria set forth in the 2018 Equity Plan. The
Compensation Committee may use one or more of the following criteria, which may be applied to a participant, a business unit
or to us and our affiliates, in establishing performance goals for such performance awards: revenues; earnings before all or any
of interest expense, taxes, depreciation and/or amortization; funds from operations; funds from operations per share; operating
income; operating income per share; pre-tax or after-tax income; net cash provided by operating activities; cash available for
distribution; cash available for distribution per share; working capital and components thereof; sales (net or gross) measured by
product line, territory, customer or customers or other category; return on equity or average stockholders’ equity; return on
assets; return on capital; enterprise value or economic value added; share price performance; improvements in our attainment of
expense levels; implementation or completion of critical projects; improvement in cash-flow (before or after tax); net earnings;
earnings per share; earnings from continuing operations; net worth; credit rating; levels of expense, cost or liability by category,
operating unit or any other delineation; any increase or decrease of one or more of the foregoing over a specified period; or the
occurrence of a change in control (as defined in the 2018 Equity Plan).

The Compensation Committee may provide in any performance award for the inclusion or exclusion of the effect on

reported financial results of any of the following events or occurrences: asset write-downs; litigation or claim judgments or
settlements; changes in tax laws, accounting principles or other laws or provisions; reorganization or restructuring programs,
including share repurchase programs; acquisitions or divestitures; foreign currency exchange translation gains or losses; any
loss from a discontinued operations; goodwill impairment charges; revenue or earnings attributable to a minority ownership in
another entity; any amounts accrued by us or any subsidiary pursuant to management bonus plans or cash profit-sharing plans
and related employer payroll taxes for the fiscal year; any discretionary or matching contributions made to a savings and
deferred profit-sharing plan or deferred compensation plan for the fiscal year; interest, expenses, taxes, depreciation and
depletion, amortization and accretion charges; and gains and losses that are treated as extraordinary items. The level or levels of
performance specified with respect to a performance goal may be established in absolute terms, as objectives relative to
performance in prior periods, as an objective compared to the performance of one or more comparable companies or an index
covering multiple companies on a per-share basis, against our performance as a whole or against one or more of our entities,
segments, operating units or products, on a pre-tax or after-tax basis, in tandem with any other performance goal, or otherwise
as the Compensation Committee may determine.

Other Stock-Based Awards. The Compensation Committee may grant other stock-based awards that are payable in,

valued in whole or in part by reference to, or otherwise based on our Class A common stock, including, without limitation,
dividend equivalent rights.

Change in Control and Other Corporate Transactions. In the event of a change in control (as defined in the 2018

Equity Plan) or certain other significant corporate transactions, outstanding awards will be treated as the Compensation
Committee determines in its discretion. The Compensation Committee may (i) arrange for continuation or assumption of
awards, or substitution of equivalent awards of the surviving entity or its parent; (ii) cancel awards in exchange for cash or
securities in an amount equal to the value of vested awards, or to the difference between the value of the underlying shares of
our Class A common stock and the exercise price for vested options and stock appreciation rights; or (iii) cancel outstanding
awards without payment of any consideration, in which case participants will be given a reasonable period during which to
exercise their awards.

Plan Amendment or Termination. Either our Board or our Compensation Committee may amend or terminate the

2018 Equity Plan. However, stockholder approval will be required for any amendment to the extent necessary to comply with
applicable law or exchange listing rules. In addition, either our Board or our Compensation Committee may amend awards
granted under the 2018 Equity Plan, but no amendment may impair the rights of a participant under any outstanding award
without his or her consent. The 2018 Equity Plan will remain in effect for a period of ten years unless earlier terminated by our
Board or the Compensation Committee.

Incentive Compensation Recoupment Policy

On December 6, 2018, our Board adopted a Policy for the Recoupment of Incentive Compensation (the “Recoupment

Policy”), which provides that, in the event that the Company is required to prepare an accounting restatement of its financial
statements due to material noncompliance with financial reporting requirements under the securities laws, we are required to
use reasonable efforts to recoup from current and former executive officers any excess incentive compensation received by
them during the three completed fiscal years immediately preceding the date on which we are required to prepare an accounting
restatement. The Recoupment Policy is intended to comply with the Dodd-Frank Wall Street Reform and Consumer Protection
Act and proposed SEC rules thereunder, which we believe represents best practice. The Recoupment Policy applies to incentive
compensation (cash and equity) that is approved, awarded or granted to our executive officers on or after December 6, 2018.
The Recoupment Policy applies irrespective of whether an executive officer engaged in fraud or other misconduct.

Cash and equity awards that are granted, earned or vested wholly or in part on the attainment of a financial reporting
measure are subject to recoupment based on a restatement of our financial statements. We may recoup incentive compensation
by (i) requiring reimbursement of cash incentive compensation previously paid, (ii) seeking recovery of any gain realized on
vesting, exercise, settlement, sale, transfer or other disposition of any equity-based awards, (iii) offsetting the recouped amount
from any compensation otherwise owed by us to the current or former executive officer, (iv) cancelling outstanding vested or
unvested equity awards and/or (v) taking any other remedial or recovery action permitted by law. There is no time limit on our
ability to recover amounts under the Recoupment Policy other than limits imposed by law, and recoupment is available to us
regardless of whether the executive officer is still employed by us when repayment is required. Our Compensation Committee,
designated by the Board as the administrator of the Recoupment Policy, is responsible for determining whether recoupment is
required under the Recoupment Policy and for making all other determinations for the administration of the Recoupment
Policy.

Outstanding Equity Awards at Fiscal Year-End

The following table presents information regarding outstanding equity-based awards held by our named executive

officers as of September 30, 2018.

Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
-
-
-

Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
-
-
74,592

Option
Exercise
Price
($)
-
-
$0.04

Option
Expiration
Date
-
-
March 7, 2027 (1)

Name
Charles E. Owens
R. Alan Palmer
F. Julius Smith, III

(1)

Mr. Smith’s option was granted pursuant to a written option agreement, dated March 7, 2017, and may be
exercised only on the occurrence of a change in control of the Company, as defined in the option agreement.
The option expires on the earliest of (i) the termination of Mr. Smith’s services, whether as our employee,
director or consultant, (ii) March 7, 2027, or (iii) the occurrence of a change in control of the Company, after
which all unexercised options will be canceled. This option represents part of the consideration paid in the
Company’s acquisition of FSC.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides certain information regarding options and rights outstanding under our equity compensation
plans as of September 30, 2018.

(a)
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options
and Rights
-
74,952 (1)
-

(b)
Weighted-
Average
Exercise Price of
Outstanding
Options and
Rights
-
$0.04
-

(c)
Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans (Excluding
Securities
Reflected in the
First Column)
2,000,000 (2)
-
-

Plan Category
Equity Compensation Plans Approved by Security Holders
Equity Compensation Plans Not Approved by Security Holders
Total

(1)

(2)

Represents shares of Class B common stock issuable pursuant to a non-plan option granted to Mr. Smith on
March 7, 2017 that becomes exercisable only in the event of a change in control of the Company, as defined in
the option agreement.
Represents shares of Class A common stock available for issuance under the 2018 Equity Plan, described
above, under which no awards were issued or outstanding as of September 30, 2018.

Retirement Benefits

We do not provide defined benefit pension payments. Our named executive officers are eligible to participate in the

Construction Partners Holdings, Inc. 401(k) Plan (the “401(k) Plan”) on the same basis as other employees who satisfy the
401(k) Plan’s eligibility requirements. As such, our named executive officers, along with other 401(k) Plan participants, are
eligible for discretionary employer matching contributions and discretionary contributions. Effective January 1, 2017, all
401(k) Plan participants are eligible for employer matching contributions equal to 100% of the participant’s elective deferral
contributions up to 3% of the participant’s compensation, plus 50% of the participant’s elective deferral contributions that
exceed 3% of the participant’s compensation but are not more than 5% of the participant’s compensation.

Potential Payments upon Termination or a Change in Control

Employment Agreements

If FSC terminates Mr. Smith’s employment for any reason, with or without cause (as defined in his employment and

non-competition agreement), then he will be entitled to continued payment of his retention payments of $25,000 per month
until June 30, 2019. In addition, if Mr. Smith’s employment with FSC is terminated either voluntarily by Mr. Smith or by FSC
for any reason except his death, then FSC has the right to elect to enforce a two-year non-compete period, pursuant to which
Mr. Smith will be restricted from competing with FSC in road construction, paving, grading, asphalt and any other business
activity engaged in by FSC within 75 miles of the city limits of Raleigh, North Carolina. If FSC makes such an election, then
Mr. Smith will be entitled to monthly non-compete payments equal to his then-current monthly base salary for the 24-month
non-compete period.

Option Agreement

As described above under the heading “Non-Plan Stock Options,” Mr. Smith has an option to purchase 74,592 shares
of our Class B common stock at an exercise price of $0.04 per share during the ten-day period immediately preceding a change
in control of the Company, as described in the option agreement. This option represents part of the consideration paid in the
Company’s acquisition of FSC.

Role of Executive Officers in Determining Executive Compensation

The Compensation Committee makes all compensation decisions related to our named executive officers. Our Chief

Executive Officer regularly provides information and recommendations to the Compensation Committee on the performance of
the executive officers and appropriate levels and components of compensation, as well as other information that the
Compensation Committee may request. However, our Chief Executive Officer does not participate in any Compensation
Committee deliberations or determinations with respect to his own compensation.

Role of Compensation Consultant in Determining Executive Compensation

Under its charter, the Compensation Committee has the authority to retain its own compensation consultant. During

the first quarter of our 2018 fiscal year, prior to our initial public offering, the Compensation Committee retained Ernst &
Young LLP (“Ernst & Young”) to review, assess and provide input on certain aspects of our compensation program for
executive officers in connection with the Company’s transition to becoming a public company. In particular, Ernst &Young
examined the overall pay mix for our executive officers, conducted a competitive assessment of our executive compensation
program, and made recommendations to the Compensation Committee on compensation design and competitive market levels.
The Company paid Ernst & Young approximately $41,000 for these services. The information furnished by Ernst & Young was
one factor that the Compensation Committee used in making decisions about executive compensation during the 2018 fiscal
year.

During the 2018 fiscal year, Ernst & Young and its affiliates did not provide any additional services to the Company,
but did provide tax preparation and consultation services to SunTx, the Company’s controlling stockholder, for which SunTx
paid approximately $319,000. The decision to engage Ernst & Young for the services provided to SunTx was not made or
recommended by the Company’s management, and neither the Compensation Committee nor the Board approved such
services. The Compensation Committee believes that, given the limited duration and scope of Ernst & Young’s engagement by
the Company and the unrelated nature of the services that Ernst & Young provided to SunTx, Ernst & Young did not have any
relationships or other economic interests at the time that it provided services to the Company that would impair its ability to
provide independent advice concerning executive and director compensation matters.

Director Compensation

2018 Fiscal Year Compensation. During the fiscal year ended September 30, 2018, our directors were not
compensated for their service on the Board, except for Michael H. McKay, who received an annual cash retainer of $60,000.
However, the Company did reimburse all ordinary and necessary expenses incurred by our directors in the conduct of the
Board’s business. Mr. Owens, our President and Chief Executive Officer, was not compensated for his service on the Board
during fiscal year 2018. The compensation received by Mr. Owens for his service as the Company’s President and Chief
Executive Officer is set forth above under the heading “Summary Compensation Table.”

The following table summarizes the compensation of our non-employee directors during the fiscal year ended

September 30, 2018.

Name
Ned N. Fleming, III
Craig Jennings
Mark R. Matteson
Michael H. McKay
Stefan L. Shaffer
David Webb (1)

Fees Earned or Paid in Cash
($)
-
-
-
60,000
-
-

Total
($)
-
-
-
60,000
-
-

(1)

Mr. Webb resigned from his position as a member of our Board on November 15, 2017 and was replaced by
independent Board member Stefan L. Shaffer.

2019 Fiscal Year Compensation. In December 2018, our Board approved a new annual retainer framework for Board
members. Beginning in the 2019 fiscal year, the Executive Chairman receives an annual retainer of $275,000, and each of the
other non-employee directors receives an annual retainer of $110,000. The retainer is payable in cash or equity. Directors who
are also employees of the Company will not receive any additional compensation for their service on the Board. The Company
will reimburse all ordinary and necessary expenses incurred by our directors in the conduct of the Board’s business.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Review and Approval of Related Party Transactions

On April 22, 2018, our Board adopted a written policy for the review, approval and ratification of transactions with
related parties. The policy covers transactions between the Company and any of our executive officers and directors or their
respective affiliates, director nominees, 5% or greater security holders or family members of any of the foregoing. Our Audit
Committee reviews transactions covered by this policy to determine, among other things:

• whether the terms of the transaction are fair to the Company, have resulted from arm’s length negotiations and are

on terms at least as favorable as would apply if the transaction did not involve a related party;

• whether there are demonstrable business reasons for the Company to enter into the transaction;

• whether the transaction is material to the Company;

•

the role the related party played in arranging the transaction;

• whether the transaction could impair the independence of a director; and

•

the interests of all related parties in the transaction.

A related party transaction will only be approved or ratified by the Audit Committee if the Audit Committee
determines that the transaction is beneficial to the Company and the terms of the transaction are fair to the Company.

Historically, our management and Board have reviewed and approved related party transactions. The terms of the

related party transactions and agreements described below were determined by and among affiliated entities and, consequently,
are not necessarily the result of arm’s length negotiations. Although it is possible that we could have negotiated more favorable
terms for such transactions with unrelated third parties, our management and Board believe that the terms of the related party
transactions described below are reasonable, fair and beneficial to the Company.

Transactions with Related Parties

We have engaged in, and continue to engage in, related party transactions with certain current and former directors,
members of management and beneficial holders of more than 5% of our common stock. The following summarizes certain
transactions with these related parties.

Management Services Agreement

Construction Partners Holdings, Inc., a wholly owned subsidiary of the Company (“CPHI”), is a party to a

management services agreement with SunTx Capital Management Corp. (“SunTx Capital Management”), an affiliate of SunTx.
Pursuant to the agreement, SunTx Capital Management provides management services to CPHI, including management
services with respect to financing, business strategies and business development, in return for a monthly fee of $83,333, plus an
amount not exceeding 2% of the total value of any acquisition, disposition, debt or equity financings by CPHI and out-of-
pocket expenses. For these management services, CPHI paid SunTx Capital Management approximately $1.3 million and $1.5
million during the fiscal years ended September 30, 2017 and 2018, respectively. The management services agreement expires
on October 1, 2023.

Registration Rights Agreement

We are a party to a registration rights agreement (the “Registration Rights Agreement”) with certain related parties,

including (i) SunTx CPI Expansion Fund, L.P., SunTx Fulcrum Fund Prime, L.P., SunTx Fulcrum Dutch Investors Prime, L.P.,
and Grace, Ltd., each of which owns more than 5% of our Class B common stock, (ii) Michael H. McKay, a director of the
Company, and (iii) R. Alan Palmer and John L. Harper, executive officers of the Company (collectively, together with the other
parties to the Registration Rights Agreement, the “RRA Holders”). Pursuant to the Registration Rights Agreement, we are
required to register under the Securities Act of 1933 (the “Securities Act”) shares of our common stock owned by such RRA
Holders (the “Registrable Securities”) upon their request under certain circumstances. Specifically, subject to certain
restrictions, RRA Holders who own at least 20% of our outstanding Registrable Securities may demand that we register at least
50% of the aggregate number of Registrable Securities owned by such requesting RRA Holders. We are not obligated to file a
registration statement pursuant to these demand provisions on more than two occasions on Form S-1. However, the RRA
Holders are entitled to make an unlimited number of demands for registration on Form S-3, subject to the limitation that the
Company will not be obligated to file more than one registration statement on Form S-3 in response to a registration demand
within six months after the effective date of any registration statement that we file in response to a registration demand.

The RRA Holders have “piggyback” registration rights as well. Accordingly, if, at any time, we propose to register an
offering of our securities, either for our account or for the account of our other stockholders, we must give written notice to the
RRA Holders to allow each to include its shares in the registration, subject to certain marketing and other limitations.

The registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit

the number of Registrable Securities to be included in a particular registration and our right to delay or withdraw the
registration statement under certain circumstances. We generally will pay all registration expenses in connection with our
obligations under the Registration Rights Agreement. The Registration Rights Agreement provides that we will indemnify the
RRA Holders against certain liabilities that may arise under the Securities Act and expires on May 4, 2023.

Indemnification Agreements

We have entered into indemnification agreements with each of our current directors and executive officers. We

anticipate that future directors and executive officers will enter into indemnification arrangements with us in substantially
similar form. The indemnification agreements generally provide, among other things, that we will indemnify and hold harmless
each person subject to such agreement (each, an “indemnitee”) to the fullest extent permitted by applicable law from and
against all expenses, losses, damages, judgments, fines and other specified costs that may result or arise in connection with
such indemnitee serving in his or her capacity as a director or executive officer of the Company or serving at our direction as a
director, officer, employee or agent of another entity. These agreements further provide that, upon an indemnitee’s request and
subject to certain conditions, we will advance expenses to the indemnitee. Pursuant to the indemnification agreements, an
indemnitee is presumed to be entitled to indemnification, and we have the burden of proving otherwise. The indemnification
agreements also provide that, to the extent that we maintain an insurance policy providing liability insurance for directors,
officers, employees, agents or fiduciaries of the Company, indemnitees shall be covered by such policy to the maximum extent
of the available coverage. The foregoing is only a brief description of the indemnification agreements, does not purport to be
complete and is qualified in its entirety by reference to the Company’s form of indemnification agreement, which previously
has been filed with the SEC.

Other Transactions

On December 31, 2017, we sold an indirect wholly owned subsidiary to Reid Smith, the brother of F. Julius Smith, III,

our Senior Vice President, in consideration for a note receivable in the amount of approximately $1.0 million, which
approximated the net book value of the disposed entity. In connection with this transaction, we also received a note receivable
from the disposed entity in the amount of approximately $1.0 million, representing certain accounts payable of the disposed
entity that we had previously paid on its behalf. During the 2018 fiscal year, the largest aggregate amount of principal
outstanding was the initial principal balance at origination, and the amount of principal paid on each note was $163,234 and
$88,017, respectively. As of September 30, 2018, the remaining principal balance of each note was approximately $0.9 million.
Each note bears simple interest at a rate of two percent per year, but no interest payments were made on either note during our
2018 fiscal year. Principal and interest payments have been, and will be, made in periodic installments from January 2018
through September 2026.

Since January 30, 2015, FSC has been a party to a master services subcontract with Austin Trucking, LLC (“Austin

Trucking”), an entity owned by Jacob R. Austin, the brother-in-law of F. Julius Smith, III, our Senior Vice President. Pursuant
to the agreement, Austin Trucking performs subcontract work for FSC, including trucking services. During the fiscal years
ended September 30, 2017 and 2018, FSC incurred costs of approximately $11.8 million and $13.0 million, respectively, for
these subcontract services. As of September 30, 2017 and 2018, we had approximately $1.0 million and $0.8 million,
respectively, due to Austin Trucking reflected in accounts payable.

FSC provides construction services to various companies owned by Fred J. Smith, Jr., the father of F. Julius Smith, III,

our Senior Vice President. During the fiscal years ended September 30, 2017 and 2018, we earned approximately $5.2 million
and $1.7 million, respectively, for these services. As of September 30, 2017 and 2018, we had $4.2 million and $2.7 million,
respectively, due from these companies reflected in contracts receivable.

FSC pays a consulting fee to FSC III, LLC, an entity owned by Fred J. Smith, Jr., the father of F. Julius Smith, III, our

Senior Vice President. During each of the fiscal years ended September 30, 2017 and 2018, FSC paid approximately $0.2
million in consulting fees to this entity.

FSC rents vehicles on a month-to-month basis from Fred Smith Company, an entity owned by Fred J. Smith, Jr., the
father of F. Julius Smith, III, our Senior Vice President. During each of the fiscal years ended September 30, 2017 and 2018,
FSC paid Fred Smith Company approximately $1.2 million for these rentals.

From time to time, Providence Construction Services, LLC (“Providence”), an entity owned by Reid Smith, the
brother of F. Julius Smith, III, our Senior Vice President, provides subcontracting services to FSC. During the fiscal year ended
September 30, 2018, we paid approximately $0.2 million for these services, and we owed approximately $52,000 to Providence
as of September 30, 2018, as reflected in accounts payable. We did not incur any expenses or have any amounts outstanding to
Providence during the fiscal year ended September 30, 2017.

Prior to its acquisition by Construction Partners, Inc., FSC advanced funds to an entity owned by Fred J. Smith, Jr., the

father of F. Julius Smith, III, our Senior Vice President, in connection with a land development project. The obligations of the
borrower entity to repay the advances are guaranteed by a separate entity owned by Fred J. Smith, Jr. and secured by 140,389
shares of the Company’s Class B common stock that are owned by the guarantor entity. Amounts outstanding under the
advances do not bear interest and must be repaid in full no later than March 17, 2021. During each of the fiscal years ended
September 30, 2017 and 2018, the amount outstanding under the advances was $773,770.

For periodic corporate events, we charter a boat from Deep South Adventures, LLC, an entity owned by John
L. Harper, our Senior Vice President. During the fiscal years ended September 30, 2017 and 2018, we paid Deep South
Adventures, LLC approximately $0.3 million and $33,000, respectively, for these charter services.

WCC leases office space for its Dothan, Alabama office from H&K, Ltd., an entity partly owned by John L. Harper,
our Senior Vice President, for which Mr. Harper also serves as general partner. The office space is leased through January 1,
2020. Under the lease agreement, WCC pays a fixed minimum rent of $7,000 per month. During each of the fiscal years ended
September 30, 2017 and 2018, WCC paid H&K, Ltd. $84,000 pursuant to the terms of the lease agreement.

In September 2018, WCC purchased a building for its Montgomery, Alabama office from H&A Properties LLC, an

entity owned by John L. Harper and M. Brett Armstrong, two of our Senior Vice Presidents, for $487,500. Prior to the
purchase, WCC leased space in the building from H&A Properties LLC. Under the lease agreement, WCC paid a fixed
minimum rent of $5,500 per month. During the fiscal years ended September 30, 2017 and 2018, WCC paid total rent of
$66,000 and $60,500, respectively, to H&A Properties LLC pursuant to the terms of the lease agreement. The payments during
the 2018 fiscal year represent rent for the eleven months of the fiscal year prior to the date on which WCC purchased the
building.

In November 2017, WCC hired Brandi Harper, the wife of John L. Harper, our Senior Vice President, as General

Counsel. From her hire date through September 30, 2018, WCC paid Brandi Harper $206,346 in connection with her
employment with WCC. Prior to her hire date, Harper Law Firm, LLC, a law firm owned by Brandi Harper, provided legal
services to WCC. During the fiscal years ended September 30, 2017 and 2018, WCC paid Harper Law Firm, LLC
approximately $268,000 and $58,000, respectively, as compensation for this legal work.

Brandon Owens, the son of Charles E. Owens, our President and Chief Executive Officer, serves as the Vice President
of Operations of WCC. During the fiscal years ended September 30, 2017 and 2018, WCC paid Brandon Owens $337,538 and
$352,500, respectively, in connection with his employment with WCC.

J. Gregory (Greer) Walker, the son of John A. Walker, our Senior Vice President, serves as a Chief Estimator and

Project Manager of WCC. During the fiscal years ended September 30, 2017 and 2018, WCC paid Greer Walker $121,940 and
$125,852, respectively, in connection with his employment with WCC.

Since June 1, 2014, CPHI has been a party to an access agreement with Island Pond Corporate Services, LLC (“Island

Pond”) regarding certain property owned by affiliates of Ned N. Fleming, III, the Executive Chairman of our Board and
Managing Partner of SunTx. Pursuant to the agreement, Island Pond has granted CPHI the non-exclusive right to use certain
land located in Baker County, Georgia for the purpose of business development. CPHI paid Island Pond $320,000 during each
of the fiscal years ended September 30, 2017 and 2018, pursuant to the terms of the agreement.

Nelson Fleming, the son of Ned N. Fleming, III, the Executive Chairman of our Board and Managing Partner of

SunTx, serves as our Director of Acquisition and Strategy Development. During the fiscal years ended September 30, 2017 and
2018, we paid Nelson Fleming $95,750 and $413,750, respectively, in connection with his employment. In addition, on
February 23, 2018, Nelson Fleming was granted 35,280 restricted shares of our Class B common stock, all of which have
vested. The value of these shares of restricted stock on the grant date was approximately $274,478, or $7.78 per share. The
foregoing information gives effect to the Reclassification.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors and officers and persons who beneficially own more than

10% of any class of our equity securities to file with the SEC reports of ownership and changes in ownership of the Company’s
common stock held by them. Copies of these reports must also be provided to the Company. Based on our review of these
reports, we believe that, during the fiscal year ended September 30, 2018, all such reports that were required to be filed were
filed on a timely basis.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee of the Board is currently composed of three directors, two of whom satisfy the heightened

independence requirements specified in SEC rules. All members of the Audit Committee are financially literate, as that
qualification has been interpreted by the Company’s Board in its business judgment, and at least one member of the Audit
Committee qualifies as an “audit committee financial expert,” as that term is defined by the SEC. The Audit Committee
operates under a written charter, which became effective on April 22, 2018.

The Audit Committee hereby submits the following report:

• The Audit Committee has reviewed and discussed with management the Company’s audited consolidated

financial statements as of, and for the fiscal year ended, September 30, 2018.

• The Audit Committee has discussed with the Company’s independent registered public accountants, RSM, the

matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard
No. 1301, Communications with Audit Committees (as amended), as well as all other matters required to be
discussed with the independent auditors by applicable PCAOB standards.

• The Audit Committee has received and reviewed the written disclosures and the letter from RSM required by
applicable rules of the PCAOB regarding RSM’s communications with the Audit Committee concerning
independence, and has discussed with RSM their independence.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the financial
statements referred to above be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30,
2018 for filing with the SEC.

Audit Committee:

Mark R. Matteson, Chairperson
Michael H. McKay
Stefan L. Shaffer

PROPOSAL 1
ELECTION OF CLASS I DIRECTORS

Upon the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated the

following individuals for election as Class I directors of the Company to serve for a three-year term expiring at the 2022 annual
meeting of stockholders:

Charles E. Owens

Ned N. Fleming, III

Unless a stockholder instructs otherwise, shares represented by properly submitted proxies will be voted “FOR” the

election of the director nominees listed above. The Board anticipates that the nominees listed above will be able to serve, but if
any nominee should be unable or unwilling to serve, proxies will be voted for a substitute selected by the Board.

The Board unanimously recommends that the stockholders vote “FOR” each of the nominees named above.

PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS

The Audit Committee has selected RSM US LLP (“RSM”) as the Company’s independent registered public

accounting firm for the fiscal year ending September 30, 2019. Stockholder ratification of the appointment is not required
under Delaware law, but the Board has decided to ascertain the position of the Company’s stockholders on the appointment.
The Audit Committee and the Board believe that the continued retention of RSM as the Company’s independent registered
public accountants is in the best interest of the Company and its stockholders. If the appointment of RSM is not ratified, the
Audit Committee will reconsider its appointment of RSM. The affirmative vote of a majority of the votes cast by the
stockholders present in person or by proxy at the Annual Meeting and entitled to vote is required for ratification.

General

RSM has audited our financial statements for the fiscal year ended September 30, 2018 and has served as our
independent registered public accounting firm since June 2017. It is expected that a representative of RSM will be present at
the Annual Meeting to respond to appropriate questions and will be given the opportunity to make a statement if he or she so
desires.

Audit Committee Pre-Approval Policy

On April 22, 2018, our Board adopted a policy for the pre-approval of audit and non-audit services performed by the

independent registered public accountants (the “Pre-Approval Policy”), pursuant to which the Audit Committee generally is
required to pre-approve the audit and permissible non-audit services performed by the independent registered public
accountants in order to assure that the provision of such services does not impair the accountants’ independence. The Audit
Committee considers non-audit fees and services when assessing the accountants’ independence. Unless a type of service to be
provided by the independent registered public accountants has received general pre-approval, the service will require specific
pre-approval by the Audit Committee. Any amounts invoiced for services rendered that materially exceed preapproved cost
levels will require specific approval by the Audit Committee prior to the payment of such invoice. On an annual basis, the
Audit Committee may pre-approve specific services that are expected to be provided to the Company by the independent
registered public accountants during the following twelve months. The most recent preapproval occurred in August 2018. The
Audit Committee may delegate pre-approval authority to one or more of its members, who in turn must report any pre-approval
decisions to the Audit Committee at its next scheduled meeting.

Change in Accountants

In June 2017, we retained RSM as our independent registered public accounting firm and dismissed our prior

independent registered public accounting firm, PBMares, LLP (“PBMares”). The decision to dismiss PBMares and appoint
RSM was approved by our Board, effective as of June 19, 2017. Subsequent to the appointment of RSM, we engaged RSM to
re-audit our consolidated financial statements as of and for the fiscal years ended September 30, 2015 and 2016, which had
previously been audited by PBMares.

The reports of PBMares on our consolidated financial statements as of and for the fiscal years ended September 30,

2015 and 2016 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles. During the two most recent fiscal years preceding our discharge of PBMares
and the subsequent interim period through June 19, 2017, we had no “disagreements” (as defined in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions thereto) with PBMares on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of
PBMares, would have caused PBMares to make reference in connection with its opinion to the subject matter of the
disagreement during its audit of our consolidated financial statements for the fiscal years ended September 30, 2015 and 2016.
During the two most recent fiscal years preceding our discharge of PBMares and the subsequent interim period through
June 19, 2017, there were no “reportable events” (as defined in Item 304(a)(1)(v) of Regulation S-K and the related instructions
thereto).

During the two fiscal years ended September 30, 2016 and through the period ended June 19, 2017, we did not consult

with RSM with respect to the application of accounting principles to a specified transaction, either completed or proposed, the
type of audit opinion that might be rendered on our financial statements, or any other matter that was the subject of a
disagreement or a reportable event (each as defined above). Moreover, neither a written report nor oral advice was provided to
the Company that RSM concluded was an important factor considered by the Company in reaching a decision as to any
accounting, auditing or financial reporting issue.

We have previously provided PBMares with a copy of the foregoing disclosure and requested that PBMares furnish us

with a letter addressed to the SEC stating whether or not PBMares agrees with the above statements and, if not, stating the
respects in which it does not agree. A copy of the letter, dated January 26, 2018, furnished by PBMares in response to that
request, was filed as Exhibit 16.1 to our Registration Statement on Form S-1 (File No. 333-224174), filed with the SEC on
April 6, 2018.

Fees Paid to RSM

The following table presents fees for professional services rendered by RSM for the audit of the Company’s annual

financial statements for the fiscal years ended September 30, 2018 and 2017, and fees billed for other services rendered by
RSM during those periods, including out-of-pocket expenses.

Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees
TOTAL

2018

2017

1,942,249 $
0
0
0
1,942,249 $

1,075,266
0
0
0
1,075,266

Audit Fees. This category includes fees for professional services related to the audit of the Company’s financial

statements and review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, as well as services
that are normally provided by RSM in connection with statutory and regulatory filings. Specifically, the amounts in the table
above represent fees and expenses related to (i) the audit of the Company’s annual financial statements for the fiscal years
ended September 30, 2018 and 2017, respectively, (ii) review of the Company’s interim financial statements and related
disclosures included in periodic reports filed with the SEC, (iii) work performed in connection with the Company’s registration
statements filed during the 2018 fiscal year, and (iv) audit services related to subsidiary-level financial data of our operating
companies for submission to, and for purposes of qualifying our operating companies to perform work with, various state
Departments of Transportation.

Audit-Related Fees. This category includes fees billed for assurance and related services that are reasonably related to

the performance of the audit or review of the Company’s financial statements and are not included in Audit Fees. There were
no such fees for the 2018 or 2017 fiscal years.

Tax Fees. This category includes fees billed for professional services related to tax compliance, tax advice and tax

planning. RSM did not render any such services to the Company during the 2018 or 2017 fiscal years beyond its audit of our
income tax accruals.

All Other Fees. This category includes fees billed to the Company for products and services provided by RSM that do

not fall into one of the other three categories above. There were no such fees during the 2018 or 2017 fiscal years.

The Board unanimously recommends that the stockholders vote “FOR” Proposal 2.

OTHER MATTERS

As of the date of this Proxy Statement, the Board does not know of any business that will be presented for

consideration at the Annual Meeting other than as specified herein and in the Notice of Annual Meeting of Stockholders, but if
other matters are presented, it is the intention of the persons designated as proxies to vote in accordance with their judgment on
such matters.

DEADLINE FOR STOCKHOLDER PROPOSALS

In order for a proposal by a stockholder of the Company to be eligible to be included in the proxy statement and form

of proxy for the 2020 annual meeting of stockholders pursuant to the proposal process prescribed by SEC Rule 14a-8, the
proposal must be received by the Secretary of the Company at Construction Partners, Inc., 290 Healthwest Drive, Suite 2,
Dothan, Alabama 36303, on or before September 24, 2019.

If a stockholder proposal is submitted outside the proposal process mandated by SEC Rule 14a-8, and is submitted

instead under the advance notice provision of the Company’s amended and restated by-laws, the proposal must be received by
the Secretary of the Company at 290 Healthwest Drive, Suite 2, Dothan, Alabama 36303 not earlier than November 9, 2019 or
later than December 9, 2019, together with the necessary supporting documentation required under that by-law provision.

ANNUAL REPORT ON FORM 10-K

You may receive a copy of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30,
2018 without charge by sending a written request to Construction Partners, Inc., 290 Healthwest Drive, Suite 2, Dothan,
Alabama 36303, Attention: Secretary.

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2018

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .

Commission file number: 001-38479

CONSTRUCTION PARTNERS, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)

26-0758017
(I.R.S. Employer Identification Number)

290 Healthwest Drive, Suite 2
Dothan, Alabama 36303
(Address of Principal Executive Offices) (ZIP Code)

(334) 673-9763
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Name of Each Exchange on Which Registered

Class A Common Stock, par value $0.001 per share

The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Non-accelerated filer

Emerging growth company

Accelerated filer

Smaller reporting company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes

The registrant completed its initial public offering subsequent to March 31, 2018, the last business day of the registrant's most recently
completed second fiscal quarter. As of May 8, 2018, the date of the closing of the registrant's initial public offering, the aggregate
market value of the registrant's common stock held by non-affiliates of the registrant was $135,000,000, based on the actual offering
price and number of shares sold in the offering.

As of December 10, 2018, the registrant had 11,950,000 shares of Class A common stock, $0.001 par value per share, and 39,464,619
shares of Class B common stock, $0.001 par value per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after
the registrant’s fiscal year ended September 30, 2018 in connection with the registrant’s 2019 annual meeting of stockholders are
incorporated by reference into Part III of this report.

Cautionary Statement Regarding Forward-Looking Statements

TABLE OF CONTENTS

Item 1.

Business

Item1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2.

Item 3.

Properties

Legal Proceedings

Item 4. Mine Safety Disclosures

PART I

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 6.

Selected Financial Data

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8.

Item 9.

Financial Statements and Supplementary Data

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

PART III

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accounting Fees and Services

Item 15. Exhibits, Financial Statements Schedules

SIGNATURES

PART IV

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Cautionary Statement Regarding Forward-Looking Statements

This report contains forward-looking statements that involve risks and uncertainties, such as statements related to future events,
business strategy, future performance, future operations, backlog, financial position, estimated revenues and losses, projected costs,
prospects, plans and objectives of management. All statements other than statements of historical fact may be forward-looking
statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek,” “anticipate,” “plan,”
“continue,” “estimate,” “expect,” “may,” “will,” “project,” “predict,” “potential,” “targeting,” “intend,” “could,” “might,” “should,”
“believe” and similar expressions or their negative. Forward-looking statements should not be read as a guarantee of future
performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be
achieved. Forward-looking statements are based on management’s belief, based on currently available information, as to the outcome
and timing of future events. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other
factors that may cause actual results or events to differ materially from those expressed in such forward-looking statements. When
evaluating forward-looking statements, you should consider the risk factors and other cautionary statements described below under the
heading “Risk Factors.” We believe that the expectations reflected in the forward-looking statements contained in this report are
reasonable, but no assurance can be given that these expectations will prove to be correct.

Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements
include, but are not limited to:

•

declines in public infrastructure construction and reductions in government funding, including the funding by transportation
authorities and other state and local agencies;

risks related to our operating strategy;

competition for projects in our local markets;

risks associated with our capital-intensive business;

government requirements and initiatives, including those related to funding for public or infrastructure construction, land
usage and environmental, health and safety matters;

unfavorable economic conditions and restrictive financing markets;

our ability to successfully identify, manage and integrate acquisitions;

our ability to obtain sufficient bonding capacity to undertake certain projects;

our ability to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are
ultimately awarded to us;

the cancellation of a significant number of contracts or our disqualification from bidding for new contracts;

risks related to adverse weather conditions;

our substantial indebtedness and the restrictions imposed on us by the terms thereof;

our ability to maintain favorable relationships with third parties that supply us with equipment and essential supplies;

our ability to retain key personnel and maintain satisfactory labor relations;

property damage, results of litigation and other claims and insurance coverage issues;

risks related to our information technology systems and infrastructure; and

our ability to remediate the material weaknesses in internal control over financial reporting identified in preparing our
consolidated financial statements included in this report and to subsequently maintain effective internal control over financial
reporting.

These factors are not necessarily all of the important factors that could cause actual results or events to differ materially from those
expressed in forward-looking statements. Other unknown or unpredictable factors could also cause actual results or events to differ
materially from those expressed in the forward-looking statements. Our future results will depend upon various other risks and
uncertainties, including those described under the heading “Risk Factors.” All forward-looking statements attributable to us are
qualified in their entirety by this cautionary statement. Forward-looking statements speak only as of the date hereof. We undertake no

obligation to update or revise any forward-looking statements after the date on which any such statement is made, whether as a result
of new information, future events or otherwise, except as required by law.

Item 1. Business

Overview

PART I

Construction Partners, Inc. (the “Company”) is a leading infrastructure company that specializes in the construction and maintenance
of roadways across Alabama, Florida, Georgia, North Carolina and South Carolina. Through its wholly owned subsidiaries, the
Company provides a variety of products and services to both public and private infrastructure projects, with an emphasis on highways,
roads, bridges, airports, and commercial and residential sites. Consistent with its vertical integration strategy, the Company's primary
operations consist of (i) mining aggregates, such as sand and gravel, that are used as raw materials in the production of hot mix asphalt
("HMA"), (ii) manufacturing and distributing HMA for use by the Company and third parties in connection with construction projects,
and (iii) site development, installing utility and drainage systems and paving.

The Company was formed as a Delaware corporation in 2007 as a holding company for its wholly owned subsidiary, Construction
Partners Holdings, Inc., to facilitate an acquisition growth strategy in the HMA paving and construction industry.

As used in this report, the terms “Company,” “we” and “us” refer to Construction Partners, Inc. and its subsidiaries, except when the
context requires that those terms mean only the parent company or a particular subsidiary.

2018 Fiscal Year Developments

Reclassification of Common Stock. On April 23, 2018, the Company amended and restated its certificate of incorporation to
effectuate a dual class common stock structure consisting of Class A common stock and Class B common stock (the
“Reclassification”). As a result of the Reclassification, each share of common stock, par value $0.001 per share, issued immediately
prior thereto was converted into 25.2 shares of Class B common stock, and Class A common stock was initially authorized for
issuance. Following the Reclassification, the Company’s amended and restated certificate of incorporation authorized 400,000,000
shares of Class A common stock and 100,000,000 shares of Class B common stock.

Initial Public Offering. On May 8, 2018, the Company completed an initial public offering of 11,250,000 shares of its Class A
common stock for a price of $12.00 per share. Of these shares, 9,000,000 were sold by the Company, for which the Company received
$100.4 million in proceeds, after deducting underwriting discounts and commissions of $7.6 million, and prior to additional total
offering expenses of $6.3 million. The remaining 2,250,000 shares were sold by the holders of Class B common stock, which shares
upon sale automatically converted on a one-to-one basis into 2,250,000 shares of Class A common stock. The Company did not receive
any proceeds from the sale of shares by the holders of Class B common stock. On May 24, 2018, the underwriters of the initial public
offering partially exercised their over-allotment option to purchase an additional 700,000 shares of Class A common stock at a price of
$12.00 per share, less the underwriting discount and commissions. Of these shares, 350,000 were sold by the Company, for which the
Company received $3.9 million in proceeds, after deducting underwriting discounts and commissions of $0.3 million. The remaining
350,000 shares were sold by the holders of Class B common stock, which shares upon sale automatically converted on a one-to-one
basis into 350,000 shares of Class A common stock. The Company did not receive any proceeds from the sale of shares by the holders
of Class B common stock.

Acquisition of The Scruggs Company. On May 15, 2018, the Company acquired all of the outstanding common stock of The Scruggs
Company, a privately-owned infrastructure and road construction company headquartered in Hahira, Georgia, that operates three HMA
plants, three aggregate mines and one industrial plant in Georgia. The purchase price of $51.3 million was funded by $29.3 million of
cash on hand and $22.0 million borrowed under an existing credit facility.

Settlement Agreements. On April 19, 2018, certain of the Company’s subsidiaries entered into settlement agreements with a third
party, pursuant to which they will receive aggregate net payments of approximately $15.7 million, payable in four equal installments
between January 2019 and July 2020, in exchange for releasing and waiving all current and future claims against the third party
relating to compensation to the Company for a business interruption event that (i) occurred more than five years ago, (ii) did not
directly relate to the Company’s business and (iii) has not, and is not expected to, recur (the “Settlement”). The Company recorded a
pre-tax gain of $14.8 million during the fiscal year ended September 30, 2018 related to the Settlement.

Our Industry

We operate in the large and growing highway and road construction industry and specifically within the asphalt paving materials and
services segment. Asphalt paving mix is the most common roadway material used today due to its cost effectiveness, durability and
reusability, and minimized traffic disruption during paving, as compared to concrete. Recent growth in our industry has been driven by

federal, state and local Department of Transportation (“DOT”) budgets, which annually earmark amounts for transportation and
infrastructure spending. The federal Fixing America’s Surface Transportation Act (the “FAST Act”), which was signed into law in
2015, provides long-term funding for surface transportation infrastructure planning and investment. Among other things, the FAST Act
authorized $305 billion in federal expenditures over fiscal years 2016 through 2020 for highway, motor vehicle safety, public
transportation, motor carrier safety, hazardous materials safety, rail, and research, technology, and statistics programs. In addition to the
FAST Act, certain states within our markets have in recent years approved legislation that will increase funding of transportation
construction for local road, bridge and transit projects. The non-discretionary nature of highway and road construction services and
materials supports stable and consistent industry growth.

Projects and Customers

We provide construction products and services to both public and private infrastructure projects, with an emphasis on highways, roads,
bridges, airports, and commercial and residential sites in the southeastern United States. We provide a wide range of large sitework
construction, including site development, paving, and utility and drainage systems construction, and supply the HMA required for the
projects. Our projects consist of both new construction and maintenance services. Publicly and privately funded projects accounted for
approximately 67% and 33% of our fiscal 2018 construction contract revenues, respectively. Our public customers include federal
agencies, state DOTs and local municipalities. Our private clients include commercial and residential developers and local businesses.

Our largest customers are state DOTs. For the fiscal year ended September 30, 2018, the Alabama DOT and the North Carolina DOT
accounted for 15.1% and 13.3% of our revenues, respectively. Other than these customers, no other customer accounted for more than
10% of our revenues for such periods, and projects performed for all DOTs accounted for 42.9% of our revenues. Our 25 largest
projects accounted for 30.2% of our revenues for the fiscal year ended September 30, 2018.

Types of Contracts

Our public customer contracts are primarily fixed unit price contracts. Pricing on a fixed unit price contract is typically based on
approved quantities. Our private customer contracts are primarily fixed total price contracts, also known as lump sum contracts, which
require that the total amount of work be performed for a single price. We also occasionally enter into design build contracts, which
generally are performed under fixed total price contracts. For the majority of our customer contracts, upon completion and final
acceptance of the services that we were contracted to perform, we receive our final payment upon completion of the necessary contract
closing documents, and our obligations to the owner are complete at that point. For some contracts, we are required to furnish a
warranty on our construction. These warranties, when required, are usually one year in length, but can extend up to three years
according to the owners’ specifications. Historically, warranty claims have not been material to our business.

Contract Management

We identify potential contracts through a variety of sources, including: (i) subscriber services that consolidate and alert us to contracts
open for bidding; (ii) posted solicitations by federal, state and local governmental entities through agency websites, disclosure of long-
term infrastructure plans or advertising and other general solicitations; (iii) our business development efforts; and (iv) communications
with other participants in our industry. We consider several factors that can create variability in contract performance and our financial
results compared to our bid assumptions and methodologies on a contract. As a result, after determining the potential contracts that are
available, we decide which contracts to pursue based on a non-exclusive list of factors, which include relevant skills required by the
contract, the contract size and duration, availability of our personnel and equipment, size and makeup of our current contract backlog,
our competitive advantages and disadvantages, our prior experience, the contracting agency or customer, the source of contract
funding, the geographic location, the likely competition, the construction risks, the gross margin opportunities, the penalties or
incentives and the type of contract.

To ensure the completeness and accuracy of our original bid analysis, the bid preparation for potential projects typically involves three
phases.

•

Phase One: We review the plans and specifications of the project so that we can identify (i) the various types of work
involved and related estimated materials, (ii) the contract duration and schedule, and (iii) any unique or risky aspects of
the project.

Phase Two: We estimate the cost and availability of labor, materials and equipment, subcontractors and the project team
required to complete the contract in accordance with the plans, specifications and construction schedule. Substantially all
of our estimates are made on a per-unit basis for each bid item, with the typical contract containing 50 to 200 bid items.

Phase Three: Management conducts a detailed review of the estimate. This review includes an analysis of assumptions
regarding (i) cost, approach, means and methods of completing the project, (ii) staffing and productivity and (iii) risk.
After concluding this detailed review of the cost estimate, management determines the appropriate profit margin to
calculate the total bid amount. This profit amount varies according to management’s perception of the degree of difficulty

of the contract, the existing competitive climate, and the size and makeup of our contract backlog. Throughout this
process, we work closely with our project managers so that all issues concerning a contract, including any risks, can be
better understood and addressed as appropriate.

To ensure subcontracting costs used in submitting bids for construction contracts do not change, we obtain firm quotations from our
subcontractors before submitting a bid. Also, to mitigate the risk of material price changes, we obtain “not to exceed” quotations from
our suppliers, which, for projects of longer duration, usually contain price escalator provisions. These quotations typically include
quantity guarantees that are tied to our prime contract. We have no obligation for materials or subcontract services beyond those
required to complete the respective contracts that we are awarded for which quotations have been provided.

After a contract has been awarded and during the construction phase, we monitor our progress by comparing actual costs incurred and
quantities completed to date with budgeted amounts and the project schedule. Monthly, we review our estimate of total forecasted
revenue, cost and expected profit for each contract.

During the normal course of some projects, we or our customer may initiate modifications or changes to the original contract to reflect,
among other things, changes in quantities, specifications or design, method or manner of performance, facilities, materials, site
conditions and period for completion of the work.

Generally, the scope and price of these modifications are documented in a “change order” to the original contract and reviewed,
approved and paid for in accordance with the normal change order provisions of the contract. Occasionally, we are asked to perform
extra or change order work as directed by the customer even if the customer has not agreed in advance on the scope or price of the
work to be performed. This process may result in disputes over whether the work performed is beyond the scope of the work included
in the original contract plans and specifications or, even if the customer agrees that the work performed qualifies as extra work, the
price that the customer is willing to pay for the extra work. These disputes may not be settled to our satisfaction. Even when the
customer agrees to pay for the extra work, we may be required to fund the cost of such work for an extended period of time until the
change order is approved and funded by the customer. In addition, any delay caused by the extra work may adversely impact the timely
scheduling of other work on the contract (or on other contracts) and our ability to meet contract milestone dates. Historically, we have
been successful at managing the impacts caused by change orders, and change orders have not had a material adverse effect on our
business.

Most of our contracts with governmental agencies provide for termination at the convenience of the customer, with requirements to
pay us for work performed through the date of termination. The termination of a government contract for the convenience of the
customer is an extremely rare occurrence. Many of our contracts contain provisions that require us to pay liquidated damages if
specified completion schedule requirements are not met. Historically, we have not been materially adversely affected by liquidated
damages provisions.

We act as prime contractor on most of our construction projects. As prime contractor, we are responsible for the performance of the
entire contract, including subcontract work. To manage the risk of non-performance by our subcontractors, we typically require the
subcontractor to furnish a bond or other type of security to guarantee its performance and/or we retain payments in accordance with
contract terms until their performance is complete. Disadvantaged business enterprise regulations require us to use our good faith
efforts to subcontract a specified portion of contract work done for governmental agencies to certain types of disadvantaged contractors
or suppliers.

Contract Backlog

At September 30, 2018, our contract backlog was $594.4 million, compared to $549.9 million at September 30, 2017. Contract backlog
is a financial measure that generally reflects the dollar value of work that the Company expects to perform in the future. Although
contract backlog is not a term recognized under generally accepted accounting principles in the United States (“GAAP”), it is a
common measure used in our industry. We generally 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 on uncompleted work on contracts in progress was
$528.4 million and $457.6 million at September 30, 2018 and 2017, respectively.

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
contract has been executed and (ii) private work jobs for which we have been notified 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 $66.0 million and $92.3 million at September
30, 2018 and 2017, respectively. At September 30, 2018, we expect approximately 80% of our contract backlog will be completed
during the next 12 months.

Certain customer contracts contain options that are exercisable at the discretion of our customer to award additional work to us,
without requiring us to go through an additional competitive bidding process. In addition, some customer contracts also contain task
orders that are signed under master contracts pursuant to which we perform work only when the customer awards specific task orders
to us. Awarded contracts that include unexercised contract options and unissued task orders are included in contract backlog to the
extent such options are exercised or the issuance of such task orders is probable.

Substantially all of the contracts in our contract backlog, as well as unexercised contract options and unissued task orders, may be
canceled or modified at the election of the customer. Historically, we have not experienced material amounts of contract cancellations
or modifications. Many projects are added to our contract backlog and completed within the same fiscal year and therefore may not be
reflected in our beginning or year-end contract backlog. Contract backlog does not include external sales of HMA and aggregates.

Insurance and Bonding

We maintain general and excess liability, property, workers’ compensation and medical insurance, all in amounts consistent with industry
practice.

In the ordinary course of our business, we are required to provide various types of surety bonds that provide an additional measure of
security to the customer for our performance under certain public and private sector contracts. Our ability to obtain surety bonds
depends on our capitalization, working capital, past performance, management expertise and external factors, including the capacity of
the overall surety market. Surety companies consider such factors in light of the amount of our contract backlog that we have bonded
and their underwriting standards. The capacity of the surety market is subject to market-based fluctuations driven primarily by the level
of surety industry losses and the degree of surety market consolidation.

Competition

We compete against multiple competitors in all of the markets in which we operate. Competition is constrained in our industry because
participants are limited by the distance that materials can be efficiently transported, resulting in a fragmented market with thousands of
participants nationwide, many of which are local or regional operators. Our competitors typically range from small, family-owned
companies focused on a single material, product or market to multinational corporations that offer a wide array of construction
materials, products and paving and related services. We believe that we are well-positioned to compete effectively in the markets in
which we operate.

Seasonality

The activity of our business fluctuates due to seasonality because our business is primarily conducted outdoors. Therefore, seasonal
changes and other weather-related conditions, in particular extended snowy, rainy or cold weather in the winter, spring or fall and
major weather events, such as hurricanes, tornadoes, tropical storms and heavy snows, can adversely affect our business and operations
through a decline in both the use of our products and the demand for our services. In addition, construction materials production and
shipment levels follow activity in the construction industry, which typically occurs in the spring, summer and fall. Warmer and drier
weather during our third and fourth fiscal quarters typically result in higher activity and revenues during those quarters. Our first and
second fiscal quarters typically have lower levels of activity due to adverse weather conditions. Our third fiscal quarter varies greatly
with spring rains and wide temperature variations. A cool, wet spring increases drying time on projects, which can delay sales in the
third fiscal quarter, while a warm, dry spring may facilitate earlier project commencement dates.

Sources and Availability of Raw Materials

We purchase raw materials, including, but not limited to, diesel fuel, liquid asphalt, other petroleum-based resources, sand and rock
from numerous sources. With few exceptions, we do not enter into long-term agreements to purchase raw materials. We receive quotes
from suppliers, most with a “not to exceed” price for the quoted product over the life of a project. In the HMA production process,
components of a mix include virgin aggregates, such as sand and rock, liquid asphalt, and reclaimed asphalt pavement (“RAP”). We
are able to internally supply RAP, a byproduct of asphalt resurfacing projects, to all of our HMA plants, and virgin aggregates in some
of our market areas. The majority of our HMA plants sit in or near suppliers’ rock quarries, thereby reducing the hauling cost of
material to our plant. The price and availability of raw materials may vary from year to year due to market conditions and production
capacities. We do not expect a lack of availability of any raw materials over the next twelve months.

Government and Environmental Regulations

Our operations are subject to stringent and complex federal, state and local laws and regulations governing the environmental, health
and safety aspects of our operations or otherwise relating to environmental protection. These laws and regulations impose numerous
obligations and limitations on our operations, including:

•

requirements to obtain a permit or other approval before conducting regulated activities;

•

restrictions on the types, quantities and concentration of materials that can be released into the environment;

limitation or prohibition of activities on certain lands lying within wilderness, wetlands, and other protected areas;

requirements to comply with specific health and safety criteria addressing worker protection; and

the imposition of substantial liabilities for pollution resulting from our operations.

Such federal laws include (i) the Resource Conservation and Recovery Act, the Pollution Prevention Act and the Comprehensive
Environmental Response, Compensation and Liability Act, governing solid and hazardous waste management, (ii) the Clean Air Act
and the Clean Water Act, protecting air and water resources, and (iii) the Emergency Planning and Community Right-to-Know Act and
Toxic Substances Control Act, governing the management of hazardous materials, in addition to analogous state laws. Numerous
governmental authorities, such as the Environmental Protection Agency and corresponding state agencies, have the power to enforce
compliance with these laws and regulations and the permits issued under them. Such enforcement actions often involve difficult and
costly compliance measures or corrective actions. Failure to comply with these laws and regulations may result in the assessment of
sanctions, including administrative, civil or criminal penalties, compensatory damages, the imposition of investigatory or remedial
obligations, and the issuance of orders limiting or prohibiting some or all of our operations. In addition, we may experience delays in
obtaining, or be unable to obtain, required permits, which may delay or interrupt our operations and limit our growth and revenue.

Certain environmental laws impose strict liability (i.e., no showing of “fault” is required) as well as joint and several liability for costs
required to remediate and restore sites where hazardous substances, hydrocarbons or solid wastes have been stored or released. We
may be required to remediate contaminated properties currently or formerly owned or operated by us, regardless of whether such
contamination resulted from the conduct of others or from the consequences of our own actions that complied with applicable laws at
the time those actions were taken. In connection with certain acquisitions, we could assume, or be required to provide indemnification
against, environmental liabilities that could expose us to material losses. Furthermore, the existence of contamination at properties we
own, lease or operate could result in increased operational costs or restrictions on our ability to use those properties as intended,
including for mining purposes.

In certain instances, citizen groups also have the ability to bring legal proceedings against us if we are not in compliance with
environmental laws, or to challenge our ability to receive environmental permits that we need to operate. In addition, claims for
damages to persons or property, including natural resources, may result from the environmental, health and safety impacts of our
operations. Our insurance may not cover all environmental risks and costs or may not provide sufficient coverage if an environmental
claim is made against us. Moreover, public interest in the protection of the environment has increased dramatically in recent years. The
trend of more expansive and stringent environmental legislation and regulations applied to the construction industry could continue,
resulting in increased costs of doing business and consequently affecting profitability.

We have incurred, and may in the future incur, significant capital and operating expenditures to comply with such laws and regulations.
To the extent laws are enacted or other governmental action is taken that restricts our operations or imposes more stringent and costly
operating, waste handling, disposal and cleanup requirements, our business, prospects, financial condition or results of operations
could be materially adversely affected.

We regularly monitor and review our operations, procedures, and policies for compliance with our operating permits and related laws
and regulations. We believe that our operations and facilities, whether owned or leased, are in substantial compliance with applicable
environmental laws and regulations and that any existing non-compliance is not likely to have a material adverse effect on our
operations or financial condition.

Industrial operations, including equipment maintenance and storage, asphalt manufacturing and processing, underground storage tank
usage, and other storage and use of hazardous materials and petroleum products, have been and/or are conducted at our facilities for, in
some cases, more than 50 years. While we have conducted our operations in substantial compliance with applicable environmental
laws, we have, from time to time, identified contamination associated with these activities at certain of our facilities. We have incurred
costs for the investigation and remediation of hazardous substances and petroleum products identified at several facilities, and
investigation and remediation activities are ongoing at others. We may also become subject to similar liabilities in connection with
prior and future acquisitions. We do not believe that liabilities associated with known or potential contamination at any of our facilities
will have a material adverse effect on our operations or financial condition.

Employees

As of September 30, 2018, we employed 572 salaried employees and 1,582 hourly employees. The total number of hourly personnel is
subject to the volume of projects in progress and fluctuates on a seasonal basis. During fiscal year 2018, the number of hourly
employees ranged from 1,323 to 1,595 employees and averaged 1,458 employees. We are not subject to any collective bargaining
agreements with respect to any of our employees. We believe that we have strong relationships with our employees.

Our business is dependent upon a readily available supply of management, supervisory and field personnel. Attracting, training and
retaining key personnel has been and will remain critical to our success. Through the use of our management information systems, on-
the-job training, and educational seminars, employees are trained to understand the importance of project execution. We place
additional focus on training related to estimating, project management and project cost control. Our crews typically specialize in a
specific phase of construction, such as grading or paving, with each crew member assigned to a specific task in order to maximize
daily production. A core tenet of our organizational philosophy is to promote from within and offer advancement opportunities at all
levels of employment, which helps us retain talented employees. Moreover, we proactively recruit additional talent in both
conventional and creative manners to fill open positions when promoting internally is not an option. Like others in our industry, we
experience some recurring employee turnover; however, we historically have been able to attract sufficient numbers of personnel to
support the growth of our operations. Nonetheless, we continue to face competition for experienced workers in all of our markets.

We place a high emphasis on the safety of the public, our customers and our employees. To that end, we conduct extensive safety
training programs, which have allowed us to maintain a high safety level at our worksites. All newly-hired employees undergo an
initial safety orientation, and for certain types of projects and processes, we conduct specific hazard training programs. Our project
foremen and superintendents conduct on-site safety meetings, and our full-time safety inspectors make random site safety inspections
and perform assessments. In addition, certain operational employees are required to complete a safety course approved by the
Occupational Safety and Health Administration (“OSHA”) or the Mine Safety and Health Administration (“MSHA”), as applicable.
Moreover, we promote a culture of safety by encouraging employees to immediately correct and report all unsafe conditions.

Website Information

The Company maintains a website at www.constructionpartners.net. Certain corporate governance information, SEC filings and other
information of potential interest to our stockholders are available free of charge through the “Investors” page of the Company’s
website. These include, for example, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-
K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). These documents are made available as soon as reasonably practicable after they are filed with, or
furnished to, the Securities and Exchange Commission (the “SEC”). Information on, or accessible through, the Company’s website is
not part of or incorporated into this Annual Report on Form 10-K. We have included the website address only as an inactive textual
reference and do not intend for it to be an active link to the website. We will provide paper copies of our periodic and current reports to
stockholders free of charge upon written request to: Construction Partners, Inc., Attention: Corporate Secretary, 290 Healthwest Drive,
Suite 2, Dothan, Alabama 36303.

Item 1A. Risk Factors.

An investment in our Class A common stock involves certain risks. You should carefully read and consider the following risks, as
well as all of the other information contained in this Annual Report on Form 10-K, before making an investment decision. Our
business, financial condition and results of operations could be materially and adversely affected by any of these risks. As a result,
the trading price of our Class A common stock could decline, and you could lose all or part of your investment. The risks
described below are not the only ones facing us. Additional risks not presently known to us or that we currently consider
immaterial also may adversely affect us.

Risks Related to our Business

A significant slowdown or decline in economic conditions, particularly in the southeastern United States, could adversely
impact our results of operations.

We currently operate in Alabama, Florida, Georgia, North Carolina and South Carolina. A significant slowdown or decline in
economic conditions or uncertainty regarding the economic outlook in the United States generally, or in any of these states
particularly, could result in reduced demand for infrastructure projects, which could materially adversely affect our financial
condition, results of operations and liquidity. Demand for infrastructure projects depends on the overall condition of the national
and local economies, the need for new or replacement infrastructure, the priorities placed on various projects funded by
governmental entities and federal, state and local government spending levels. In particular, low tax revenues, credit rating
downgrades, budget deficits and financing constraints, including timing and amount of federal funding and competing
governmental priorities, could negatively impact the ability of government agencies to fund existing or new public infrastructure
projects. For example, during the most recent recession, decreases in tax revenues reduced funding for infrastructure projects. In
addition, any instability in the financial and credit markets could negatively impact our customers’ ability to pay us on a timely
basis, or at all, for work on projects already in progress, could cause our customers to delay or cancel construction projects in our
contract backlog and/or could create difficulties for customers to obtain adequate financing to fund new construction projects,
including through the issuance of municipal bonds.

Our business is dependent on federal, state and local government spending for public infrastructure construction, and
reductions in government funding could adversely affect our results of operations.

During the fiscal year ended September 30, 2018, we generated approximately 67% of our construction contract revenues from
publicly funded construction projects at the federal, state and local levels. As a result, if publicly funded construction decreases
due to reduced federal, state or local funding or otherwise, our financial condition, results of operations and liquidity could be
materially adversely affected.

In January 2011, Congress repealed a 1998 transportation law that protected annual highway funding levels from amendments that
could reduce such funding. This change subjected federal highway funding to annual appropriation reviews, which has increased
the uncertainty of many state DOTs regarding the availability of highway project funds. This uncertainty could cause state DOTs to
be reluctant to undertake large multiyear highway projects, which could, in turn, negatively affect our results of operations.

Federal highway bills provide spending authorizations that represent maximum amounts. Each year, Congress passes an
appropriation act establishing the amount that can be used for particular programs. The annual funding level is generally tied to
receipts of highway user taxes placed in the Highway Trust Fund (as defined in the FAST Act). Once Congress passes the annual
appropriation, the federal government distributes funds to each state based on formulas or other procedures. States generally must
spend these funds on the specific programs outlined in the federal legislation. In recent years, the Highway Trust Fund has faced
insolvency as outlays have outpaced revenues. Annual shortfalls have been addressed primarily by short-term measures, including
the transfer of funds from the General Fund (as defined in the FAST Act) into the Highway Trust Fund. As a result, we cannot be
assured of the existence, timing or amount of future federal highway funding. Any reduction in federal highway funding,
particularly in the amounts allocated to Alabama, Florida, Georgia, North Carolina and South Carolina, could have a material
adverse effect on our results of operations.

Each state funds its infrastructure spending from specially allocated amounts collected from various taxes, typically fuel taxes and
vehicle fees, as well as from voter-approved bond programs. Shortages in state tax revenues can reduce the amount spent on state
infrastructure projects. Delays in state infrastructure spending can adversely affect our business. Many states have experienced
state-level funding pressures caused by lower tax revenues and an inability to finance approved projects. Prior to the FAST Act,
states took on a larger role in funding sustained infrastructure investment. During the past three years, many states have again
taken on a significantly larger role in funding infrastructure investment, including initiating special-purpose taxes and increased
fuel taxes.

While the current administration has announced an infrastructure stimulus plan, we cannot predict the impact, if any, that it or
other proposed changes in law and regulations may have on our business.

We derive a significant portion of our revenues from state DOTs. The loss of our ability to competitively bid for certain projects
or successfully contract with state DOTs could have a material adverse effect on our business.

Our largest customers are state DOTs. During the fiscal year ended September 30, 2018, the Alabama DOT and the North Carolina
DOT accounted for 15.1% and 13.3% of our revenues, respectively, and projects performed for all DOTs accounted for 42.9% of
revenues. We believe that we will continue to rely on state DOTs for a substantial portion of our revenues for the foreseeable
future. The loss or reduction of our ability to competitively bid for certain projects or successfully contract with a state DOT could
have a material adverse effect on our financial condition, results of operation and liquidity. See Note 3 - Significant Accounting
Policies, Concentration of Risks, to the consolidated financial statements for the fiscal year ended September 30, 2018 included
elsewhere in this Annual Report on Form 10-K, for information relating to concentrations of revenues by type of customer and for
a description of our largest customers.

Government contracts generally are subject to a variety of governmental regulations, requirements and statutes, the violation
or alleged violation of which could have a material adverse effect on our business.

During the fiscal year ended September 30, 2018, approximately 67% of our construction contract revenues were derived from
contracts funded by federal, state and local governmental agencies. Our contracts with these governmental agencies are generally
subject to specific procurement regulations, contract provisions and a variety of socioeconomic requirements relating to their
formation, administration, performance and accounting and often include express or implied certifications of compliance. Further,
government contracts typically provide for termination at the convenience of the customer with requirements to pay us for work
performed through the date of termination. We may be subject to claims for civil or criminal fraud for actual or alleged violations
of these various governmental regulations, requirements or statutes. In addition, we may also be subject to qui tam litigation
brought by private individuals on behalf of the government under the Federal Civil False Claims Act, which could include claims
for treble damages. Further, if we fail to comply with any of these various governmental regulations, requirements or statutes, or if
we have a substantial number of accumulated OSHA, MSHA or other workplace safety violations, our existing government
contracts could be terminated, and we could be suspended from government contracting or subcontracting, including federally
funded projects at the state level. Even if we have not violated these various governmental regulations, requirements or statutes,
allegations of violations or defending qui tam litigation could harm our reputation and require us to incur material costs to defend
any such allegations or lawsuits. Should one or more of these events occur, it could have a material adverse effect on our financial
condition, results of operations, cash flow and liquidity.

If we do not comply with certain federal or state laws, we could be suspended or debarred from government contracting, which
could have a material adverse effect on our business.

Various statutes to which our operations are subject, including the Davis-Bacon Act (regulating wages and benefits), the Walsh-
Healy Act (prescribing a minimum wage and regulating overtime and working conditions), Executive Order 11246 (establishing
equal employment opportunity and affirmative action requirements) and the Drug-Free Workplace Act, provide for mandatory
suspension and/or debarment of contractors in certain circumstances involving statutory violations. In addition, the Federal
Acquisition Regulation and various state statutes provide for discretionary suspension and/or debarment in certain circumstances,
including as a result of being convicted of, or being found civilly liable for, fraud or a criminal offense in connection with
obtaining, attempting to obtain or performing a public contract or subcontract. The scope and duration of any suspension or
debarment may vary depending upon the facts of a particular case and the statutory or regulatory grounds for debarment. Any
suspension or debarment from government contracting could have a material adverse effect on our financial condition, results of
operations or liquidity.

If we are unable to accurately estimate the overall risks, revenues or costs on our projects, we may incur contract losses or
achieve lower than anticipated profits.

Pricing on a fixed unit price contract is based on approved quantities irrespective of our actual costs, and contracts with a fixed
total price require that the work be performed for a single price irrespective of our actual costs. We only generate profits on fixed
unit price and fixed total price contracts when our revenues exceed our actual costs, which requires us to accurately estimate our
costs, to control actual costs and to avoid cost overruns. If our cost estimates are too low or if we do not perform the contract
within our cost estimates, then cost overruns may cause us to incur a loss or cause the contract not to be as profitable as we
expected. The costs incurred and profit realized, if any, on our contracts can vary, sometimes substantially, from our original
projections due to a variety of factors, including, but not limited to:

•

the failure to include materials or work in a bid, or the failure to estimate properly the quantities or costs needed to
complete a fixed total price contract;

delays caused by weather conditions or otherwise failing to meet scheduled acceptance dates;

contract or project modifications or conditions creating unanticipated costs that are not covered by change orders;

changes in the availability, proximity and costs of materials, including liquid asphalt cement, aggregates and other
construction materials, as well as fuel and lubricants for our equipment;

to the extent not covered by contractual cost escalators, variability and inability to predict the costs of purchasing
diesel, liquid asphalt and cement;

the availability and skill level of workers;

the failure by our suppliers, subcontractors, designers, engineers or customers to perform their obligations;

•

fraud, theft or other improper activities by our suppliers, subcontractors, designers, engineers, customers or our own
personnel;

• mechanical problems with our machinery or equipment;

•

citations issued by a government authority, including OSHA or MSHA citations;

difficulties in obtaining required government permits or approvals;

changes in applicable laws and regulations;

uninsured claims or demands from third parties for alleged damages arising from the design, construction or use and
operation of a project of which our work is part; and

public infrastructure customers seeking to impose contractual risk-shifting provisions that result in increased risks to
us.

These factors, as well as others, may cause us to incur losses, which could have a material adverse effect on our financial
condition, results of operations or liquidity.

Because our industry is capital-intensive and we have significant fixed and semi-fixed costs, our profitability is sensitive to
changes in volume.

The property, plants and equipment needed to produce our products and provide our services can be very expensive. We must
spend a substantial amount of capital to purchase and maintain such property, plants and equipment. Although we believe our
current cash balance, along with our projected internal cash flows and available financing sources, will provide sufficient cash to
support our currently anticipated operating and capital needs, if we are unable to generate sufficient cash to purchase and maintain
the property, plants and equipment necessary to operate our business, we may be required to reduce or delay planned capital
expenditures or to incur additional indebtedness. In addition, due to the level of fixed and semi-fixed costs associated with our
business, particularly at our HMA production facilities, volume decreases could have a material adverse effect on our financial
condition, results of operations or liquidity.

The cancellation of a significant number of contracts, our disqualification from bidding for new contracts and the
unpredictable timing of new contracts could have a material adverse effect on our business.

We could be prohibited from bidding on certain government contracts if we fail to maintain qualifications required by those
entities. In addition, government contracts typically can be canceled at any time with us receiving payment only for the work
completed. The cancellation of an unfinished contract, or our disqualification from the bidding process, could result in lost
revenues and cause our equipment to be idled for a significant period of time until other comparable work becomes available.
Additionally, the timing of project awards is unpredictable and outside of our control. Project awards, including expansions of
existing projects, often involve complex and lengthy negotiations and competitive bidding processes.

The success of our business depends, in part, on our ability to execute on our acquisition strategy, to successfully integrate
acquired businesses and to retain key employees of acquired businesses.

Over the past 17 years, we have acquired and integrated 16 complementary businesses, which have contributed to a significant
portion of our growth. We continue to evaluate strategic acquisition opportunities that have the potential to support and strengthen
our business, including acquisitions in states in the southeastern United States, as part of our ongoing growth strategy. We expect
to evaluate, negotiate and enter into possible acquisition transactions on an ongoing basis in the future. We expect to regularly
make non-binding acquisition proposals, and we may enter into non-binding, confidential letters of intent from time to time in the
future. We cannot predict the timing or size of any future acquisitions. To successfully acquire a significant target, we may need to
raise additional equity and/or indebtedness, which could increase our leverage level. There can be no assurance that we will enter
into definitive agreements with respect to any contemplated transaction or that any contemplated transaction will be completed.
The investigation of acquisition candidates and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If we fail to complete any acquisition for any reason, including events beyond our control, the costs incurred
up to that point for the proposed acquisition likely would not be recoverable.

Acquisitions typically require integration of the acquired company’s estimation, project management, finance, information
technology, risk management, purchasing and fleet management functions. We may be unable to successfully integrate an acquired
business into our existing business, and an acquired business may not be as profitable as we had expected or at all. Our inability to
successfully integrate new businesses in a timely and orderly manner could increase costs, reduce profits or generate losses.
Factors affecting the successful integration of an acquired business include, but are not limited to, the following:

•

we may become liable for certain liabilities of an acquired business, whether or not known to us, which could
include, among others, tax liabilities, product liabilities, environmental liabilities and liabilities for employment
practices;

we may not be able to retain local managers and key employees who are important to the operations of an acquired
business;

substantial attention from our senior management and the management of an acquired business may be required,
which could decrease the time that they have to service and attract customers;

we may not effectively utilize new equipment that we acquire through acquisitions;

the complete integration of an acquired company depends, to a certain extent, on the full implementation of our
financial and management information systems, business practices and policies; and

we may actively pursue a number of opportunities simultaneously and we may encounter unforeseen expenses,
complications and delays, including difficulties in employing sufficient staff and maintaining operational and
management oversight.

Acquisitions involve risks that the acquired business will not perform as expected and that business judgments concerning the
value, strengths and weaknesses of the acquired business will prove incorrect. In addition, potential acquisition targets may be in
states in which we do not currently operate, which could result in unforeseen operating difficulties and difficulties in coordinating
geographically dispersed operations, personnel and facilities. In addition, if we enter into new geographic markets, we may be
subject to additional and unfamiliar legal and regulatory requirements.

We cannot guarantee that we will achieve synergies and cost savings in connection with future acquisitions. Many of the
businesses that we previously acquired, and businesses that we may acquire in the future, could have unaudited financial
statements that are prepared by management and are not independently reviewed or audited. We cannot guarantee that such
financial statements would not be materially different if such statements were independently reviewed or audited. We cannot
guarantee that we will continue to acquire businesses at valuations consistent with our prior acquisitions or that we will complete
future acquisitions at all. We cannot guarantee that there will be attractive acquisition opportunities at reasonable prices, that
financing will be available or that we can successfully integrate acquired businesses into our existing operations. In addition, our
results of operations from these acquisitions could, in the future, result in impairment charges for any of our intangible assets,
including goodwill or other long-lived assets, particularly if economic conditions worsen unexpectedly. Our inability to effectively
manage the integration of our completed and future acquisitions could prevent us from realizing expected rates of return on an
acquired business and could have a material and adverse effect on our financial condition, results of operations or liquidity.

We may lose business to competitors that underbid us, and we may be unable to compete favorably in our highly competitive
industry.

Most of our project awards are determined through a competitive bidding process in which price is the determining factor. Because
of the high cost of transporting HMA, our ability to win a project award is often influenced by the distance between a work site
and our HMA plants. We compete against multiple competitors in all of the markets in which we operate, most of which are local
or regional operators. Some of our competitors are larger than we are, are vertically integrated and/or have similar or greater
financial resources than we do. As a result, our competitors may be able to bid at lower prices than we can due to the location of
their plants or as a result of their size or vertical-integration advantages. Government funding for public infrastructure projects is
limited, thus contributing to competition for the limited number of public projects available. An increase in competition may result
in a decrease in new project awards to us at acceptable profit margins. In addition, in the event of a downturn in private residential
and commercial construction, the competition for available public infrastructure projects could intensify, which could materially
and adversely impact our financial condition, results of operations or liquidity.

We may be unable to obtain or maintain sufficient bonding capacity, which could materially adversely affect our business.

A significant number of our contracts require performance and payment bonds. Our ability to obtain performance and payment
bonds primarily depends upon our capitalization, working capital, past performance, management expertise, reputation and certain
external factors, including the overall capacity of the surety market. If we are unable to renew or obtain a sufficient level of
bonding capacity in the future, we may be precluded from being able to bid for certain projects or successfully contract with
certain customers. In addition, even if we are able to successfully renew or obtain performance or payment bonds, we may be
required to post letters of credit in connection with such bonds, which could negatively affect our liquidity and results of
operations.

It is standard for sureties to issue or continue bonds on a project-by-project basis, and they can decline to do so at any time or
require the posting of additional collateral as a condition thereto. Events that adversely affect the insurance and bonding markets
generally may result in bonding becoming more difficult or costly to obtain in the future. If we were to experience an interruption
or reduction in the availability of our bonding capacity as a result of these or any other reasons, or if bonding costs were to
increase, we may be unable to compete for certain projects that require bonding, which would materially and adversely affect our
financial condition, results of operations or liquidity.

Our business is seasonal and subject to adverse weather conditions, which can adversely impact our business.

Our construction operations occur outdoors. As a result, seasonal changes and adverse weather conditions can adversely affect our
business operations through a decline in both the use and production of HMA, a decline in the demand for our construction
services and alterations and delays in our construction schedules. Adverse weather conditions, such as extended snowy, rainy or
cold weather in the winter, spring or fall can reduce demand for our products and reduce sales or render our contracting operations
less efficient, resulting in under-utilization of crews and equipment and lower contract profitability. Major weather events, such as
hurricanes, tornadoes, tropical storms and heavy snows, could also adversely affect our revenues and profitability.

We depend on information technology, and our systems and infrastructure face certain risks, including cybersecurity risks and
data leakage risks.

We are dependent on information technology systems and infrastructure that could be damaged or interrupted by a variety of
factors. Any significant breach, breakdown, destruction or interruption of these systems by employees, others with authorized
access to our systems or unauthorized persons has the potential to negatively affect our operations. There is also a risk that we
could experience a business interruption, theft of information or reputational damage as a result of a cyberattack, such as the
infiltration of a data center, or data leakage of confidential information either internally or at our third-party providers. Although
we have invested in the protection of our data and information technology to reduce these risks and periodically test the security of
our information systems network, there can be no assurance that our efforts will prevent breakdowns or breaches in our systems
that could have a material adverse effect on our financial condition, results of operations and liquidity.

Design-build contracts subject us to the risk of design errors and omissions.

Design-build contracts are used as a method of project delivery that provides the owner with a single point of responsibility for
both design and construction. We generally subcontract design responsibility to architectural and engineering firms. However, in
the event of a design error or omission that causes damages, there is a risk that the subcontractor and/or its errors and omissions
insurance would not be able to absorb the full amount of the liability incurred. In this case, we may be responsible for the liability,
resulting in a potentially material adverse effect on our financial position, results of operations, cash flows and liquidity.

Our continued success requires us to hire, train and retain qualified personnel and subcontractors in a competitive industry.

The success of our business depends upon our ability to attract, train and retain qualified, reliable personnel, including, but not
limited to, our executive officers and key management personnel. Additionally, the successful operation of our business depends
upon engineers, project management personnel, other employees and qualified subcontractors who possess the necessary and
required experience and expertise and who will perform their respective services at a reasonable and competitive rate. Competition
for these and other experienced personnel is intense, and it may be difficult to attract and retain qualified individuals with the
requisite expertise and in the timeframe demanded by our clients. In certain geographic areas, for example, we may not be able to
satisfy the demand for our services because of our inability to successfully hire, train and retain qualified personnel. Also, it could
be difficult to replace personnel who hold government-granted eligibility that may be required to obtain certain government
projects and/or who have significant government contract experience.

As some of our executives and other key personnel approach retirement age, we must provide for smooth transitions, which may
require that we devote time and resources to identify and integrate new personnel into vacant leadership roles and other key

positions. If we are unable to attract and retain a sufficient number of skilled personnel or effectively implement appropriate
succession plans, our ability to pursue projects and our strategic plan may be adversely affected, the costs of executing both our
existing and future projects may increase and our financial performance may decline.

In addition, the cost of providing our services, including the extent to which we utilize our workforce, affects our profitability. For
example, the uncertainty of contract award timing can present difficulties in matching our workforce size with our contracts. If an
expected contract award is delayed or not received, we could incur costs resulting from excess staff or redundancy of facilities that
could have a material adverse impact on our business, financial condition and results of operations.

We depend on third parties for equipment and supplies essential to operate our business.

We rely on third parties to sell or lease properties, plants and equipment to us and to provide us with supplies, including liquid
asphalt cement, aggregates and other construction materials (such as stone, gravel and sand), necessary for our operations. We
cannot assure you that our favorable working relationships with our suppliers will continue in the future. In addition, there have
historically been periods of supply shortages in our industry.

The inability to purchase or lease the properties, plants or equipment that are necessary for our operations could severely impact
our business. If we lose our supply contracts and receive insufficient supplies from third parties to meet our customers’ needs, or if
our suppliers experience price increases or disruptions to their business, such as labor disputes, supply shortages or distribution
problems, our business, financial condition, results of operations, liquidity and cash flows could be materially and adversely
affected.

We consume natural gas, electricity, diesel fuel, liquid asphalt and other petroleum-based resources that are subject to potential
reliability issues, supply constraints and significant price fluctuations, which could have a material adverse effect on our
financial condition, results of operations and liquidity.

In our production and distribution processes, we consume significant amounts of natural gas, electricity, diesel fuel, liquid asphalt
and other petroleum-based resources. The availability and pricing of these resources are subject to market forces that are beyond
our control, such as unavailability due to refinery turnarounds, higher prices charged for petroleum-based products, and other
factors. Furthermore, we are vulnerable to any reliability issues experienced by our suppliers, which also are beyond our control.
Our suppliers contract separately for the purchase of such resources, and our sources of supply could be interrupted if our suppliers
are unable to obtain these materials due to higher demand or other factors that interrupt their availability. Additionally, increases in
the costs of fuel and other petroleum-based products utilized in our operations, particularly increases following a bid based on
lower costs for such products, could result in a lower profit, or a loss, on a contract. Variability in the supply and prices of these
resources could have a material adverse effect on our financial condition, results of operations and liquidity.

Our contract backlog is subject to reductions in scope and cancellations and therefore could be an unreliable indicator of our
future earnings.

At September 30, 2018, our contract backlog was $594.4 million, compared to $549.9 million at September 30, 2017. Our contract
backlog generally consists of construction projects for which we either have an executed contract or commitment with a client or
where we are the current low bid. Contract backlog does not include external sales of HMA and aggregates. Moreover, our
contract backlog reflects our expected revenues from the contract, commitment or bid, which is often subject to revision over time.
We cannot guarantee that the revenues projected in our contract backlog will be realized or, if realized, will be profitable. Projects
reflected in our contract backlog may be affected by project cancellations, scope adjustments, time extensions or other changes.
Such changes may adversely affect the revenues and profit we ultimately realize on these projects.

Failure of our subcontractors to perform as expected could have a negative impact on our results.

We rely on third-party subcontractors to perform some of the work on many of our contracts, but we are ultimately responsible for
the successful completion of their work. Although we seek to require bonding or other forms of guarantees from our
subcontractors, we are not always able to obtain such bonds or guarantees. In situations where we are unable to obtain a bond or
guarantee, we may be responsible for the failures on the part of our subcontractors to perform as anticipated, resulting in a
potentially adverse impact on our cash flows and liquidity. In addition, if the total costs of a project exceed our original estimates,
we could experience reduced profits or a loss for that project, which could have an adverse impact on our financial position, results
of operations, cash flows and liquidity.

The construction services industry is highly schedule-driven, and our failure to meet the schedule requirements of our
contracts could adversely affect our reputation and/or expose us to financial liability.

In some instances, including in the case of many of our fixed unit price contracts, we guarantee that we will complete a project by
a certain date. Any failure to meet contractual schedule or completion requirements set forth in our contracts could subject us to
responsibility for costs resulting from the delay, generally in the form of contractually agreed-upon liquidated damages, liability
for our customer’s actual costs arising out of our delay, reduced profits or a loss on that project, damage to our reputation and a
material adverse impact to our financial position, results of operations, cash flows and liquidity.

Increasing restrictions on securing aggregate reserves could have a negative impact on our future results of operations.

Increasingly strict regulations and the limited nature of properties containing useful aggregate reserves have made it increasingly
challenging and costly to obtain aggregate reserves. Although we have been able to obtain adequate reserves to support our
business in the past, our financial position, results of operations, cash flows and liquidity may be adversely affected by
increasingly strict regulations.

Force majeure events, such as natural disasters and terrorist attacks, and unexpected equipment failures could negatively
impact our business, which may affect our financial condition, results of operations or cash flows.

Force majeure events, such as terrorist attacks or natural disasters, have impacted, and could continue to negatively impact, the
United States economy and the markets in which we operate. As an example, from time to time, we face unexpected severe
weather conditions, evacuation of personnel and curtailment of services, increased labor and material costs or shortages, inability
to deliver materials, equipment and personnel to work sites in accordance with contract schedules and loss of productivity. We
seek to include language in our private client contracts that grants us certain relief in connection with force majeure events, and we
attempt to mitigate the potential impact arising from force majeure events in both public and private client contracts. However, the
extra costs incurred as a result of these events may not be reimbursed by our clients, and we remain obligated to perform our
services after most extraordinary events, subject to any relief that may be available pursuant to a force majeure clause.

Additionally, our manufacturing processes are dependent upon critical pieces of equipment, such as our HMA plants. This
equipment, on occasion, may be out of service as a result of unanticipated failures or damage. Any significant interruption in
production capability may require us to make significant capital expenditures to remedy problems or damage and cause us to lose
revenues due to lost production time.

These force majeure events may affect our operations or those of our customers or suppliers and could impact our revenues,
production capability and ability to complete contracts in a timely manner.

A failure to obtain or maintain adequate insurance coverage could adversely affect our results of operations.

As part of our overall risk management strategy and pursuant to requirements to maintain specific coverage that are contained in
our financing agreements and in a majority of our contracts, we have obtained and maintain insurance coverage.

Although we have been able to obtain reasonably priced insurance coverage to meet our requirements in the past, there is no
assurance that we will be able to do so in the future. For example, catastrophic events can result in decreased coverage limits, more
limited coverage, and increased premium costs or deductibles. If we are unable to obtain adequate insurance coverage, we may not
be able to procure certain contracts, which could materially adversely affect our financial position, results of operations, cash flows
or liquidity.

We could incur material costs and losses as a result of claims that our products do not meet regulatory requirements or
contractual specifications.

We provide our customers with products designed to comply with building codes or other regulatory requirements, as well as any
applicable contractual specifications, including, but not limited to, durability, compressive strength and weight-bearing capacity. If
our products do not satisfy these requirements and specifications, material claims may arise against us, our reputation could be
damaged and, if any such claims are for an uninsured, non-indemnified or product-related claim, resolution of such claim against
us could have a material adverse effect on our financial condition, results of operations or liquidity.

Environmental, health and safety laws and regulations and any changes to, or liabilities arising under, such laws and
regulations could have a material adverse effect on our financial condition, results of operations and liquidity.

Our operations are subject to stringent and complex federal, state and local laws and regulations governing the discharge of
materials into the environment or otherwise relating to environmental protection and public health and safety. These laws and
regulations impose numerous obligations applicable to our operations, including: a requirement to obtain a permit or other
approval before conducting regulated activities; restrictions on the types, quantities and concentration of materials that can be
released into the environment; limitation or prohibition of activities on certain lands lying within wilderness, wetlands, and other
protected areas; application of specific health and safety criteria addressing worker protection; and imposition of substantial
liabilities for pollution resulting from our operations. Numerous government authorities, such as the U.S. Environmental
Protection Agency (the “EPA”) and analogous state agencies, have the power to enforce compliance with these laws and
regulations and the permits issued under them. Such enforcement actions often involve difficult and costly compliance measures or
corrective actions. Failure to comply with these laws and regulations may result in the assessment of sanctions, including
administrative, civil or criminal penalties, compensatory damages, the imposition of investigatory or remedial obligations, and the
issuance of orders limiting or prohibiting some or all of our operations. In addition, we may experience delays in obtaining, or be
unable to obtain, required permits, which may delay or interrupt our operations and limit our growth and revenue.

Certain environmental laws impose strict liability (i.e., no showing of “fault” is required) or joint and several liability for costs
required to remediate and restore sites where hazardous substances, hydrocarbons or solid wastes have been stored or released. We
may be required to remediate contaminated properties currently or formerly owned or operated by us or third-party facilities that
received waste generated by our operations, regardless of whether such contamination resulted from the conduct of others or from
the consequences of our own actions that were in compliance with all applicable laws at the time those actions were taken. In
connection with certain acquisitions, we could assume, or be required to provide indemnification against, environmental liabilities
that could expose us to material losses. Furthermore, the existence of contamination at properties we own, lease or operate could
result in increased operational costs or restrictions on our ability to use those properties as intended, including for mining
purposes.

In certain instances, citizen groups also have the ability to bring legal proceedings against us if we are not in compliance with
environmental laws, or to challenge our ability to receive environmental permits that we need to operate. In addition, claims for
damages to persons or property, including natural resources, may result from the environmental, health and safety impacts of our
operations. Our insurance may not cover all environmental risks and costs or may not provide sufficient coverage if an
environmental claim is made against us. Moreover, public interest in the protection of the environment has increased dramatically
in recent years. The trend of more expansive and stringent environmental legislation and regulations applied to our industry could
continue, resulting in increased costs of doing business and, consequently, affecting profitability.

The risks associated with climate change, as well as climate change legislation and regulations, could adversely affect our
operations and financial condition.

The physical risks of climate change, such as more frequent or more extreme weather events, changes in temperature and
precipitation patterns, changes to ground and surface water availability and other related phenomena, could affect some, or all, of
our operations. Severe weather or other natural disasters could be destructive, which could result in increased costs, including
supply chain costs.

In addition, a number of governmental bodies have finalized, proposed or are contemplating legislative and regulatory actions in
response to growing concerns about climate change. In recent years, federal, state and local governments have taken steps to
reduce emissions of greenhouse gases. The EPA has finalized a series of greenhouse gas monitoring, reporting and emissions
control rules for certain large sources of greenhouse gases, and the U.S. Congress has, from time to time, considered adopting
legislation to reduce greenhouse gas emissions. Nearly half of the states have already taken measures to reduce greenhouse gas
emissions, primarily through the development of greenhouse gas emission inventories and/or regional greenhouse gas cap-and-
trade programs. Whether or not the United States participates in international commitments to reduce greenhouse gas emissions at
the federal level, many state and local officials have announced their commitment to upholding such commitments.

Although it is not possible at this time to predict how future legislation or regulations to address greenhouse gas emissions would
impact our business, any such laws and regulations imposing reporting obligations on, or limiting emissions of greenhouse gases
from, our equipment and operations, could require us to incur costs to reduce greenhouse gas emissions associated with our
operations. Because we emit greenhouse gases through the manufacture of HMA products and through the combustion of fossil
fuels as part of our mining and road construction services, such laws and regulations could have a material adverse effect on our
operating results and financial condition.

Our operations are subject to special hazards that may cause personal injury or property damage, subjecting us to liabilities
and possible losses that may not be covered by insurance.

Operating hazards inherent in our business, some of which may be outside our control, can cause personal injury and loss of life,
damage to or destruction of property, plant and equipment and environmental damage. We maintain insurance coverage in amounts
and against risks that we believe are consistent with industry practice, but this insurance may be inadequate or unavailable to cover
all losses or liabilities we may incur in our operations. Our insurance policies are subject to varying levels of deductibles. Losses
up to our deductible amounts are accrued based upon our estimates of the ultimate liability for claims incurred and an estimate of
claims incurred but not reported. However, liabilities subject to insurance are difficult to estimate due to unknown factors,
including the severity of an injury, the determination of our liability in proportion to other parties, the number of unreported
incidents and the effectiveness of our safety programs. If we were to experience insurance claims or costs above our estimates, we
may be required to use working capital to satisfy these claims rather than using working capital to maintain or expand our
operations.

Our substantial indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligations.

Construction Partners Holdings, Inc. (“Construction Partners Holdings”), our wholly owned subsidiary, is party to a credit
agreement with Compass Bank, as agent, sole lead arranger and sole bookrunner (as amended, the “Compass Credit Agreement”).
The Compass Credit Agreement provides for a $72.0 million term loan (the “Compass Term Loan”) and a $30.0 million revolving
credit facility (the “Compass Revolving Credit Facility”). We guarantee the obligations under the Term Loan and the Revolving
Credit Facility. A significant portion of our cash flow will be required to pay interest and principal on our outstanding
indebtedness, and we may be unable to generate sufficient cash flow from operations, or have future borrowings available, to
enable us to repay our indebtedness or to fund other liquidity needs. This level of indebtedness could have important
consequences, including the following:

•

we may be required to use a significant percentage of our cash flow from operations for debt service and the
repayment of our indebtedness, and any such cash flow would not be available for other purposes;

our ability to borrow money or issue equity to fund our working capital, capital expenditures, acquisitions and debt
service requirements may be limited;

our interest expense could increase if interest rates in general increase because a portion of our indebtedness bears
interest at floating rates;

our flexibility in planning for or reacting to changes in our business and future business opportunities may be limited;

we may be more highly leveraged than some of our competitors, which may place us at a competitive disadvantage;

we may be more vulnerable to a downturn in our business or the economy; and

our ability to exploit business opportunities may be limited.

Despite our substantial indebtedness, we and our subsidiaries may still be able to incur additional debt. This could reduce our
ability to satisfy our current obligations and further exacerbate the risks to our financial condition described above.

At September 30, 2018, we had $57.3 million outstanding under the Term Loan and $5.0 million outstanding under the Revolving
Credit Facility. In addition, we and our subsidiaries may be able to incur significant additional indebtedness in the future, and we
may do so, among other reasons, to fund acquisitions as part of our growth strategy. Although the Compass Credit Agreement
contains restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and
exceptions, and we could incur substantial additional indebtedness in compliance with these restrictions.

The Compass Credit Agreement restricts our ability and the ability of our subsidiaries to engage in some business and financial
transactions.

The Compass Credit Agreement contains a number of covenants that limit our ability and the ability of our subsidiaries to: incur
additional indebtedness or guarantees; create liens on assets; change our or our subsidiaries' fiscal year; enter into sale and
leaseback transactions; enter into certain restrictive agreements; engage in mergers or consolidations; participate in partnerships
and joint ventures; sell assets; incur additional liens; pay dividends or distributions and make other restricted payments; make
investments, loans or advances; repay or amend terms of subordinated indebtedness; make certain acquisitions; enter into certain
operating leases; enter into certain hedge transactions; amend material contracts; and engage in certain transactions with affiliates.

The Compass Credit Agreement also requires us to maintain a fixed charge coverage ratio and a consolidated leverage ratio and
contains certain customary representations and warranties, affirmative covenants and events of default (including, among others,
an event of default upon a change of control). If an event of default occurs, the lenders under the Compass Credit Agreement will
be entitled to take various actions, including the acceleration of amounts due thereunder and all actions permitted to be taken by a
secured creditor. Our failure to comply with our obligations under the Compass Credit Agreement may result in an event of default
under the Compass Credit Agreement. A default, if not cured or waived, may permit acceleration of our indebtedness. If our
indebtedness is accelerated, we cannot be certain that we will have sufficient funds available to pay the accelerated indebtedness or
that we will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all.

We may need to raise additional capital in the future for working capital, capital expenditures and/or acquisitions, and we may
not be able to do so on favorable terms or at all, which would impair our ability to operate our business or achieve our growth
objectives.

Our ongoing ability to generate cash is important for the funding of our continuing operations, making acquisitions and servicing
our indebtedness. To the extent that existing cash balances and cash flow from operations, together with borrowing capacity under
our Revolving Credit Facility, are insufficient to make investments or acquisitions or provide needed working capital, we may
require additional financing from other sources. Our ability to obtain such additional financing in the future will depend in part
upon prevailing capital market conditions, as well as conditions in our business and our operating results, and those factors may
affect our efforts to arrange additional financing on terms that are acceptable to us. Furthermore, if global economic, political or
other market conditions adversely affect the financial institutions that provide credit to us, it is possible that our ability to draw
upon our Revolving Credit Facility may be impacted. If adequate funds are not available, or are not available on acceptable terms,
we may not be able to make future investments, take advantage of acquisitions or other opportunities, or respond to competitive
challenges, resulting in loss of market share, each of which could have a material adverse impact on our financial position, results
of operations, cash flows and liquidity.

We may be unable to identify and contract with qualified Disadvantaged Business Enterprise contractors to perform as
subcontractors.

Some of our contracts with governmental agencies contain minimum Disadvantaged Business Enterprise (“DBE”) participation
clauses, which require us to maintain a requisite level of DBE participation. If we fail to obtain or maintain such requisite level of
DBE participation, we could be held responsible for breach of contract. Such breach may result in the placement of restrictions on
our ability to bid on future projects as well as monetary damages. To the extent we are responsible for monetary damages, the total
costs of the project could exceed our original estimates, we could experience reduced profits or a loss for that project and there
could be a material adverse impact to our financial position, results of operations, cash flows or liquidity.

Failure to maintain safe work sites could result in significant losses, which could materially affect our business and reputation.

Because our employees and others are often in close proximity with mechanized equipment, moving vehicles, chemical substances
and dangerous manufacturing processes, our construction and maintenance sites are potentially dangerous workplaces. Therefore,
safety is a primary focus of our business and is critical to our reputation and performance. Many of our clients require that we meet
certain safety criteria to be eligible to bid on contracts, and some of our contract fees or profits are subject to satisfying safety
criteria. Unsafe work conditions also can increase employee turnover, which increases project costs and therefore our overall
operating costs. If we fail to implement safety procedures or implement ineffective safety procedures, our employees could be
injured, and we could be exposed to investigations and possible litigation. Our failure to maintain adequate safety standards
through our safety programs could also result in reduced profitability or the loss of projects or clients, and could have a material
adverse impact on our financial position, results of operations, cash flows or liquidity.

In connection with acquisitions, we have recorded goodwill that could become impaired and adversely affect our operating
results. Assessing whether impairment has occurred requires us to make significant judgments and assumptions about the
future, which are inherently subject to risks and uncertainties, and if actual events turn out to be materially less favorable than
the judgments we make and the assumptions we use, we may be required to record impairment charges in the future.

At September 30, 2018 and September 30, 2017, we had $32.9 million and $30.6 million, respectively, of goodwill recorded on
our Consolidated Balance Sheets. We assess goodwill for impairment annually or more often if required. Our assessments involve
a number of estimates and assumptions that are inherently subjective and require significant judgment regarding highly uncertain
matters that are subject to change. The use of different assumptions or estimates could materially affect the determination as to
whether or not an impairment has occurred. In addition, if future events are less favorable than what we assumed or estimated in
our impairment analysis, we may be required to record an impairment charge, which could have a material impact on our
consolidated financial statements.

Our earnings are affected by the application of accounting standards and our critical accounting policies, which involve
subjective judgments and estimates by our management. Our actual results could differ from the estimates and assumptions
used to prepare our consolidated financial statements.

The accounting standards we use in preparing our financial statements are often complex and require that we make significant
estimates and assumptions in interpreting and applying those standards. These estimates and assumptions affect the reported values
of assets, liabilities, revenues and expenses, and the disclosure of contingent liabilities. We make critical estimates and
assumptions involving accounting matters, including our revenue recognition, contracts receivable including retainage, valuation
of long-lived assets and goodwill, income taxes, accrued insurance costs and share-based payments and other equity transactions.
These estimates and assumptions involve matters that are inherently uncertain and require us to make subjective and complex
judgments. If we used different estimates and assumptions or used different ways to determine these estimates, our financial
results could differ.

Our actual business and financial results could differ from our estimates of such results, which could have a material negative
impact on our financial condition and reported results of operations. See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Critical Accounting Policies and Estimates.”

The percentage-of-completion method of accounting for contract revenues involves significant estimates that may result in
material adjustments, which could result in a charge against our earnings.

We recognize contract revenues using the percentage-of-completion accounting method. Under this method, revenues are
recognized as costs are incurred in an amount equal to cost plus the related expected profit based on the ratio of costs incurred to
estimated final costs. Contract costs consist of direct costs on contracts, including labor, materials, amounts payable to
subcontractors and those indirect costs related to contract performance, such as equipment costs, insurance and employee benefits.
Contract cost is recorded as incurred, and revisions in contract revenues and cost estimates are reflected in the accounting period
when known. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are
determined. Changes in job performance, job conditions and estimated profitability, including those changes arising from contract
change orders, penalty provisions and final contract settlements, may result in revisions to costs and income and are recognized in
the period in which the revisions are determined. Provisions for estimated losses on uncompleted contracts are made in the period
in which such losses are determined. Estimated contract losses are recognized in full when determined. Total contract revenues and
cost estimates are reviewed and revised at a minimum on a quarterly basis as the work progresses and as change orders are
approved. Adjustments based upon the percentage-of-completion method are reflected in contract revenues in the period when
these estimates are revised. To the extent that these adjustments result in an increase or a reduction in or an elimination of
previously reported contract profit, we recognize a credit or a charge against current earnings, as applicable. Such credits or
charges could be material and could cause our results to fluctuate materially from period to period.

Accounting for our contract-related revenues and costs, as well as other expenses, requires management to make a variety of
significant estimates and assumptions. Although we believe we have the experience and processes to enable us to formulate
appropriate assumptions and produce reasonably dependable estimates, these assumptions and estimates may change significantly
in the future and could result in the reversal of previously recognized revenues and profit. Such changes could have a material
adverse effect on our financial position and results of operations.

Risks Related to Ownership of Our Class A Common Stock

The dual class structure of our common stock has the effect of concentrating voting control with SunTx and its affiliates,
which limits your ability to influence corporate matters.

Our Class B common stock has ten votes per share, and our Class A common stock has one vote per share. As of December 10,
2018, holders of our Class B common stock, including SunTx, its affiliates and certain other stockholders, together hold
approximately 97.1% of the voting power of our outstanding common stock. Because of the ten-to-one voting ratio between our
Class B common stock and our Class A common stock, the holders of our Class B common stock collectively control a majority of
the combined voting power of our common stock and therefore control the outcome of all matters submitted to our stockholders.
This concentrated control limits or precludes your ability to influence corporate matters for the foreseeable future.

Future transfers of shares of our Class B common stock generally will result in those shares converting into shares of our Class A
common stock, subject to limited exceptions, such as certain transfers to permitted transferees. The conversion of shares of our
Class B common stock into our Class A common stock will have the effect, over time, of increasing the relative voting power of
each individual holder of shares of our Class B common stock who retain their shares in the long-term.

We have incurred, and expect to continue to incur, substantial costs as a result of being a public company, which may
significantly affect our financial condition.

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company,
including costs associated with our public company reporting requirements. We also incur costs associated with corporate
governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and the
Dodd-Frank Act of 2010 and rules implemented by the SEC. We expect these rules and regulations to increase our legal and
financial compliance costs and to make some activities more time-consuming and costly, particularly after we are no longer an
“emerging growth company” under the JOBS Act. For example, as a result of becoming a publicly traded company, we are
required to adopt policies regarding internal controls and disclosure controls and procedures, including the preparation of reports
on internal control over financial reporting. We also expect these rules and regulations may make it more difficult and more
expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and
coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to
attract and retain qualified individuals to serve on our board of directors or as executive officers.

After we are no longer an emerging growth company, we expect to incur significant additional expenses and devote substantial
management effort toward ensuring compliance with those requirements applicable to companies that are not emerging growth
companies, including Section 404 of the Sarbanes-Oxley Act ("Section 404").

For so long as we are an “emerging growth company,” we will not be required to comply with certain disclosure requirements
that are applicable to other public companies, and the reduced disclosure requirements applicable to emerging growth
companies could make our Class A common stock less attractive to investors.

We are an “emerging growth company” (as defined in the Jumpstart Our Business Startups Act (the "JOBS Act"), and we intend to
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including,
but not limited to, not being required to comply with the auditor attestation requirements of Section 404, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. We cannot predict whether investors will find our Class A common stock less attractive because we rely
on these exemptions. If some investors find our Class A common stock less attractive as a result, there may be a less active trading
market for our Class A common stock, and our Class A common stock price may be more volatile.

We will remain an emerging growth company until the earliest to occur of (i) the last day of the fiscal year during which our total
revenues equals or exceeds $1.07 billion, (ii) September 30, 2023, which is the last day of the fiscal year following the fifth
anniversary of our initial public offering, (iii) the date on which we have, during the previous three-year period, issued more than
$1.0 billion in non-convertible debt securities and (iv) the date on which we are deemed to be a “large accelerated filer” under the
Exchange Act.

We are subject to certain requirements of Section 404 beginning in fiscal year 2019. If we are unable to timely comply with
such requirements or if the costs related to compliance are significant, our profitability, stock price, results of operations and
financial condition could be materially adversely affected.

We are required to comply with certain provisions of Section 404, which requires that we document and test our internal control
over financial reporting and issue management’s assessment of our internal control over financial reporting beginning with the
fiscal year ending September 30, 2019. Section 404 also requires that our independent registered public accounting firm opine on
those internal controls upon becoming an accelerated filer, as defined in the SEC rules, or otherwise ceasing to qualify for an
exemption from the requirement to provide auditors’ attestation on internal controls afforded to emerging growth companies under
the JOBS Act.

We believe that the out-of-pocket costs, the diversion of management’s attention from running the day-to-day operations and
operational changes caused by the need to comply with the requirements of Section 404 could be significant. If the time and costs
associated with such compliance exceed our current expectations, our results of operations could be adversely affected.

We cannot be certain at this time that we will be able to successfully complete the procedures, certification and attestation
requirements of Section 404 or that we or our auditors will not identify further material weaknesses in our internal control over
financial reporting. If we fail to comply with such requirements, or if at any time after becoming a public company, we or our
auditors identify and report any material weaknesses, the accuracy and timeliness of the filing of our annual and quarterly reports
may be materially adversely affected and could cause investors to lose confidence in our reported financial information, which
could have a negative effect on the trading price of our Class A common stock. In addition, a material weakness in the
effectiveness of our internal control over financial reporting could result in an increased chance of fraud and the loss of customers,
reduce our ability to obtain financing, subject us to investigations by the SEC or other regulatory authorities and require additional
expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of
operations and financial condition.

We have identified material weaknesses in our internal control over financial reporting, and if we are unable to achieve and
maintain effective internal control over financial reporting, investors could lose confidence in our consolidated financial
statements and our Company, which could have a material adverse effect on our business and our stock price.

In the course of preparing the financial statements for the fiscal years ended September 30, 2018 and 2017, our management
determined that we have material weaknesses in our internal control over financial reporting, which relate to the design and
operation of our information technology general controls and overall closing and financial reporting controls, including our
accounting for significant and unusual transactions. We have concluded that these material weaknesses in our internal control over
financial reporting are primarily due to the fact that we have historically operated as a private company with limited resources and
had neither formally designed and implemented the necessary business processes and related internal controls nor employed
personnel with the appropriate level of experience and technical expertise to oversee (i) our business processes and controls
surrounding information technology general controls, (ii) our closing and financial reporting processes, or (iii) the accounting and
financial reporting requirements related to significant and unusual transactions.

As a result of these material weaknesses, we have initiated and will continue to implement remediation measures including, but not
limited to: (i) hiring additional accounting staff members to augment our current staff and to improve the effectiveness of our
financial period close and reporting processes; (ii) engaging a third party to assist us in complying with the accounting and
financial reporting requirements related to significant and unusual transactions; (iii) engaging a third party to assist us in
identifying and implementing the business processes and controls surrounding information technology general controls; and (iv)
engaging a third party to assist us with formalizing our business processes, accounting policies and internal control documentation,
strengthening supervisory reviews by our management, and evaluating the effectiveness of our internal controls in accordance with
the framework established by Internal Control - Integrated Framework (2013) published by the Committee of Sponsoring
Organizations of the Treadway Commission.

If we fail to fully remediate these material weaknesses or fail to maintain effective internal controls in the future, it could result in
a material misstatement of our consolidated financial statements that would not be prevented or detected on a timely basis, which
could cause investors to lose confidence in our financial information or cause the trading price of our Class A common stock to
decline. Our independent registered public accounting firm has not assessed the effectiveness of our internal control over financial
reporting and, under the JOBS Act, will not be required to provide an attestation report on the effectiveness of our internal control
over financial reporting so long as we qualify as an emerging growth company, which may increase the risk that weaknesses or
deficiencies in our internal control over financial reporting go undetected.

If the price of our Class A common stock fluctuates significantly, your investment could lose value.

Prior to our initial public offering in May 2018, there was no public market for our Class A common stock. Although our Class A
common stock is listed on the Nasdaq Global Select Market, we cannot guarantee that an active public market will be maintained
for our Class A common stock. If an active public market for our Class A common stock is not maintained, the trading price and
liquidity of our Class A common stock will be materially and adversely affected. If there is a thin trading market or “float” for our
Class A common stock, the market price for our Class A common stock may fluctuate significantly more than the stock market as a
whole. Without a large float, our Class A common stock is less liquid than the securities of companies with broader public
ownership and, as a result, the trading prices of our Class A common stock may be more volatile. In addition, in the absence of an
active public trading market, investors may be unable to liquidate their investment in our Company at the times or prices they
desire. In addition, the stock market is subject to significant price and volume fluctuations, and the price of our Class A common
stock could fluctuate widely in response to several factors, including: our quarterly or annual operating results; investment
recommendations by securities analysts following our business or our industry; additions or departures of key personnel; changes
in the business, earnings estimates or market perceptions of our competitors; our failure to achieve operating results consistent
with securities analysts’ projections; changes in industry, general market or economic conditions; and announcements of legislative
or regulatory change.

The stock market has experienced substantial price and volume fluctuations in recent years that have significantly affected the
quoted prices of the securities of many companies, including companies in our industry. The changes often appear to occur without
regard to specific operating performance. The price of our Class A common stock could fluctuate based upon factors that have
little or nothing to do with our Company, and these fluctuations could materially reduce the price for our Class A common stock.

Future sales, or the perception of future sales, by us or our existing stockholders in the public market could cause the market
price for our Class A common stock to decline.

The sale of shares of our Class A common stock in the public market, or the perception that such sales could occur, could harm the
prevailing market price of shares of our Class A common stock. These sales, or the possibility that these sales may occur, also
might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

We have outstanding a total of 11,950,000 shares of our Class A common stock and 39,464,619 shares of our Class B common
stock that are convertible by the holders thereof at any time into an equal number of shares of our Class A common stock. Of the
outstanding shares, the 11,950,000 shares sold in the initial public offering are freely tradable without restriction or further
registration under the Securities Act of 1933, as amended (the "Securities Act"), except that certain shares held by our affiliates, as
that term is defined under Rule 144 of the Securities Act (“Rule 144”), including certain of our directors, executive officers and
other affiliates (including affiliates of SunTx) may be sold only in compliance with the provisions of Rule 144.

The 39,464,619 shares of our Class B common stock, representing 76.8% of our total outstanding shares of our common stock at
December 10, 2018, are “restricted securities” within the meaning of Rule 144 and may be sold in the public market only if they
are registered under the Securities Act or are sold pursuant to an exemption from registration such as Rule 144.

Pursuant to a registration rights agreement, SunTx and certain other stockholders have the right, subject to certain conditions, to
require us to register the sale of their shares of common stock under the Securities Act. By exercising their registration rights and
selling a large number of shares, these stockholders could cause the prevailing market price of our Class A common stock to
decline. Shares covered by registration rights represented approximately 75.9% of our total outstanding common stock as of
December 10, 2018. Registration of any of these outstanding shares of common stock would result in such shares becoming freely
tradable without compliance with Rule 144 upon effectiveness of the registration statement.

If these stockholders exercise their registration rights, the market price of the shares of our Class A common stock could drop
significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could
also make it more difficult for us to raise additional funds through future offerings of our Class A common stock or other
securities.

In the future, we may also issue our securities in connection with offerings or acquisitions. The number of shares of our Class A
common stock issued in connection with offerings or acquisitions could constitute a material portion of the then-outstanding shares
of our Class A common stock. Any issuance of additional securities in connection with offerings or acquisitions would result in
additional dilution to holders of our Class A common stock.

Affiliates of SunTx control us, and their interests may conflict with ours or yours in the future.

As of December 10, 2018, affiliates of SunTx beneficially owned 88.8% of our Class B common stock, representing 86.2% of the
combined voting power of our common stock. Each share of our Class B common stock has ten votes per share, and each share of
our Class A common stock has one vote per share. As a result, affiliates of SunTx have the ability to elect all of the members of
our board of directors and thereby control our policies and operations, including the appointment of management, future issuances
of our Class A common stock or other securities, the payment of dividends, if any, on our Class A common stock, the incurrence of
debt by us, amendments to our amended and restated certificate of incorporation and amended and restated bylaws, and the
Company's entry into extraordinary transactions. This concentration of voting control could deprive you of an opportunity to
receive a premium for your shares of our Class A common stock as part of a sale of our Company and ultimately might affect the
market price of our Class A common stock. In addition, we have engaged, and expect to continue to engage, in related party
transactions involving SunTx and certain companies they control. As a result, the interests of affiliates of SunTx may not in all
cases be aligned with your interests.

In addition, SunTx may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could
enhance its investment, even though such transactions might involve risks to you. For example, SunTx could cause us to make
acquisitions that increase our indebtedness or cause us to sell revenue-generating assets. SunTx is in the business of making
investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly
with us. Our amended and restated certificate of incorporation provides that none of SunTx, any of its affiliates or any director
who is not employed by us or his or her affiliates will have any duty to refrain from engaging, directly or indirectly, in the same
business activities or similar business activities or lines of business in which we operate. SunTx also may pursue acquisition
opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to
us.

So long as SunTx and its affiliates continue to beneficially own a sufficient number of shares of our Class B common stock, they
will continue to be able to effectively control our decisions. For example, if our Class B common stock amounted to 15% of our
outstanding common stock, holders of our Class B common stock (including SunTx and its affiliates) would collectively control
approximately 63.8% of the voting power of our common stock based on the number of shares of Class A and Class B common
stock outstanding at December 10, 2018. Shares of our Class B common stock may be transferred to an unrelated third party if a
majority of the shares of our Class B common stock held by SunTx and its affiliates have consented to such transfer in writing in
advance.

If securities or industry analysts do not publish research or reports about our business, if they adversely change their
recommendations regarding our Class A common stock or if our operating results do not meet their expectations, the price of
our Class A common stock could decline.

The trading market for our Class A common stock is influenced by the research and reports that industry or securities analysts
publish about us or our business. If one or more of these analysts cease coverage of our Company or fail to publish reports on us
regularly, we could lose visibility in the financial markets, which in turn could cause the price or trading volume of our Class A
common stock to decline. Moreover, if one or more of the analysts who cover our Company downgrades our Class A common
stock or if our operating results do not meet their expectations, the price of our Class A common stock could decline.

We may issue preferred stock with terms that could adversely affect the voting power or value of our Class A common stock.

Our amended and restated certificate of incorporation authorizes us to issue, without the approval of our stockholders, one or more
classes or series of preferred stock having such designations, preferences, limitations and relative rights, including preferences
over our Class A common stock with respect to dividends and distributions, as our board of directors may determine. The terms of
one or more classes or series of preferred stock could adversely impact the voting power or value of our Class A common stock.
For example, we might grant holders of preferred stock the right to elect some number of our directors in all events or upon the
happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or
liquidation preferences we might assign to holders of preferred stock could affect the residual value of our Class A common stock.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws and Delaware corporate
law make it more difficult to effect a change in control of our Company, which could adversely affect the price of our Class A
common stock.

Certain provisions in our amended and restated certificate of incorporation and amended and restated bylaws and Delaware
corporate law could delay or prevent a change in control of our Company, even if that change would be beneficial to our
stockholders. Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may
make acquiring control of our Company difficult, including:

•

a dual class common stock structure, which currently provides SunTx and its affiliates and the other holders of our
Class B common stock with the ability to control the outcome of matters requiring stockholder approval, so long as
they continue to beneficially own a sufficient number of shares of our Class B common stock, even if they own
significantly less than 50% of the shares of our outstanding common stock;

a classified board of directors with three-year staggered terms;

provisions regulating the ability of our stockholders to nominate directors for election or to bring matters for action at
annual meetings of our stockholders;

limitations on the ability of our stockholders to call a special meeting;

the ability of our board of directors to adopt, amend or repeal bylaws, and the requirement that the affirmative vote of
holders representing at least 66 2/3% of the voting power of all outstanding shares of capital stock be obtained for
stockholders to amend our amended and restated bylaws;

the requirement that the affirmative vote of holders representing at least 66 2/3% of the voting power of all
outstanding shares of capital stock be obtained to remove directors;

the requirement that the affirmative vote of holders representing at least 66 2/3% of the voting power of all
outstanding shares of capital stock be obtained to amend our amended and restated certificate of incorporation; and

the authorization given to our board of directors to issue and set the terms of preferred stock without the approval of
our stockholders.

These provisions also could discourage proxy contests and make it more difficult for you and other stockholders to elect directors
and take other corporate actions. As a result, these provisions could make it more difficult for a third party to acquire us, even if
doing so would benefit our stockholders, which may limit the price that investors are willing to pay in the future for shares of our
Class A common stock.

Our amended and restated certificate of incorporation designates courts in the State of Delaware as the sole and exclusive
forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our
stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.

Our amended and restated certificate of incorporation provides that, subject to limited exceptions, a state court located within the
State of Delaware is the sole and exclusive forum for:

•

any derivative action or proceeding brought on our behalf;

any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers or other employees to
us or our stockholders;

any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law
(the “DGCL”); or

any action asserting a claim against us that is governed by the internal affairs doctrine.

In addition, our amended and restated certificate of incorporation provides that if any action specified above (each is referred to
herein as a covered proceeding), is filed in a court other than a court located within the State of Delaware (each is referred to
herein as a foreign action), the claiming party will be deemed to have consented to (i) the personal jurisdiction of state and federal
courts located within the State of Delaware in connection with any action brought in any such court to enforce the exclusive forum
provision described above and (ii) having service of process made upon such claiming party in any such enforcement action by
service upon such claiming party’s counsel in the foreign action as agent for such claiming party.

These provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or
our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and
employees. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation
inapplicable to, or unenforceable in respect of, one or more of the covered proceedings, we may incur additional costs associated
with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

Because we are a “controlled company” under the listing standards of The Nasdaq Stock Market LLC and the rules of the
SEC, our stockholders do not have, and may never have, certain corporate governance protections that are available to
stockholders of companies that are not controlled companies.

SunTx and its affiliates control a majority of the voting power of our outstanding common stock. As a result, we are a “controlled
company” under the listing standards of The Nasdaq Stock Market LLC and SEC rules. As a result, we are not required to comply
with certain provisions requiring that (i) a majority of our directors be independent, (ii) the compensation of our executives be
determined by independent directors or (iii) nominees for election to our board of directors be selected by independent directors.
Because we intend to take advantage of some or all of these exemptions, our stockholders may not have the protections that these
rules are intended to provide. Our status as a controlled company could cause our Class A common stock to be less attractive to
certain investors or otherwise reduce the trading price of our Class A common stock.

We do not intend to pay cash dividends on our Class A common stock in the foreseeable future, and therefore only
appreciation, if any, of the price of our Class A common stock will provide a return to our stockholders.

We currently anticipate that we will retain all future earnings, if any, to finance the growth and development of our business. We
do not intend to pay cash dividends on our Class A common stock in the foreseeable future. Any future determination as to the
declaration and payment of cash dividends will be at the discretion of our board of directors and will depend upon our financial
condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors deemed relevant
by our board of directors. In addition, the Compass Credit Agreement restricts our ability to pay cash dividends. As a result, only
appreciation of the price of our Class A common stock, which may not occur, will provide a return to our stockholders.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our headquarters are located in a 7,000 square foot owned office space in Dothan, Alabama. At September 30, 2018, we operated 30
HMA plants and had 30 office locations and nine quarries. We believe all of our properties are suitable for their intended use and that our
facilities are adequate to conduct our operations. However, we routinely evaluate the purchase or lease of additional properties or the
consolidation of our properties as our business needs change.

The following table sets forth certain information about our properties, including the type of property and the nature of our interest therein.

Property Location

Owned/Leased

Quarry

Plant

Office Space

Alabama

Andalusia

Ariton

Brantley

Calera

Clanton

Deatsville

Decatur

Dothan

Dothan (headquarters)

Ft. Payne

Gadsden

Guntersville

Headland

Huntsville

Lacon

Montgomery

Owens Cross Roads

Pelham

River Falls

Scottsboro

Shorter

Skyline

Florida

Freeport

Hosford

Panama City

Plant City

Tallahassee

Wildwood

—

Leased

Owned

Leased

Owned

Leased

Owned

Leased

Owned

Leased

Owned

Leased

Owned

Leased

Owned

Leased

Owned

Property Location

Owned/Leased

Quarry

Plant

Office Space

Georgia

Adel

Cochran

Hahira

Lenox

Meigs

Mount Vernon

Oak Park

Nashville

Surrency

North Carolina

Holly Springs

Kenly

Knightdale

Raleigh

Wake Forest

Leased

Owned

Leased

Owned

Leased

Owned

Leased

—

Item 3. Legal Proceedings.

Due to the nature of our business, we are involved in routine litigation or subject to other disputes or claims related to our business
activities, including workers’ compensation claims, employment-related disputes and liability issues or breach of contract or tortious
conduct in connection with the performance of services and provision of materials. We and our affiliates are also subject to government
inquiries in the ordinary course of business seeking information concerning our compliance with government construction contracting
requirements, the outcome of which cannot be predicted with certainty. In the opinion of our management, after consultation with legal
counsel, none of the pending litigation, disputes or claims against us, if decided adversely to us, would have a material adverse effect on
our financial condition, cash flows or results of operations.

Item 4. Mine Safety Disclosures.

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 C.F.R. Part 229.104) is included in Exhibit 95.1 to this Annual
Report on Form 10-K.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

From our inception in 2007 until April 2018, we maintained a single class of common stock. On April 23, 2018, we amended and
restated our certificate of incorporation to effectuate a dual-class equity structure, which we refer to as the “Reclassification.” The
Reclassification resulted in the conversion of each share of our then-outstanding common stock into 25.2 shares of Class B
common stock and the initial authorization of Class A common stock.

Market for Our Common Stock

Our Class A common stock is listed and trades on the Nasdaq Global Select Market under the symbol “ROAD.” Prior to its listing
on the Nasdaq Global Select Market on May 4, 2018, there was no established public trading market for our Class A common
stock. There is no established public trading market for our Class B common stock.

Holders

As of December 10, 2018, there were 11,950,000 shares of our Class A common stock outstanding, all of which were held in
"street name" through a single stockholder of record. The actual number of beneficial holders of our Class A common stock is
significantly greater than the number of record holders and includes stockholders who are beneficial owners, but whose shares are
held by banks, brokers and other nominees. The last sale price for a share of our Class A common stock as reported on the Nasdaq
Global Select Market on December 10, 2018 was $8.75.

As of December 10, 2018, there were 39,464,619 shares of our Class B common stock outstanding, held by 16 stockholders of
record.

Dividends

Holders of our Class A and Class B common stock receive dividends if and when declared by our board of directors out of legally
available funds. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of
our business and do not anticipate declaring or paying any cash dividends in the foreseeable future. Any future determination as to
the declaration and payment of dividends will be at the discretion of our board of directors and will depend on then-existing
conditions, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects
and other factors that our board of directors considers relevant. In addition, the terms of the Compass Credit Agreement restrict our
ability to pay cash dividends to the holders of our common stock unless, after giving effect to such dividend, we would remain in
compliance with the financial covenants and, at the time any such dividend is made, no default or event of default exists or would
result from the payment of such dividend.

The Company declared and paid one cash dividend during the past two fiscal years. On December 21, 2016, our board of directors
declared a cash dividend of approximately $31.3 million, or $0.754 per share of common stock, to the stockholders of record at
December 15, 2016. The dividend was paid from cash on hand on January 10, 2017.

Recent Sales of Unregistered Securities

During the fiscal year ended September 30, 2018, we granted to certain officers and employees a total of 126,000 restricted shares of
our Class B common stock under the Construction Partners, Inc. 2016 Equity Incentive Plan, of which 63,000 shares vested on
February 23, 2018 (the grant date) and the remaining 63,000 shares vested on July 1, 2018. This grant was made for compensatory
purposes pursuant to a written plan or contract, a copy which was delivered to each purchaser, in reliance on Rule 701 under the
Securities Act.

Use of Proceeds from Our Initial Public Offering of Class A Common Stock

On May 3, 2018, the Registration Statement on Form S-1 (No. 333-224174) that we filed in connection with the initial public
offering of our Class A common stock (the "Form S-1") was declared effective by the SEC. There has been no material change in
our planned use of the proceeds that we received from the sale of shares of our Class A common stock in the initial public offering
from that described in the prospectus forming part of the Form S-1 and other periodic reports that we have filed with the SEC.

Issuer Purchases of Equity Securities

During the quarter ended September 30, 2018, we did not purchase any of our equity securities that are registered under Section
12(b) of the Exchange Act.

Item 6. Selected Financial Data.

We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, and therefore are not required to provide the
information called for by this Item.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This discussion and analysis of our financial condition and results of operations is intended to assist in understanding and assessing
the trends and significant changes in our results of operations and financial condition. Historical results may not be indicative of
future performance. This discussion includes forward-looking statements that reflect our plans, estimates and beliefs. Such statements
involve risks and uncertainties. Our actual results may differ materially from those contemplated by these forward-looking statements
as a result of various factors, including those set forth under the headings “Risk Factors” and “Cautionary Statement Regarding
Forward-Looking Statements.” This discussion should be read in conjunction with our audited consolidated financial statements and
the notes thereto included elsewhere in this Annual Report on Form 10-K. In this discussion, we use certain non-GAAP financial
measures. Explanation of these non-GAAP financial measures and reconciliation to the most directly comparable GAAP financial
measures are included in this "Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Investors
should not consider non-GAAP financial measures in isolation or as substitutes for financial information presented in compliance with
GAAP.

Overview

We are one of the fastest growing civil infrastructure companies in the United States specializing in the building and maintenance of
transportation networks. Our operations leverage a highly skilled workforce, strategically located HMA plants, substantial construction
assets and select material deposits. We provide construction products and services to both public and private infrastructure projects,
with an emphasis on highways, roads, bridges, airports and commercial and residential sites in the southeastern United States.

Our public projects are funded by federal, state and local governments and include projects for roads, highways, bridges, airports and
other forms of infrastructure. Public transportation infrastructure projects historically have been a relatively stable portion of state and
federal budgets and represent a significant share of the United States construction market. Federal funds are allocated on a state-by-
state basis, and each state is required to match a portion of the federal funds they receive. Federal highway spending uses funds
predominantly from the Highway Trust Fund, which derives its revenues from fuel taxes and other user fees.

In addition to public infrastructure projects, we provide a wide range of large sitework construction and HMA paving services to
private construction customers, including commercial and residential developers and local businesses.

How We Assess Performance of Our Business

Revenues

We derive our revenues predominantly by providing construction products and services for both public and private infrastructure
projects, with an emphasis on highways, roads, bridges, airports and commercial and residential sites. Our projects represent a mix of
federal, state, municipal and private customers. We also derive revenues from the sale of HMA and aggregates to customers. Revenues
derived from projects are recognized on the percentage-of-completion basis, measured by the relationship of total cost incurred
compared to total estimated contract costs (cost-to-cost method). Changes in job performance, job conditions and estimated
profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to
estimated costs and income, and are recognized in the period in which the revisions are determined. Revenues derived from the sale of
HMA and aggregates are recognized when risks associated with ownership have passed to the customer.

Gross Profit

Gross profit represents revenues less cost of revenues. Cost of revenues consists of all direct and indirect costs on construction
contracts, including raw materials, labor, equipment costs, depreciation, lease expenses, subcontract costs and other expenses at our
HMA plants and aggregate mining facilities. Our cost of revenues is directly affected by fluctuations in commodity prices, primarily
liquid asphalt and diesel fuel. From time to time, when appropriate, we limit our exposure to changes in commodity prices by entering
into forward purchase commitments. In addition, our public infrastructure contracts often provide for price adjustments based on
fluctuations in certain commodity-related product costs. These price adjustment provisions are in place for most of our public
infrastructure contracts, and we seek to include similar provisions in our private contracts.

Depreciation, Depletion and Amortization

We carry property, plant and equipment on our balance sheet at cost, net of accumulated depreciation, depletion and amortization.
Depreciation on property, plant and equipment is computed on a straight-line basis over the estimated useful life of the asset.
Amortization expense is the periodic expense related to leasehold improvements and intangible assets. Leasehold improvements are
amortized over the lesser of the life of the underlying asset or the remaining lease term. Our intangible assets were recognized as a
result of certain acquisitions and are generally amortized on a straight-line basis over the estimated useful lives of the assets. Quarry
reserves are depleted in accordance with the units-of-production method as aggregate is extracted, using the initial allocation of cost
based on proven and probable reserves.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and personnel costs for our administration, finance and accounting,
legal, information systems, human resources and certain managerial employees. Additional expenses include audit, consulting and
professional fees, travel, insurance, office space rental costs, property taxes and other corporate and overhead expenses.

Gain on Sale of Equipment, net

In the normal course of business, we sell construction equipment for various reasons, including when the cost of maintaining the asset
exceeds the cost of replacing it. The gain or loss on sale of equipment reflects the difference between the carrying value at the date of
disposal and the net consideration received from the sale of equipment during the period.

Interest Expense, net

Interest expense, net primarily represents interest incurred on our long-term debt, such as the Compass Term Loan and the Compass
Revolving Credit Facility, as well as the cost of interest swap agreements and amortization of deferred debt issuance costs. These
amounts are partially offset by interest income earned on short-term investments of cash balances in excess of our current operating
needs.

Other Key Performance Indicators

Adjusted EBITDA and Adjusted EBITDA Margin

Adjusted EBITDA represents net income before interest expense, net, provision for income taxes, depreciation, depletion and
amortization, equity-based compensation expense, loss on extinguishment of debt and certain management fees and expenses, and
excludes income recognized in connection with the Settlement (1). 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 should not be considered 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 they
are measures frequently used by securities analysts, investors and other parties to evaluate companies in our industry. These measures
have limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of our results as reported
under GAAP.

Our calculation of Adjusted EBITDA and Adjusted EBITDA Margin may not be comparable to similarly named measures reported by
other companies. Potential differences between our measure of Adjusted EBITDA compared to other similar companies’ measures of
Adjusted EBITDA may include differences in capital structures, tax positions and the age and book depreciation of intangible and
tangible assets.

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 each of the periods presented.

(in thousands, except percentages)
Net income

Interest expense, net

Provision for income taxes

Depreciation, depletion and amortization of long-lived assets

Equity-based compensation expense

Loss on extinguishment of debt
Settlement income (1)
Management fees and expenses (2)

Adjusted EBITDA

Revenues

Adjusted EBITDA Margin

For the Fiscal Year
Ended September 30,

2018

2017

50,791

1,270

10,525

25,321

975

—

(14,803)

1,457

75,536

680,096

26,040

3,960

14,742

21,072

513

1,638

—

1,309

69,274

568,212

11.1%

12.2%

(1) Represents pre-tax income recognized in connection with the Settlement (see Note 21 - Settlement Agreement to the

consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

(2) Reflects fees and reimbursement of certain travel expenses under a management services agreement with SunTx (see Note 18

- Related Parties to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K).

Results of Operations

Fiscal Year Ended September 30, 2018 Compared to Fiscal Year Ended September 30, 2017

The following table sets forth selected financial data for the fiscal years ended September 30, 2018 ("fiscal 2018") and September 30,
2017 ("fiscal 2017"):

For the Fiscal Year Ended September 30,

2018

2017

Change from Fiscal Year
2017 to Fiscal Year 2018

Dollars

% of
Revenues

Dollars

% of
Revenues

$ Change

%
Change

(in thousands, except percentages)

Revenues

Cost of revenues
Gross profit

$ 680,096

100.0 % $ 568,212

100.0 % $

111,884

580,560

99,536

85.4 %

14.6 %

477,241

90,971

84.0 %

16.0 %

103,319

8,565

General and administrative
expenses

Settlement income

Gain on sale of equipment, net

Operating income

Interest expense, net

Loss on extinguishment of debt

Other expense

Income before provision for
income taxes and earnings
from investment in joint
venture

Provision for income taxes

Earnings from investment in
joint venture
Net income

Adjusted EBITDA

(55,303)

(8.2)%

14,803

2,392
61,428

2.2 %

0.4 %
9.0 %

(1,270)

(0.2)%

—

(101)

— %

(47,867)
—

3,481
46,585
(3,960)
(1,638)
(205)

(8.4)%

— %

0.6 %
8.2 %

(0.7)%

(0.3)%

— %

(7,436)
14,803
(1,089)
14,843

2,690

1,638

104

60,057

10,525

1,259

50,791

75,536

8.8 %

1.5 %

0.2 %

40,782

14,742

7.2 %

2.6 %

19,275
(4,217)

—

— %

1,259

7.5 % $

26,040

4.6 % $

24,751

11.1 % $

69,274

12.2 % $

6,262

19.7 %

21.6 %

9.4 %

15.5 %

N/A

(31.3)%
31.9 %

(67.9)%

(100.0)%

(50.7)%

47.3 %

(28.6)%

N/A

95.0 %

9.0 %

Revenues. Revenues for fiscal 2018 increased $111.9 million, or 19.7%, to $680.1 million from $568.2 million for fiscal 2017. The
increase in revenues was primarily due to a $191.0 million higher backlog at the beginning of fiscal 2018 compared to the beginning of
fiscal 2017, the increase in available work in our existing markets, and $51.4 million of revenues from two acquisitions and two
greenfield expansions we completed subsequent to September 30, 2017.

Gross Profit. Gross profit for fiscal 2018 increased $8.5 million, or 9.4%, to $99.5 million from $91.0 million for fiscal 2017. The
higher gross profit was the result of the 19.7% revenue increase for fiscal 2018 compared to fiscal 2017. The decrease in gross profit as
a percentage of revenues was due to the negative impact of rising asphalt cement prices on margins from internal and external sales of
HMA.

General and Administrative Expenses. General and administrative expenses include costs related to our operational offices that are
not allocated to direct contract costs and expenses related to our corporate offices. General and administrative expenses for fiscal 2018
increased $7.4 million, or 15.5%, to $55.3 million from $47.9 million for fiscal 2017. The increase in general and administrative
expenses for fiscal 2018 compared to fiscal 2017 was attributable to (i) a $4.2 million increase in management payroll and benefit
costs as a result of the two acquisitions and two greenfield expansions we completed subsequent to September 30, 2017, and other
growth, and (ii) a $1.3 million increase in professional expenses and insurance costs related to increased regulatory and reporting
requirements due to becoming a public company.

Interest Expense, Net. Interest expense, net for fiscal 2018 decreased $2.7 million, or 67.9%, to $1.3 million compared to $4.0 million
for fiscal 2017. The decrease in interest expense, net was due to lower interest rates applicable to our variable interest loans during
fiscal 2018 compared to fiscal 2017 and a lower amortization of deferred debt issuance costs of $0.1 million compared to $0.7 million
during the same periods. This reduction in interest rates was due to lower effective interest rates under the Compass Credit Agreement,
which we entered into on June 30, 2017. In addition, to hedge against future changes in the variable interest rates, we entered into

interest rate swap agreements tied to our variable rate debt. These interest rate swap agreements do not qualify for hedge accounting
treatment in accordance with GAAP; therefore, changes in fair value are reflected within interest expense on the Consolidated
Statements of Income. During fiscal 2018, the change in the fair value of the interest rate swaps resulted in a $0.4 million credit to
interest expense.

Loss on Extinguishment of Debt. We recorded a $1.6 million loss on extinguishment of debt during fiscal 2017 resulting from the
unamortized deferred debt issuance costs related to the CIT Credit Facility (as defined in Note 12 - Debt to the consolidated financial
statements included elsewhere in this Annual Report on Form 10-K) and other debt refinanced at June 30, 2017. There were no
transactions during fiscal 2018 resulting in a loss on extinguishment of debt.

Settlement Income. During fiscal 2018, we recorded settlement income of $14.8 million reflecting the net present value of future
payments to be received in connection with the Settlement. Pursuant to the Settlement, we will receive aggregate net payments of
approximately $15.7 million, payable in four equal installments between January 2019 and July 2020, in exchange for releasing and
waiving all current and future claims against a third party.

Provision for Income Taxes. Our effective tax rate decreased to 17.2% for fiscal 2018, from 36.1% for fiscal 2017. Our lower effective
tax rate for fiscal 2018 was primarily due to the impacts of comprehensive tax legislation enacted by the U.S. government on
December 22, 2017, known as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act includes broad and complex changes to the U.S.
tax code, including a reduction in the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018. Specifically, we
completed the Company's accounting for the income tax effects of the Tax Act during fiscal 2018 and recorded a discrete tax benefit of
$4.6 million related to the Tax Act, primarily due to adjusting its U.S. deferred tax liabilities by the same amount, reflecting the
reduction in the U.S. federal corporate tax rate. This net reduction in deferred tax liabilities also included the estimated impact on the
Company’s net state deferred tax assets. Accordingly, the effective tax rate for fiscal 2018 reflects a federal income tax provision
based on a blended U.S. statutory tax rate of 24.5%, which is calculated based on a proration of the applicable tax rates before and
after the effective date of the Tax Act during fiscal 2018, and the effect of applicable state income taxes. The effective tax rate for fiscal
2018 was also reduced by a $1.4 million permanent tax benefit resulting from the deduction of the excess fair market value of options
exercised under the 2010 Non-Plan Stock Option Agreement over the exercise price.

Earnings from Investment in Joint Venture. During fiscal 2018, we earned $1.3 million of pre-tax income from our 50% interest in
the earnings of a joint venture. We entered into the joint venture with a third party in November 2017 for the sole purpose of
performing a construction project for the Alabama Department of Transportation. We did not have an interest in a joint venture during
fiscal 2017.

Net Income. Net income increased $24.8 million, or 95.0%, to $50.8 million for fiscal 2018 compared to $26.0 million for fiscal 2017.
This increase in net income was a result of (i) the Settlement income and earnings from investment in a joint venture during fiscal 2018
with no comparable amounts during fiscal 2017; (ii) a $1.6 million loss on extinguishment of debt during fiscal 2017 with no
comparable amount during fiscal 2018; (iii) a reduction in interest expense and (iv) benefits of a lower effective tax rate during fiscal
2018 compared to fiscal 2017, all as described above. The increase in gross profit for fiscal 2018 compared to fiscal 2017 was
substantially offset by the increase in general and administrative expenses during the same periods.

Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA Margin were $75.5 million and 11.1%,
respectively, for fiscal 2018, compared to $69.3 million and 12.2%, respectively, for fiscal 2017. The increase in Adjusted EBITDA
primarily resulted from the increase in gross profit and depreciation for fiscal 2018 compared to fiscal 2017, partially offset by the
increase in general and administrative expense and the decline in gain on sale of equipment. The decrease in Adjusted EBITDA Margin
is the result of lower gross profit as a percent of revenue and the decline in the gain on sale of equipment, partially offset by lower
general and administrative expenses as a percentage of revenue in fiscal 2018 compared to fiscal 2017. 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”.

Inflation and Price Changes

Inflation had an immaterial impact on our results of operations for the fiscal years ended September 30, 2018 and 2017 due to
relatively low inflation in the United States in recent years and our ability to recover increasing costs by obtaining higher prices for our
products, including sale price escalator clauses in most of our public infrastructure sector contracts. Inflation risk varies with the level
of activity in our industry, the number, size and strength of competitors and the availability of products to supply a local market.

Liquidity and Capital Resources

Cash Flows Analysis

The following table sets forth our cash flows for the periods indicated.

For the Fiscal Year
Ended September 30,
2017
2018

(in thousands)
Net cash provided by operating activities, net of acquisition
Net cash used in investing activities
Net cash provided by (used in) financing activities
Net change in cash and cash equivalents

66,121
(89,592)
95,061
71,590

46,927
(30,686)
(39,779)
(23,538)

Operating Activities

Cash provided by operating activities, net of acquisition, was $66.1 million for fiscal 2018, an increase of $19.2 million compared to
$46.9 million for fiscal 2017. The increase was primarily due to a $24.8 million increase in net income for fiscal 2018 compared to
fiscal 2017, partially offset by a $5.7 million reduction in changes in operating assets and liabilities for those same periods. The
decrease in changes in operating assets and liabilities included (i) a $10.3 million greater decrease in accrued expenses and other
liabilities, (ii) a $14.2 million greater increase in other assets and other current assets, primarily due to the Settlement income, and (iii)
a $9.0 million lesser increase in net billings in excess of costs and estimated earnings on uncompleted contracts, partially offset by a
$28.9 million greater reduction in contracts receivable including retainage, net, reflecting fluctuations resulting from the timing of
performing and closing projects. Our working capital results from both public and private sector projects. Customers in the private
sector typically pay more slowly than customers in the public sector, and private sector contracts often contain retention provisions that
allow the customer to withhold a percentage of the revenues earned until the completion of the project.

Investing Activities

Cash used in investing activities was $89.6 million for fiscal 2018 compared to $30.7 million for fiscal 2017. The increase reflects a
$40.5 million increase in cash used in business acquisitions, net of cash acquired, and a $18.4 million increase in purchases of property,
plant and equipment to execute our greenfield activities and other organic growth opportunities.

Financing Activities

Cash provided by financing activities was $95.1 million for fiscal 2018 compared to $39.8 million of cash used in financing activities
during fiscal 2017. Fiscal 2018 included $98.0 million of proceeds from our initial public offering of Class A common stock, net of
offering costs. Fiscal 2017 included the payment of a $31.3 million dividend.

Compass Credit Agreement

On June 30, 2017, Construction Partners Holdings, our wholly owned subsidiary, entered into the Compass Credit Agreement, with
Compass Bank as agent (the “Agent”), sole lead arranger and sole bookrunner, providing for a $50.0 million Compass Term Loan and
a $30.0 million Compass Revolving Credit Facility. In connection with the Scruggs Acquisition, the Company amended the Compass
Credit Agreement on May 15, 2018 and borrowed an additional $22.0 million under the Compass Term Loan to fund a portion of the
purchase price. The principal amount of the Compass Term Loan, including the additional borrowing, must be paid in quarterly
installments of $3.6 million. All amounts borrowed under the Compass Credit Agreement mature on July 1, 2022.

Construction Partners Holdings’ obligations under the Compass Credit Agreement are guaranteed by the Company and all of
Construction Partners Holdings’ direct and indirect subsidiaries and are secured by first priority security interests in substantially all of
the Company’s assets.

plus (ii) the applicable rate, which ranges from 2.0% to 2.25%. The interest rate for Euro-Dollar loans fluctuates and is equal to the
sum of the applicable rate, which ranges from 2.0% to 2.25%, plus LIBOR for the interest period selected by the Agent.

At September 30, 2018 and September 30, 2017, the interest rate on outstanding borrowings under the Compass Term Loan and
Compass Revolving Credit Facility was 4.242% and 3.235%, respectively. At September 30, 2018 and September 30, 2017, we had
availability of $14.0 million and $11.3 million, respectively, under the Compass Revolving Credit Facility, including reduction for
outstanding letters of credit. In order to hedge against changes in interest rates, on June 30, 2017, we entered into an amortizing
$25.0 million notional interest rate swap agreement applicable to outstanding debt under the Compass Term Loan, under which we pay
a fixed percentage rate of 2.015% and receive a credit based on the applicable LIBOR rate. In connection with the amendment to the
Compass Amendment and the additional borrowing on May 15, 2018, we entered into an additional $11.0 million notional interest rate
swap agreement applicable to the $22.0 million of additional debt under the Compass Term Loan. Under this additional swap
agreement, we pay a fixed percentage rate of 3.01% and receive a credit based on the applicable LIBOR rate. At September 30, 2018
and September 30, 2017, the aggregate notional value of these interest rate swap agreements was $28.7 million and $23.8 million,
respectively, and the fair value was $0.3 million and $(0.2) million, respectively, which is included within other assets or other
liabilities on our Consolidated Balance Sheets. We must pay a commitment fee of 0.35% per annum on the aggregate unused revolving
commitments under the Compass Credit Agreement. We also must pay fees with respect to any letters of credit issued under the
Compass Credit Agreement.

The Compass Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not
limited to, restrictions on our ability to make acquisitions, make loans or advances, make capital expenditures and investments, create
or incur indebtedness, create liens, wind up or dissolve, consolidate, merge or liquidate, or sell, transfer or dispose of assets. The
Compass Credit Agreement requires us to satisfy certain financial covenants, including a minimum fixed charge coverage ratio of 1.20
to 1.00. At September 30, 2018 and September 30, 2017, our fixed charge ratio was 1.51 to 1.00 and 1.63 to 1.00, respectively. The
Compass Credit Agreement also requires us to maintain a consolidated leverage ratio not to exceed 2.00 to 1.00, subject to certain
adjustments as further described in the Compass Credit Agreement. At September 30, 2018 and September 30, 2017, our consolidated
leverage ratio was 0.88 to 1.00 and 0.95 to 1.00, respectively. The Compass Credit Agreement includes customary events of default,
including, among other things, payment default, covenant default, breach of representation or warranty, bankruptcy, cross-default,
material ERISA events, certain changes of control, material money judgments and failure to maintain subsidiary guarantees. The
Compass Credit Agreement prevents us from paying dividends or otherwise distributing cash to our stockholders unless, after giving
effect to such dividend, we would be in compliance with the financial covenants and, at the time any such dividend is made, no default
or event of default exists or would result from the payment of such dividend.

At September 30, 2018 and September 30, 2017, we were in compliance with all covenants under the Compass Credit Agreement.

Capital Requirements and Sources of Liquidity

During fiscal 2018 and fiscal 2017, our capital expenditures were approximately $42.8 million and $24.4 million, respectively. Our
capital expenditures are typically made during the same fiscal year in which they are approved. At September 30, 2018, our
commitments for capital expenditures were not material to our financial condition or results of operations on a consolidated basis. For
fiscal 2019, we expect total capital expenditures to be approximately $39.0 million to $42.0 million. Our capital expenditure budget is
an estimate and is subject to change. As described further below, we believe that cash flows from operations combined with existing
cash on hand and amounts available under our credit facilities will be sufficient to fund our working capital needs and planned capital
expenditures for the next twelve months.

Historically, we have had significant cash requirements in order to organically expand our business into new geographic markets. Our
cash requirements include costs related to increased capital expenditures, purchase of materials and production of materials and cash to
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, enhancing our information systems and, in the future, our integration of
any acquisitions and our compliance with laws and rules applicable to public companies.

We have historically relied upon cash available through credit facilities, in addition to cash from operations, to finance our working
capital requirements and to support our growth. We regularly monitor potential capital sources, including equity and debt financings, in
an effort to meet our planned capital expenditures and liquidity requirements. Our future success will depend on our ability to access
outside sources of capital.

We believe that our operating cash flow and available borrowings under the Compass Revolving Credit Facility will be sufficient to
fund our operations for at least the next twelve months. However, future cash flows are subject to a number of variables, 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 cash in sufficient amounts 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 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 Compass Revolving Credit Facility, joint ventures, asset sales, offerings
of debt or equity securities or other means. We cannot guarantee that this 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.

Off-Balance Sheet Arrangements

The Company enters into operating leases for property and equipment in the normal course of business. See Note 19 - Commitments
and Contingencies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional
information. Other than the operating leases described therein, we do not currently have any off-balance sheet arrangements that have,
or are reasonably likely to have, a current or future effect on our financial condition, revenue or expenses, results of operations,
liquidity, capital expenditures or capital resources that would be material to investors.

Critical Accounting Policies and Estimates

The discussion of our financial condition and results of operations is based upon our consolidated financial statements, which have
been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and
judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. We evaluate our estimates and
assumptions on an ongoing basis. The results of our analysis form the basis for making assumptions about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different
assumptions or conditions, and the impact of such differences may be material to our consolidated financial statements.

Critical accounting policies are those policies that, in management’s view, are the most important in the portrayal of our financial
condition and results of operations. The notes to the consolidated financial statements also include disclosure of significant accounting
policies. The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on the results
that we report in our consolidated financial statements. These critical accounting policies require us to make difficult and subjective
judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Our most critical accounting
policies and estimates include those involved in the recognition of revenues and provision for income tax expense. Those critical
accounting policies and estimates that require the most significant judgment are discussed further below.

Revenue Recognition

The majority of our public construction contracts are fixed unit price contracts. Under fixed unit price contracts, we are committed to
providing materials or services required by a contract at fixed unit prices (for example, dollars per ton of asphalt placed). Our private
customer contracts are primarily fixed total price contracts, also known as lump sum contracts, which require that the total amount of
work be performed for a single price. Revenues from these construction contracts are recognized using the percentage-of-completion
accounting method. Under this method, revenues are recognized as costs are incurred in an amount equal to cost plus the related
expected profit based on the ratio of costs incurred to estimated final costs. This cost-to-cost measure is used because management
considers it to be the best available measure of progress on these contracts. Contract costs consist of direct costs on contracts, including
labor, materials, amounts payable to subcontractors and those indirect costs related to contract performance, such as equipment costs,
insurance and employee benefits. Contract cost is recorded as incurred, and revisions in contract revenues and cost estimates are
reflected in the accounting period when known. Provisions for estimated losses on uncompleted contracts are made in the period in
which such losses are determined. Changes in job performance, job conditions and estimated profitability, including those changes
arising from contract change orders, penalty provisions and final contract settlements may result in revisions to costs and income and
are recognized in the period in which the revisions are determined.

Change orders are modifications of an original contract that effectively change the existing provisions of the contract without adding
new provisions or terms. Change orders may include changes in specifications or designs, manner of performance, facilities,
equipment, materials, sites and period of completion of the work. Either we or our customers may initiate change orders. We consider
unapproved change orders to be contract variations for which we have a change of scope for which we believe we are contractually
entitled to a higher price, but where a price change associated with the scope change has not yet been agreed upon with the customer.
Costs associated with unapproved change orders are included in the estimated cost to complete the contracts and are treated as project
costs as incurred. We recognize revenues equal to costs incurred on unapproved change orders when realization of price approval is
probable. Unapproved change orders involve the use of estimates, and it is reasonably possible that revisions to the estimated costs and
recoverable amounts may be required in future reporting periods to reflect changes in estimates or final agreements with customers.
Change orders that are unapproved as to both price and scope are evaluated as claims. We consider claims to be amounts in excess of
agreed contract prices that we seek to collect from our customers or others for customer-caused delays, errors in specifications and
designs, contract terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of
unanticipated additional contract costs. Claims are included in the calculation of revenues when realization is probable and amounts
can be reliably determined. To support these requirements, the existence of the following items must be satisfied: (i) the contract or
other evidence provides a legal basis for the claim or a legal opinion has been obtained, stating that, under the circumstances, there is a

reasonable basis to support the claim; (ii) additional costs are caused by circumstances that were unforeseen at the contract date and are
not the result of deficiencies in our performance; (iii) costs associated with the claim are identifiable or otherwise determinable and are
reasonable in view of the work performed; and (iv) the evidence supporting the claim is objective and verifiable, not based on
management’s subjective evaluation of the situation or on unsupported representations. Revenues in excess of contract costs incurred
on claims are recognized when an agreement is reached with the customer as to the value of the claim, which in some instances may
not occur until after completion of work under the contract. Costs associated with claims are included in the estimated costs to
complete the contracts and are treated as project costs when incurred.

For the majority of our contracts, upon completion and final acceptance of the services that we were contracted to perform, we receive
our final payment upon completion of the necessary contract closing documents, and our obligations to the owner are complete at that
point. The accuracy of our revenues and profit recognition in a given period depends on the accuracy of our estimates of the revenues
and costs to finish uncompleted contracts. Our estimates for all of our significant contracts use a highly detailed “bottom up” approach.
However, our projects can be highly complex and, in almost every case, the profit margin estimates for a contract will either increase
or decrease to some extent from the amount that was originally estimated at the time of bid. Because we have a large number of
projects of varying levels of size and complexity in process at any given time, these changes in estimates can sometimes offset each
other without materially impacting our overall profitability. However, large changes in revenues or cost estimates can have a
significant effect on profitability. There are a number of factors that can contribute to changes in estimates of contract cost and
profitability. The most significant of these include the completeness and accuracy of the original bid, recognition of costs associated
with scope changes, extended overhead due to customer-related and weather-related delays, subcontractor and supplier performance
issues and site conditions that differ from those assumed in the original bid to the extent contract remedies are unavailable. The
foregoing factors, as well as the stage of completion of contracts in process and the mix of contracts at different margins, may cause
fluctuations in gross profit between periods, and these fluctuations may be significant.

Contracts Receivable, Including Retainage

Contracts receivable are generally based on amounts billed to the customer and currently due in accordance with our contracts. Many
of the contracts under which we perform work contain retainage provisions. Retainage refers to amounts that we have billed to the
customer, but are being held for payment by the customer pending satisfactory completion of the project. Retainage on active contracts
is classified as a current asset regardless of the term of the contract and is generally collected within one year of the completion of a
contract. At September 30, 2018 and September 30, 2017, contracts receivable included $16.8 million and $13.2 million, respectively,
of retainage, which was being contractually withheld by customers until completion of the associated contracts.

Because the majority of our construction contracts are entered into with federal, state or municipal government customers, credit risk is
minimal. We confirm that funds have been appropriated by the government project owner prior to commencing work on such projects.
While most of our public contracts are subject to termination at the election of the government entity, in the event of any such
termination, we are entitled to receive the contract price for completed work and reimbursement of termination-related costs. Credit
risk with private owners is minimized because of statutory mechanic's liens, which give us high priority in the event of lien
foreclosures following financial difficulties of private owners. We maintain an allowance for doubtful accounts, which has historically
been sufficient to cover accounts that are not collected.

Valuation of Long-Lived Assets and Goodwill

Long-lived assets, which include property, equipment and acquired intangible assets, such as goodwill, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment
evaluations involve fair values and management estimates of useful asset lives and future cash flows. Actual useful lives and cash
flows could be different from those estimated by management, and this could have a material effect on our operating results and
financial position. For the fiscal years ended September 30, 2018 and 2017, there were no events or changes in circumstances that
would indicate a material impairment of our long-lived assets.

Goodwill must be tested for impairment at least annually. We performed our most recent annual impairment test of goodwill on July 1,
2018. Our test indicated that there was no impairment of goodwill. The valuation is impacted by a number of factors, but the key
factors are the price of our common stock, recently completed transactions from both public companies and private transactions and
our estimated forecast of future cash flows.

The valuation approaches contain uncertainty regarding the estimates used. One of the largest uncertainties relates to federal, state and
local government spending, which management expects to increase in the upcoming years. There are a number of other uncertainties
with respect to our future financial performance that could impact estimated future cash flows, including those discussed under the
heading “Risk Factors” elsewhere in this Annual Report on Form 10-K. Based on our valuation approaches, we determined that for
each of our reporting units with goodwill, its fair value substantially exceeded its carrying value, and thus concluded that the carrying
value of goodwill was not impaired at July 1, 2018 or July 1, 2017. At September 30, 2018 and September 30, 2017, we had goodwill
with a carrying amount of $32.9 million and $30.6 million, respectively.

Income Taxes

Deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amounts and the tax
basis of assets and liabilities. We regularly review our deferred tax assets for recoverability and, where necessary, establish a valuation
allowance. Valuation allowances are established to reduce deferred tax assets if we determine that it is more likely than not that some
or all of the deferred tax assets will not be realized in future periods.

To assess this likelihood, we use historical three-year results of operations, estimates and judgments regarding our future taxable
income and consider the jurisdiction in which the taxable income is generated to determine whether a valuation allowance is required.
Such evidence can include our current financial position, results of operations, actual and forecasted results, the reversal of deferred
tax liabilities, tax planning strategies and the current and forecasted business economics of our industry. Additionally, we record
uncertain tax positions at their net recognizable amount, based on the amount that management deems is more likely than not to be
sustained upon ultimate settlement with the tax authorities in jurisdictions in which we operate.

On the basis of our evaluations, at September 30, 2018 and September 30, 2017, no valuation allowance was recorded on our net
deferred tax assets, and we had no material uncertain tax positions. If our estimates or assumptions regarding our current and deferred
tax items are inaccurate or are modified, these changes could have potentially material impacts on our earnings.

Accrued Insurance Cost

We carry insurance policies to cover various risks, primarily general liability, automobile liability and workers compensation, under
which we are liable to reimburse the insurance company for a portion of each claim paid, ranging from $100,000 to $500,000 per
occurrence. Prior to October 1, 2017, this amount was $250,000 per occurrence. We accrue for probable losses, both reported and
unreported, that are reasonably estimable using actuarial methods based on historic trends and modified, if necessary, by recent events.
Changes in our loss assumptions caused by changes in actual experience would affect our assessment of the ultimate liability and could
have an effect on our operating results and financial position up to $500,000 per occurrence for general liability, automobile liability
and workers' compensation claims.

We provide employee medical insurance under policies that are both fixed-premium, fully-insured policies and self-insured policies
that are administered by the insurance company. Under the self-insured policies, we are liable to reimburse the insurance company for
actual claims paid plus an administrative fee. We purchase separate stop-loss insurance, which limits the individual participant claim
loss to amounts ranging from $75,000 to $160,000.

Share-Based Payments and Other Equity Transactions

Our equity incentive plans are administered by the Compensation Committee of our Board of Directors, which historically set stock
option exercise prices based on then recent unregistered sales of our common stock prior to our initial public offering.

We recognize compensation expense for stock option awards based on valuation studies. Prior to the completion of our initial public
offering, there had not been an established market for shares of our common stock. While we have issued new equity to unrelated
parties, and we use such facts in the determination of the fair value of our shares, we believe that the historic lack of a secondary
market for our common stock and our limited history issuing stock to unrelated parties currently make it impracticable to estimate our
common stock’s expected volatility. Therefore, it is not possible to reasonably estimate the grant-date fair value of our options using
our own historical price data. Accordingly, we have applied the provisions of Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 718 in accounting for the options using the calculated value method.

During fiscal 2018 and fiscal 2017, we estimated expected volatility based on the average volatility of five companies within three
different Standard Industrial Classifications that management believed had comparable profiles.

Forfeitures are estimated using historical experience and projected employee turnover. These estimates require a considerable degree
of judgment and affect the amount of stock-based compensation expense we recognize. If we determine that another method to
estimate expected volatility or expected term is more reasonable than our current methods, or if another method for calculating fair
value is prescribed by authoritative guidance, the fair value calculated for future stock-based awards could change significantly from
past awards, even if the principal terms of the awards are similar. Higher volatility and longer expected terms result in an increase to
stock-based compensation determined at the date of grant. The expected dividend rate and expected risk-free interest rate are not as
significant to our calculation of fair value. A hypothetical 10% increase or decrease to any of the above assumptions would have had an
immaterial impact on the amount of stock-based compensation expense we recognized in each of the periods presented. However,
although changes in assumptions relative to expenses related to stock options granted outside of our equity incentive plan would be
considered immaterial to us, future years could result in a more significant difference if we were to grant additional stock options, the
value of our common stock increases significantly or our estimated volatility is higher.

Emerging Growth Company

The JOBS Act permits an “emerging growth company” like us to take advantage of an extended transition period to comply with new
or revised accounting standards applicable to public companies. We have irrevocably elected to “opt out” of this provision and, as a
result, we will comply with new or revised accounting standards as required when they are adopted.

Seasonality

The use and consumption of our products and services fluctuate due to seasonality. Our products are used, and our construction
operations and production facilities are located, outdoors. Therefore, seasonal changes and other weather-related conditions, in
particular extended snowy, rainy or cold weather in the winter, spring or fall and major weather events, such as hurricanes, tornadoes,
tropical storms and heavy snows, can adversely affect our business and operations through a decline in both the use of our products
and demand for our services. In addition, construction materials production and shipment levels follow activity in the construction
industry, which typically occurs in the spring, summer and fall. Warmer and drier weather during the third and fourth quarters of our
fiscal year typically result in higher activity and revenues during those quarters. The first and second quarters of our fiscal year
typically have lower levels of activity due to adverse weather conditions.

Commodity Price Risk

We are subject to commodity price risk with respect to price changes in liquid asphalt and energy, including fossil fuels and electricity
for aggregates and asphalt paving mix production, natural gas for HMA production and diesel fuel for distribution vehicles and
production-related mobile equipment. In order to manage or reduce commodity price risk, we monitor the costs of these commodities
at the time of bid and price them into our contracts accordingly. Furthermore, liquid asphalt escalator provisions in most of our public
contracts, and in some of our private and commercial contracts, limit our exposure to price fluctuations in this commodity. In addition,
we enter into various firm purchase commitments, with terms generally less than one year, for certain raw materials.

Interest Rate Risk

We are exposed to interest rate risk on certain of our short- and long-term debt obligations used to finance our operations and
acquisitions. We have LIBOR-based floating rate borrowings under the Compass Credit Agreement, which expose us to variability in
interest payments due to changes in the reference interest rates. From time to time, we use derivative instruments as hedges against the
impact of interest rate changes on future earnings and cash flows. In order to hedge against changes in interest rates and to manage
fluctuations in cash flows resulting from interest rate risk, on June 30, 2017, we entered into an amortizing interest rate swap
agreement applicable to $25.0 million outstanding debt under the Compass Term Loan, for which we pay a fixed rate of 2.015% and
receive a credit based on the applicable LIBOR rate. In connection with the amendment to the Compass Amendment and the
additional borrowing on May 15, 2018, we entered into an additional $11.0 million notional interest rate swap agreement applicable to
the $22.0 million additional debt under the Compass Term Loan. Under this additional swap agreement, we pay a fixed percentage
rate of 3.01% and receive a credit based on the applicable LIBOR rate.

At September 30, 2018, we had a total of $62.3 million of variable rate borrowings outstanding. Holding other factors constant and
absent the interest rate swap agreement described above, a hypothetical 1% change in our borrowing rates would result in a $0.6
million change in our annual interest expense based on our variable rate debt at September 30, 2018.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, and therefore are not required to provide the
information called for by this Item.

Item 8. Financial Statements and Supplementary Data.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Audited Consolidated Financial Statements

Consolidated Balance Sheets at September 30, 2018 and September 30, 2017

Consolidated Statements of Income for the fiscal years ended September 30, 2018 and September 30, 2017
Consolidated Statements of Stockholders’ Equity for the fiscal years ended September 30, 2018 and September 30, 2017
Consolidated Statements of Cash Flows for the fiscal years ended September 30, 2018 and September 30, 2017

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Construction Partners, Inc.:

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Construction Partners, Inc. and its subsidiaries (the Company) as of
September 30, 2018 and 2017, the related consolidated statements of income, stockholders' equity and cash flows for the years then
ended, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2018 and 2017,
and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.

Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such
opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error
or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used
and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.

/s/ RSM US LLP

We have served as the Company's auditor since 2017.

Birmingham, Alabama
December 14, 2018

CONSTRUCTION PARTNERS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

ASSETS

Current assets:

Cash and cash equivalents

Contracts receivable including retainage, net

Costs and estimated earnings in excess of billings on uncompleted contracts

Inventories

Prepaid expenses and other current assets

Total current assets

Property, plant and equipment, net

Goodwill

Intangible assets, net

Investment in joint venture

Other assets

Deferred income taxes, net

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Billings in excess of costs and estimated earnings on uncompleted contracts

Current maturities of debt

Accrued expenses and other current liabilities

Total current liabilities

Long-term liabilities:

Long-term debt, net of current maturities

Deferred income taxes, net

Other long-term liabilities

Total long-term liabilities

Total liabilities

Commitments and contingencies

Stockholders’ Equity:

Preferred stock, par value $0.001; 10,000,000 shares authorized at September 30, 2018 and 1,000,000 shares
authorized at September 30, 2017 and no shares issued and outstanding

Class A common stock, par value $0.001; 400,000,000 shares authorized, 11,950,000 shares issued and

outstanding at September 30, 2018, and no shares authorized, issued and outstanding at September 30, 2017

Class B common stock, par value $0.001; 100,000,000 shares authorized, 42,387,571 shares issued and

39,464,619 shares outstanding at September 30, 2018, and no shares authorized, issued and outstanding at
September 30, 2017

Common stock, $.001 par value, no shares authorized, issued and outstanding at September 30, 2018, and

126,000,000 shares authorized, 44,987,575 shares issued and 41,691,541 shares outstanding at September
30, 2017

Additional paid-in capital

Treasury stock, at cost

Retained earnings

Total stockholders’ equity

September 30,

2018

2017

99,137

120,291

9,334

24,556

14,137

267,455

178,692

32,919

3,735

1,659

10,270

1,580

27,547

120,984

4,592

17,487

4,520

175,130

115,911

30,600

2,550

—

2,483

1,876

496,310

328,550

63,510

38,738

14,773

17,520

134,541

48,115

8,890

5,295

62,300

196,841

—

242,493

(15,603)

72,525

299,469

52,402

32,108

10,000

20,036

114,546

47,136

9,667

5,020

61,823

176,369

—

142,385

(11,983)

21,734

152,181

328,550

Total liabilities and stockholders’ equity

496,310

See notes to consolidated financial statements.

CONSTRUCTION PARTNERS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share data)

Revenues

Cost of revenues

Gross profit

General and administrative expenses

Settlement income

Gain on sale of equipment, net

Operating income

Interest expense, net

Loss on extinguishment of debt

Other expense

Income before provision for income taxes and earnings from investment
in joint venture

Provision for income taxes

Earnings from investment in joint venture

Net income

Net income per share attributable to common stockholders:

Basic

Diluted

Weighted average number of common shares outstanding:

Basic

Diluted

See notes to consolidated financial statements.

For the Fiscal Year Ended
September 30,

2018

2017

680,096

568,212

580,560

99,536

(55,303)

14,803

2,392

61,428

(1,270)

—

(101)

60,057

10,525

1,259

477,241

90,971

(47,867)

—

3,481

46,585

(3,960)

(1,638)

(205)

40,782

14,742

—

50,791

26,040

1.11

0.63

45,605,845

41,550,293

45,919,648

41,550,293

CONSTRUCTION PARTNERS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)

Common Stock

Class A Common
Stock

Class B Common
Stock

Amount

Additional
Paid-in
Capital

Treasury
Stock

Retained
Earnings

Total
Stockholders’
Equity

44,987,575

— $ —

— $ — $ 141,872

(12,621) $

26,987

156,283

—

44,987,575

—

(44,987,575)

(45)

—

— 44,987,571

—

513

—

638

—

638

—

(31,293)

—

513

26,040

142,385

(11,983)

21,734

152,181

—

2,600,000

(2,600,000)

(3)

—

9,350,000

—

— $ — 11,950,000

—

98,000

975

(453)

—

458

1,586

(4,078)

—

50,791

42,387,571

$ 242,493

(15,603) $

72,525

299,469

—

98,009

975

(2,492)

Balance, September 30,
2016

Sale of treasury stock
Common stock
dividend paid
Equity-based
compensation

Net income

Balance, September 30,
2017

Reclassification of
common stock

Conversion of Class B
common stock to Class
A common stock in
connection with initial
public offering of Class
A common stock

Initial public offering
of Class A common
stock, net of offering
costs
Equity-based
compensation expense

Sale of treasury stock
Cashless option
exercise

Net income

Balance, September 30,
2018

See notes to consolidated financial statements.

CONSTRUCTION PARTNERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Cash flows from operating activities:

Net income
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization of long-lived assets
Amortization of deferred debt issuance costs
Loss on extinguishment of debt
Provision for bad debt
Gain on sale of equipment
Equity-based compensation expense
Earnings from investment in joint venture
Deferred income taxes

Changes in operating assets and liabilities:

Contracts receivable including retainage, net
Costs and estimated earnings in excess of billings on uncompleted contracts
Inventories
Other current assets
Other assets
Accounts payable
Billings in excess of costs and estimated earnings on uncompleted contracts
Accrued expenses and other current liabilities
Other long-term liabilities

Net cash provided by operating activities, net of acquisition

Cash flows from investing activities:

Purchases of property, plant and equipment
Proceeds from sale of equipment
Business acquisition, net of cash acquired
Investment in joint venture

Net cash used in investing activities

Cash flows from financing activities:

Repayments on revolving credit facility
Proceeds from revolving credit facility
Proceeds from issuance of long-term debt, net of debt issuance costs and discount
Repayments of long-term debt
Payment to seller of pre-acquisition balance due
Payment of treasury stock purchase obligation
Proceeds from initial public offering of Class A common stock, net of offering costs

Proceeds from sale of treasury stock
Common stock dividend paid

Net cash provided by (used in) financing activities
Net change in cash and cash equivalents

Cash and cash equivalents:

Beginning of Period
End of Period

Supplemental cash flow information:

Cash paid for interest
Cash paid for income taxes
Non-cash items:

Property, plant and equipment financed with accounts payable
Outstanding note receivable in consideration of disposition of assets

See notes to consolidated financial statements.

For the Fiscal Year
Ended September 30,

2018

2017

50,791

26,040

25,321
94
—
604
(2,392)
975
(1,259)
(481)

9,273
(2,955)
(2,746)
(8,886)
(7,787)
7,462
2,041
(4,778)
844
66,121

(42,804)
4,931
(51,319)
(400)
(89,592)

(5,000)
—
21,917
(12,361)
(4,940)
(2,569)

98,009
5
—
95,061
71,590

27,547
99,137

2,336
14,357

395
850

$
$

21,072
660
1,638
1,445
(3,481)
513
—
865

(19,619)
2,854
(3,063)
(2,178)
(286)
11,639
5,220
5,505
(1,897)
46,927

(24,399)
4,556
(10,843)
—
(30,686)

(5,101)
10,000
49,617
(60,640)
—
(3,000)

—
638
(31,293)
(39,779)
(23,538)

51,085
27,547

3,307
12,530

—
—

$
$

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - General

Business Description

Construction Partners, Inc. (the “Company”) is a leading infrastructure and road construction company operating in Alabama, Florida,
Georgia, North Carolina and South Carolina through its wholly owned subsidiaries. The Company provides site development, paving,
utility and drainage systems, as well as hot mix asphalt supply. The Company executes projects for a mix of private, municipal, state,
and federal customers that are both privately and publicly funded. The majority of the work is performed under fixed unit price
contracts and, to a lesser extent, fixed total price contracts.

The Company was formed as a Delaware corporation in 2007 as a holding company for its wholly owned subsidiary, Construction
Partners Holdings, Inc., a Delaware corporation incorporated in 1999 that began operations in 2001, to execute an acquisition growth
strategy in the hot mix asphalt paving and construction industry. SunTx Capital Partners (“SunTx”), a private equity firm based in
Dallas, Texas, is the Company’s majority investor and has owned a controlling interest in the Company’s stock since its inception. On
September 20, 2017, the Company changed its name from SunTx CPI Growth Company, Inc. to Construction Partners, Inc.

Management’s Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United
States of America (“GAAP”) requires management to make estimates and assumptions that affect the recorded amounts of assets,
liabilities, stockholders’ equity, revenues and expenses during the reporting period, and the disclosure of contingent liabilities at the
date of the consolidated financial statements. Estimates are used in accounting for items such as recognition of revenues and cost of
revenues, goodwill and other intangible assets, allowance for doubtful accounts, valuation allowances related to income taxes, accruals
for potential liabilities related to lawsuits or insurance claims, and the fair value of equity-based compensation awards. Estimates are
continually evaluated based on historical information and actual experience; however, actual results could differ from these estimates.

Note 2 – Initial Public Offering

On April 23, 2018, the Company amended and restated its certificate of incorporation to effectuate a dual class common stock structure
consisting of Class A common stock and Class B common stock. As a result, each share of common stock, par value 0.001 per share,
was reclassified into 25.2 shares of Class B common stock so that all holders of shares of outstanding common stock became the
holders of 41,817,537 shares of Class B common stock, and shares held by the Company in treasury became 3,170,034 Class B
treasury shares (the “Reclassification”). The amended and restated certificate of incorporation authorized 400,000,000 shares of Class
A common stock and 100,000,000 shares of Class B common stock. All share and per share amounts have been retroactively adjusted
for all periods presented to give effect to the 25.2 to 1 split of the common stock as part of the Reclassification (the “Stock Split”).

On May 8, 2018, the Company completed an initial public offering of 11,250,000 shares of Class A common stock at a price of $12.00
per share (the "IPO"). Of these shares, 9,000,000 were sold by the Company, for which the Company received approximately $100.4
million in proceeds, after deducting underwriting discounts and commissions of approximately $7.6 million, and prior to additional
total offering expenses of approximately $6.3 million. Of the $6.3 million additional offering expenses, $2.2 million are reflected as
capitalized equity issuance costs included within other current assets on the Consolidated Balance Sheet at September 30, 2017. All
$6.3 million of equity issuance costs were reclassified to additional paid-in capital during the fiscal year ended September 30, 2018 in
connection with the successful completion of the IPO. The remaining 2,250,000 shares were sold by the holders of Class B common
stock, which shares upon sale automatically converted into 2,250,000 shares of Class A common stock, thereby reducing the number of
issued and outstanding shares of Class B common stock to 42,737,571 and 39,567,537, respectively. The Company did not receive any
proceeds from the sale of shares by the holders of Class B common stock.

On May 24, 2018, the underwriters of the IPO partially exercised their over-allotment option to purchase an additional 700,000 shares
of Class A common stock at the IPO price of $12.00 per share less the underwriting discount and commissions. Of these shares,
350,000 were sold by the Company, for which the Company received approximately $3.9 million in proceeds after deducting
underwriting discounts and commissions of approximately $0.3 million. The remaining 350,000 shares were sold by the holders of
Class B common stock, which shares upon sale automatically converted into 350,000 shares of Class A common stock, thereby
reducing the number of issued and outstanding shares of Class B common stock to 42,387,571 and 39,217,537, respectively. The
Company did not receive any proceeds from the sale of shares by the holders of Class B common stock.

Note 3 - Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Construction Partners, Inc. and its wholly owned subsidiaries. All inter-
company balances and transactions have been eliminated in consolidation.

Common share and per share amounts have been retroactively adjusted for all periods presented to give effect to the Stock Split
described in Note 2 - Initial Public Offering.

Emerging Growth Company

Construction Partners, Inc. is an “emerging growth company” as defined by the Jumpstart Our Business Startups Act, (the “JOBS Act”)
enacted in April 2012. As an emerging growth company, the Company could have taken advantage of an exemption that would have
allowed the Company to wait to comply with new or revised financial accounting standards until the effective date of such standards
for private companies. However, the JOBS Act provides that a company may elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies, but such election to opt out is irrevocable. The Company
has elected to opt out of such extended transition period, which means that when a standard is issued or revised and it has different
effective dates for public and private companies, the Company is required to adopt the new or revised standard at the effective date
applicable to public companies that are not emerging growth companies.

Cash and cash equivalents

Cash consists principally of currency on hand and demand deposits at commercial banks. Cash equivalents are short-term, highly
liquid investments that are both readily convertible to known amounts of cash, and are so near their maturity that they present
insignificant risk of changes in value because of changes in interest rates. Cash equivalents include investments with original
maturities of three months or less. The Company maintains demand accounts, money market accounts and certificates of deposit at
several banks.

From time to time, account balances have exceeded the maximum available Federal Deposit Insurance Corporation deposit insurance
coverage limit. The Company has not experienced any losses in such accounts and regularly monitors the Company’s credit risk.

Contracts Receivable Including Retainage, net

Contracts receivable are generally based on amounts billed and currently due from customers, amounts currently due but unbilled, and
amounts retained by the customer pending completion of a project. It is common in the Company’s industry for a small portion of
progress billings or the contract price, typically 10%, to be withheld by the customer until the Company completes a project to the
satisfaction of the customer in accordance with contract terms. Such amounts are also included as contracts receivable including
retainage. Based on the Company’s experience with similar contracts in recent years, billings for such retainage balances are generally
collected within one year of the completion of the project.

The carrying value of contracts receivable including retainage, net of the allowance for doubtful accounts, represents their estimated
net realizable value. Management provides for uncollectible accounts through a charge to earnings and a credit to the allowance for
doubtful accounts based on its assessment of the current status of individual accounts, type of service performed, and current economic
conditions. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge
to the allowance for doubtful accounts and an adjustment of the contract receivable.

Costs and Estimated Earnings on Uncompleted Contracts

Billing practices for the Company’s contracts are governed by the contract terms of each project based on progress toward completion
approved by the owner, achievement of milestones or pre-agreed schedules. Billings do not necessarily correlate with revenues
recognized under the percentage-of-completion method of accounting. The Company records current assets and current liabilities to
account for these differences in timing.

The current asset, “Costs and estimated earnings in excess of billings on uncompleted contracts,” represents revenues that have been
recognized in amounts that have not been billed under the terms of the contracts. Included in costs and estimated earnings on
uncompleted contracts are amounts the Company seeks or will seek to collect from customers or others for errors, changes in contract
specifications or design, contract change orders in dispute, unapproved as to scope and price, or other customer-related causes of
unanticipated additional contract costs (claims and unapproved change orders). Such amounts are recorded at estimated net realizable
value when realization is probable and can be reasonably estimated. Claims and unapproved change orders made by the Company may
involve negotiation and, in rare cases, litigation. Unapproved change orders and claims also involve the use of estimates, and revenues
associated with unapproved change orders and claims are included when realization is probable and amounts can be reliably
determined. The Company did not recognize any material amounts associated with claims and unapproved change orders during the
periods presented.

The current liability, “Billings in excess of costs and estimated earnings on uncompleted contracts,” represents billings to customers in
excess of revenues recognized.

Concentration of Risks

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of contracts receivable
including retainage. In the normal course of business, the Company provides credit to its customers and does not generally require
collateral. Concentrations of credit risk associated with these receivables are monitored on an ongoing basis. The Company has not
historically experienced significant credit losses, due primarily to management’s assessment of customers’ credit ratings. The Company
principally deals with recurring customers, state and local governments and well-known local companies whose reputations are known
to management. The Company performs credit checks for significant new customers and generally requires progress payments for
significant projects. The Company generally has the ability to file liens against the property if payments are not made on a timely basis.
No single customer accounted for more than 10% of the Company’s contracts receivable including retainage, net balance at
September 30, 2018 or September 30, 2017.

Projects performed for various Departments of Transportation accounted for 42.9% and 41.9% of consolidated revenues for the fiscal
years ended September 30, 2018 and September 30, 2017, respectively. Two customers accounted for more than 10% of consolidated
revenues for the fiscal years ended September 30, 2018 and September 30, 2017, as follows:

Alabama Department of Transportation

North Carolina Department of Transportation

Inventories

% of Consolidated
Revenues
for the Fiscal
Year Ended September 30,

2018

2017

15.1%

13.3%

14.9%

13.9%

The Company’s inventories are stated at the lower of cost or net realizable value using the average cost method. The cost of inventory
includes the cost of material, labor, trucking and other equipment costs associated with procuring and transporting materials to asphalt
plants for production and delivery to customers. Inventories consist primarily of raw materials, including asphalt cement, aggregate
and millings that the Company expects to utilize on construction projects within one year.

Revenues and Cost Recognition

Revenues from the Company’s contracts are recognized under the percentage-of-completion method of accounting, measured by the
relationship of total cost incurred to total estimated contract costs (cost-to-cost method). Changes in job performance, job conditions,
and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in
favorable or unfavorable revisions to estimated costs, revenues and gross profit, and are recognized in the period in which the revisions
are determined. Revisions in estimates related to amounts recorded in prior periods resulted in the Company recording net increases in
revenues of $6.9 million and $4.6 million during the fiscal years ended September 30, 2018 and September 30, 2017, respectively.

The accuracy of revenues and cost of revenues reported on the consolidated financial statements depends on, among other things,
management’s estimates of total costs to complete projects. Management believes the Company maintains reasonable estimates based
on prior experience; however, many factors contribute to changes in estimates of contract costs. Accordingly, estimates made with
respect to uncompleted projects are subject to change as each project progresses and better estimates of contract costs become
available. All contract costs are recorded as incurred, and revisions to estimated total costs are reflected as soon as the obligation to
perform is determined. Provisions are recognized for the full amount of estimated losses on uncompleted contracts whenever evidence
indicates that the estimated total cost of a contract exceeds its estimated total revenue, regardless of the stage of completion. When the
Company incurs additional costs related to work performed by subcontractors, the Company may have contractual provisions to back
charge the subcontractors for those costs. A reduction to costs related to back charges is recognized when the estimated recovery is
probable and the amount can be reasonably estimated.

Contract costs include direct labor and material, subcontractors, direct overhead costs and equipment costs (primarily depreciation,
fuel, maintenance and repairs).

Fair Value Measurements

Management applies fair value measurement guidance to its impairment analyses for tangible and intangible assets. The Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and
Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Inputs used to measure fair value are classified using the following hierarchy:

Level 1. Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at
the measurement date.

Level 2. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly through corroboration with observable market data.

Level 3. Inputs are unobservable for the asset or liability and include situations in which there is little, if any, market activity for the
asset or liability. The inputs used in the determination of fair value are based upon the best information available under the
circumstances and may require significant management judgment or estimation.

The Company endeavors to utilize the best available information in measuring fair value.

The Company’s financial instruments include cash, contracts receivable including retainage, and accounts payable reflected as current
assets and current liabilities on its Consolidated Balance Sheets at September 30, 2018 and September 30, 2017. Due to the short-term
nature of these instruments, management considers their carrying value to approximate their fair value.

The Company also has term loans and a revolving credit facility as described in Note 12 - Debt. The carrying value of amounts
outstanding under these credit facilities is reflected as long-term debt, net of current maturities and current maturities of debt on the
Company’s Consolidated Balance Sheets at September 30, 2018 and September 30, 2017. Due to the variable rate or short-term nature
of these instruments, management considers their carrying value to approximate their fair value.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost and depreciated on a straight-line basis over their estimated useful lives. Leasehold
improvements for operating leases are amortized over the lesser of the term of the related lease or the estimated useful lives of the
improvements. Quarry reserves are depleted in accordance with the units-of-production method as aggregate is extracted, using the
initial allocation of cost based on proven and probable reserves. Routine repairs and maintenance are expensed as incurred. Asset
improvements are capitalized at cost and amortized over the remaining useful life of the related asset.

The useful lives of property, plant and equipment categories are as follows:

Category

Estimated Useful Life

Land and improvements

Land, unlimited; improvements, 15-25 years

Quarry reserves

Buildings

Asphalt plants

Construction equipment

Furniture and fixtures

Leasehold improvements

Based on depletion

5 - 39 years

3 - 20 years

3 - 10 years

5 - 10 years

The shorter of 15 years or the remaining lease term

Management periodically assesses the estimated useful life over which assets are depreciated, depleted or amortized. If the analysis
warrants a change in the estimated useful life of property, plant and equipment, management will reduce the estimated useful life and
depreciate, deplete or amortize the carrying value prospectively over the shorter remaining useful life.

The carrying amounts of assets sold or retired and the related accumulated depreciation are eliminated in the period of disposal, and
the resulting gains and losses are included in the results of operations during the same period.

Impairment of Long-Lived Assets

The carrying value of property, plant and equipment and intangible assets subject to amortization is evaluated whenever events or
changes in circumstances indicate that the carrying amount of such assets, or an asset group, may not be recoverable. Events or
circumstances that might cause management to perform impairment testing include, but are not limited to, a significant decrease in the
market price of an asset, a significant adverse change in the extent or manner in which an asset is used or in its physical condition, an
accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of an asset, an
operating or cash flow performance combined with a history of operating or cash flow losses or a forecast that demonstrates continuing
losses associated with the use of an asset, and an expectation that an asset will be disposed of significantly before the end of its
previously estimated useful life. If indicators of potential impairment are present, management performs a recoverability test and, if
necessary, records an impairment loss. If the total estimated future undiscounted cash flows to be generated from the use and ultimate
disposition of an asset or asset group is less than its carrying value, an impairment loss is recorded in the Company’s results of
operations, measured as the amount required to reduce the carrying value to fair value. Fair value is determined in accordance with the
best available information based on the hierarchy described under "Fair Value Measurements" above. For example, the Company
would first seek to identify quoted prices or other observable market data. If observable data is not available, management would apply
the best available information under the circumstances to a technique such as a discounted cash flow model to estimate fair value.
Impairment analysis involves estimates and the use of assumptions in connection with judgments made in forecasting long-term
estimated inflows and outflows resulting from the use and ultimate disposition of an asset, and determining the ultimate useful lives of
assets. Actual results may differ from these estimates using different assumptions, which could materially impact the results of an
impairment assessment.

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price over the fair value of net assets acquired and liabilities assumed in a business
combination. Other intangible assets consist of an indefinite-lived name license in connection with a business acquired, and finite-lived
assets including a non-compete agreement, customer relationships and construction backlog, each acquired in business acquisitions.
Goodwill and indefinite-lived intangible assets are not amortized, but are reviewed for impairment at least annually, or more frequently
when events or changes in circumstances indicate that the carrying value may not be recoverable. In addition, management evaluates
whether events and circumstances continue to support an indefinite useful life. Judgments regarding indicators of potential impairment
are based on market conditions and operational performance of the business.

Annually, on the first day of the fourth fiscal quarter, management performs an analysis of the carrying value of goodwill at its
reporting units for potential impairment. In accordance with GAAP, the Company may assess its goodwill for impairment initially
using a qualitative approach to determine whether conditions exist to indicate that it is more likely than not that the fair value of a
reporting unit is less than its carrying value. If management concludes, based on its assessment of relevant events, facts and
circumstances, that it is more likely than not that a reporting unit’s carrying value is greater than its fair value, then a quantitative
analysis will be performed to determine whether there is any impairment. The Company may also elect to initially perform a
quantitative analysis instead of starting with a qualitative assessment. The quantitative assessment for goodwill requires comparing the
carrying value of a reporting unit, including goodwill, to its fair value using the multiple period discounting method under the income
approach and market approach. The income approach uses a discounted cash flow model, which involves significant estimates and
assumptions, including preparation of revenues and profitability growth forecasts, selection of a discount rate, and selection of a
terminal year multiple, to estimate fair value. Management’s assessment of facts and circumstances at each analysis date could cause
these assumptions to change. If the fair value of the respective reporting unit exceeds its carrying amount, goodwill is not considered to
be impaired, and no further testing is required. If the carrying amount of a reporting unit exceeds its fair value, an impairment charge is
recorded to write down goodwill to its fair value and is recorded in the Company’s results of operations. The Company performed a
quantitative analysis of goodwill during fiscal year 2018 and fiscal year 2017 and determined that the fair value of each of its reporting
units exceeded its carrying value, and thus concluded that the carrying value of goodwill was not impaired at September 30, 2018 or
September 30, 2017. Accordingly, no further analysis was required or performed.

Management also performs an annual assessment, on the first day of the fiscal fourth quarter, of the carrying value of its indefinite-
lived intangible assets other than goodwill. Management tests indefinite-lived intangible assets for impairment by comparing their
carrying value to their estimated fair value. An impairment loss is recorded in the Company’s results of operations to the extent the
carrying value of an indefinite-lived intangible asset exceeds its fair value. Similar to the assessment of goodwill, events and changes
in circumstances could cause management to utilize different assumptions in subsequent evaluations, which could materially impact
the results of an impairment assessment. Management concluded that the carrying value of the Company's indefinite-lived intangible
asset other than goodwill was not impaired at September 30, 2018 or September 30, 2017.

Deferred Debt Issuance Costs

Costs directly associated with obtaining debt financing are deferred and amortized over the term of the related debt agreement.
Unamortized amounts related to long-term debt are reflected on the Consolidated Balance Sheet as a direct deduction from the carrying
amount of the related long-term debt liability.

Equity Issuance Costs

The Company capitalizes certain third-party fees that are directly associated with in-process equity offerings. These amounts are
recorded as prepaid expenses and included in other current assets on the Consolidated Balance Sheet until the offering is
consummated, suspended or abandoned. If efforts to complete an equity offering are suspended or abandoned, the capitalized costs are
charged to general and administrative expenses in the period the offering is suspended or abandoned. When an offering is completed,
the capitalized costs are recorded as a reduction to additional paid-in capital generated by the offering. At September 30, 2017, $2.2
million of capitalized equity issuance costs were included in other current assets. Upon the successful completion of the IPO in May
2018, the equity issuance costs balance of $6.3 million was reclassified from prepaid expenses to additional paid-in capital.

Comprehensive Income

Comprehensive income is a measure of net income and all other changes in equity that result from transactions other than transactions
with stockholders. Management has determined that net income is the Company’s only component of comprehensive income.
Accordingly, there is no difference between net income and comprehensive income.

Income Taxes

The provision for income taxes includes federal and state income taxes. Income taxes are accounted for under the asset and liability
method. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary
differences between the financial statement carrying values and their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the fiscal years in which the temporary differences are
expected to be reversed or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. Management evaluates the realization of deferred tax assets and establishes a valuation
allowance when it is more likely than not that all or a portion of the deferred tax assets will not be realized. Deferred tax assets and
deferred tax liabilities are presented on a net basis by taxing authority and classified as non-current on the Consolidated Balance Sheet.
The Company classifies income tax-related interest and penalties as interest expense and other expenses, respectively.

Equity-based Incentive Plans

Compensation costs related to equity-classified share-based awards are recognized on the consolidated financial statements based on
grant date fair value. Compensation cost for graded-vesting awards is recognized ratably over the respective vesting periods.

Accrued Insurance Costs

The Company carries insurance policies to cover various risks, including primarily general liability, automobile liability and workers’
compensation, under which it is liable to reimburse the insurance company for a portion of each claim paid. The amount for which the
Company is liable for general liability, automobile liability and workers’ compensation claims ranges from $100,000 to $500,000 per
occurrence. Management accrues for probable losses, both reported and unreported, that are reasonably estimable using actuarial
methods based on historic trends modified, if necessary, by recent events. Changes in loss assumptions caused by changes in actual
experience would affect the assessment of the ultimate liability and could have an effect on the Company’s operating results and
financial position up to $500,000 per occurrence for general liability, automobile liability and workers’ compensation claims.

The Company provides employee medical insurance under policies that are both fixed-premium, fully-insured policies and self-insured
policies that are administered by the insurance company. Under the self-insured policies, the Company is liable to reimburse the
insurance company for actual claims paid plus an administrative fee. The Company purchases separate stop-loss insurance that limits
the individual participant claim loss to amounts ranging from $75,000 to $160,000.

In addition to the retention items noted above, the Company’s insurance provider requires the Company to maintain a standby letter of
credit. This letter of credit serves as a guarantee by the banking institution to pay the Company’s insurance provider the incurred claim
costs attributable to general liability, workers’ compensation and automobile liability claims, up to the amount stated in the standby
letter of credit, in the event that these claims are not paid by the Company.

Earnings per Share

As described in Note 2 – Initial Public Offering, the Company completed an IPO and Reclassification of its common stock during the
fiscal year ended September 30, 2018. Prior to the Reclassification, all net income of the Company was attributable to the holders of
shares of common stock immediately prior to the Reclassification. During the period beginning from the Reclassification through the
IPO, all net income of the Company was attributable to holders of Class B common stock. Since the IPO, all net income of the
Company is attributable equally, on a per share basis, to the holders of Class A common stock and Class B common stock.

Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of
aggregate shares of pre-Reclassification common stock, Class A common stock and Class B common stock, as applicable for the

respective periods, calculated on a post-split basis, during the respective periods. The calculation of basic earnings per share excludes
shares of unvested restricted stock. Diluted earnings per share is calculated by dividing net income attributable to common
stockholders by the weighted average number of aggregate shares of pre-Reclassification common stock, Class A common stock, Class
B common stock and potential dilutive common shares determined using the treasury method, calculated on a post-split basis as
applicable for the respective periods. Securities that are anti-dilutive are not included in the calculation of diluted earnings per share.

Segment Reporting and Reporting Units

The Company operates in Alabama, Florida, Georgia, North Carolina and South Carolina through its wholly owned legal entity
subsidiaries. Each of these entities was acquired as a platform operating company and performs essentially the same operations,
primarily infrastructure and road construction.

Management determined that the Company functions as a single operating segment, and thus reports as a single reportable segment.
This determination is based on rules prescribed by GAAP applied to the manner in which management operates the Company. In
particular, management assessed the discrete financial information routinely reviewed by the Company’s Chief Operating Decision
Maker (“CODM”), its Chief Executive Officer, to monitor the Company’s operating performance and support decisions regarding
allocation of resources to its operations. Specifically, performance is continuously monitored at the consolidated level and at the
individual contract level to timely identify deviations from expected results. Resource allocations are based on the capacity of the
Company’s operating facilities to pursue new project opportunities, including reallocation of assets that are underutilized from time to
time at a certain operating facility to another operating facility where additional resources might be required to fully meet demand.
Other factors further supporting this conclusion include substantial similarities throughout all of the Company’s operations with
respect to services provided, type of customers, sourcing of materials and manufacturing and delivery methodologies.

Management further determined that the Company’s five platform operating companies represent the Company’s reporting units for
purposes of assessing potential impairment of goodwill. These legal entities represent significant acquisitions that occurred over time
in Alabama, Florida, Georgia and North Carolina pursuant to the Company’s strategic growth strategy. Each platform company is
managed by its president, who has primary responsibility for the respective operating company. Collectively, these presidents are
directly accountable to, and maintain regular contact with, the CODM as a team to discuss operating activities, financial results,
forecasts, and operating plans for the Company’s single operating segment.

Note 4 - Accounting Standards

Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued Accounting Standards Update ("ASU") No. 2017-04, Intangibles—Goodwill and Other (Topic 350):
Simplifying the Test for Goodwill Impairments, which applies to entities that have goodwill reported in their financial statements. The
amendments of this update modify the concept of impairment from the condition that exists when the carrying amount of goodwill
exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. Prior to
the amendments of this guidance, an entity performed the first step of the goodwill impairment test by comparing the fair value of a
reporting unit to its carrying amount. If an impairment loss was indicated, the entity computed the implied fair value of goodwill to
determine the amount of an impairment loss, if any (step two). Implied fair value of goodwill was calculated by assigning the fair
value of a reporting unit to all of its assets and liabilities in a manner consistent with procedures performed as if that reporting unit had
been acquired in a business combination. An entity still has the option to perform the qualitative assessment for a reporting unit to
determine whether a quantitative impairment test is necessary. If a quantitative test is performed, this guidance eliminates step two of
the assessment. In contrast, under the amendments of this update, an entity shall recognize an impairment charge in the amount by
which the carrying amount exceeds the reporting unit’s fair value, limited to the total amount of goodwill allocated to that reporting
unit. The new guidance is effective for public companies for fiscal years beginning after December 15, 2019 and interim periods within
those years, and shall be applied on a prospective basis to goodwill impairment tests subsequent to adoption of the standard. Early
adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company
early adopted this guidance on a prospective basis on July 1, 2018. The adoption of this guidance did not have an impact on the
Company’s consolidated financial statements and related disclosures. See Note 10 – Goodwill and Other Intangible Assets, for
additional information on the Company’s goodwill.

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting. Amendments of this update change the accounting for certain aspects of share-based payments to
employees. The guidance requires the recognition of the income tax effects of awards in the income statement when the awards vest or
are settled, thus eliminating additional paid-in capital pools. The guidance also allows the employer to repurchase more of an
employee’s shares for tax withholding purposes without triggering liability accounting. In addition, the guidance permits a policy
election to account for forfeitures as they occur rather than on an estimated basis, as is currently required. The Company adopted the
amendments of the update effective October 1, 2017. The adoption of this guidance did not have a material impact on the Company's
consolidated financial statements and disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

The FASB has issued certain ASUs that are applicable to the Company and will be adopted in future periods. The consolidated
financial statements and related disclosures for the fiscal years ended September 30, 2018 and September 30, 2017 do not reflect the
requirements of this guidance. The following is a brief description of the recently issued ASUs and management’s current assessment
regarding the methods, timing and impact of adoption of such ASUs by the Company in the future.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The
amendments of this update refine the definition of a business. Prior to this update, guidance in Topic 805 defined a business as having
an integrated set of assets along with three elements or activities: inputs, processes, and outputs (collectively referred to as a “set”).
The amendments of this update provide a framework to assist entities in evaluating when a set is not a business. Amendments of this
update are applicable to public companies for annual periods beginning after December 15, 2017, including interim periods within
those periods. This update shall be applied prospectively on or after the effective date. No disclosures are required at transition. The
Company will adopt this update for the Company’s fiscal year beginning October 1, 2018 and apply the guidance to the assessment
and disclosure of future acquisition transactions.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts
and Cash Payments. The amendments of this update provide guidance on eight cash flow classification issues: debt prepayment and
debt extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business
combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance
policies, distributions received from equity method investees, beneficial interests in securitization transactions, and separately
identifiable cash flows and application of the predominance principle. The amendments of this update are effective for fiscal years
beginning after December 15, 2018 and interim periods within fiscal years beginning after December 15, 2019. Early adoption is
permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments must
be reflected as of the beginning of the fiscal year that includes that interim period. Management is currently assessing this guidance to
determine the Company’s adoption date and the potential impact of adoption on the Company’s consolidated financial statements and
disclosures.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The amendments of this guidance require a lessee to
recognize most leases on its balance sheet and recognize expenses on the income statement in a manner similar to current practice. The
lessee will recognize a lease liability calculated as the present value of its obligation to make lease payments and a right-to-use asset
for the right to use the underlying assets for the lease term. Leases will continue to be classified as either financing or operating.
Operating leases will result in a single lease cost allocated over the lease term on a straight-line basis with cash payments presented as
cash flows from operations. Financing leases will result in separate presentations of interest expense on the lease liability and
amortization expense of the right-to-use asset, with repayments of the principal portion of the lease liability presented as financing
activities and payments of interest on the lease liability and variable lease payments presented as operating activities. The amendments
of this update are effective for public companies in annual periods beginning on or after December 15, 2018, including interim periods
within those fiscal years. Early adoption is permitted. The Company leases office premises and equipment as described in Note 19 -
Commitments and Contingencies. Management expects to adopt this ASU for the Company’s fiscal year beginning October 1, 2019,
and is currently evaluating this guidance to determine the potential impact of adoption on the Company's consolidated financial
statements and disclosures.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which revises and
consolidates current guidance, eliminates industry-specific revenue recognition guidance and establishes a comprehensive principle-
based approach for determining revenue recognition. The core principle of the guidance is that an entity shall recognize revenue to
depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for providing those goods or services. Amendments of this update set forth a five-step revenue recognition
model to be applied consistently to all contracts with customers, except those that are within the scope of other topics in the ASC:
identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the
transaction price to the performance obligation in the contract, and recognize revenue when (or as) the entity satisfies a performance
obligation. The update also provides guidance regarding the recognition of costs related to obtaining and fulfilling customer contracts.
This update also requires quantitative and qualitative disclosures sufficient to enable users of financial statements to understand the
nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including disclosures on significant
judgments made when applying the guidance.

Subsequent to the issuance of ASU 2014-09, the FASB issued the following pronouncements, which each amend ASU No. 2014-09:
ASU 2015-14 deferred the effective date of ASU 2014-09 from annual and interim periods beginning after December 15, 2016 to
annual and interim periods beginning after December 15, 2017. Earlier application is permitted only as of annual reporting periods
beginning after December 15, 2016, including interim periods within that reporting period. With the issuance of ASU No. 2016-08 in
March 2016, the FASB clarified the implementation guidance on principal versus agent considerations in ASC 606. In April 2016, the
FASB issued ASU No. 2016-10, which clarified implementation guidance on identifying performance obligations and licensing in ASC

606. Other provisions of the guidance in ASC 606 were also amended with the issuances of ASU No. 2016-12 in May 2016 and ASU
No. 2016-20 in December 2016.

The update permits adoption using either a full retrospective approach, under which all years included in the financial statements will
be presented under the revised guidance, or a modified retrospective approach, under which financial statements will be prepared
under the revised guidance for the year of adoption, but not for prior years. Under the latter method, entities will recognize a
cumulative adjustment to the opening balance of retained earnings for contracts that still require performance by the entity at the date
of adoption.

Management will adopt this update for the Company’s fiscal year beginning October 1, 2018, using the modified retrospective
approach. As a result, the Company will present any cumulative effect of applying the amendments of this update on the date of
adoption, October 1, 2018. Management does not expect the adoption of this update to have a material impact on the Company's
consolidated financial statements.

The Company has refined its accounting policies and related internal controls affected by this update. Management’s assessment of the
Company’s construction contracts under the new standard supports the recognition of revenue over time using the percentage-of-
completion method of accounting, measured by the relationship of total cost incurred to total estimated contract costs (cost-to-cost
method), which is consistent with the Company’s current revenue recognition practices. As such, the Company’s construction
contracts will continue to be recognized over time considering the continuous transfer of control to its customers during performance
of construction projects. The amendments of this update also require expanded disclosures regarding the nature, timing and
uncertainty of revenue and customer contract balances, including how and when the Company satisfies the performance obligations
and the relationship between revenue recognized and changes in contract balances during a reporting period. The Company has
evaluated these disclosure requirements and is incorporating the collection of supporting data into its business processes.

Note 5 - Business Acquisitions

The Scruggs Company

On May 15, 2018, the Company executed a stock purchase agreement (the “Stock Purchase Agreement”) to complete the
acquisition of 100% of the common shares and voting interests of The Scruggs Company (“Scruggs”), a privately-owned
infrastructure and road construction company headquartered in Hahira, Georgia that operates three hot mix asphalt plants, three
aggregate mines and one industrial plant (the “Scruggs Acquisition”). The Scruggs Acquisition complemented the Company’s
vertically integrated southeastern United States operations, providing new bidding areas in the expanding Georgia market. The
Company funded the purchase price with cash on hand plus an additional $22.0 million borrowed under its existing Compass Term
Loan as described in Note 12 - Debt. The purchase price of $51.3 million, excluding cash acquired of $4.7 million, was paid in
cash at closing.

This acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations.

Management completed the purchase price allocation for this acquisition during the fiscal year ended September 30, 2018.
Identifiable assets acquired and liabilities assumed were recorded at their estimated fair values based on the methodology
described under "Fair Value Measurements" in Note 3 - Significant Accounting Policies. The fair values of assets acquired and
liabilities assumed, and the estimated useful lives of intangible assets acquired, are as follows (in thousands):

Contracts receivable including retainage

Costs and estimated earnings in excess of billings on uncompleted contracts

Inventory
Other current assets (1)
Property, plant and equipment:

Construction equipment

Quarry reserves

Land and land improvements

Plant

Buildings

Backlog intangible (2)
Customer relationship (3)
Goodwill

Accounts payable

Billings in excess of costs and estimated earnings on uncompleted contracts

Current maturities of long-term debt

Other current liabilities

Payable to seller

Long-term debt, net of current maturities

(1) Other current assets excludes cash acquired

(2) The estimated useful life of the backlog intangible asset is 17 months

(3) The estimated useful life of the customer relationship intangible is 8 years

9,184

1,787

4,323

731

17,571

13,986

7,302

6,917

1,552

594

1,100
2,319
(3,646)
(4,589)
(358)
(1,770)
(4,940)
(744)
51,319

The amount of the purchase price exceeding the net fair value of identifiable assets acquired and liabilities assumed was recorded as
goodwill. Under the terms of the Stock Purchase Agreement, the parties made a Section 338(h)(10) election under the Internal Revenue
Code. Accordingly, goodwill, the backlog intangible and customer relationship intangible assets allocated to the purchase price and
the step-up to fair value of property, plant and equipment reflected in the acquisition date balance sheet are deductible by the Company
for income tax purposes. Goodwill primarily represents the assembled work force and synergies expected to result from the acquisition.
Management has determined that Scruggs represents a new reporting unit for purposes of assessing potential impairment of goodwill,
and has allocated all goodwill recognized in connection with the acquisition to that new reporting unit. Scruggs represents the
Company’s fifth platform operating company and functions one level below the Company’s single operating segment, along with its
other platform operating companies each representing reporting units.

The Consolidated Statement of Income for the fiscal year ended September 30, 2018 includes $35.8 million of revenue and $3.5
million of net income attributable to operations of Scruggs since the acquisition date of May 15, 2018. The Company recorded certain
costs to effect the Scruggs Acquisition as they were incurred, which are reflected as general and administrative expenses on the
Consolidated Statement of Income in the amount of $0.2 million for the fiscal year ended September 30, 2018. The following presents
pro forma revenues and net income as though the Scruggs Acquisition had occurred on October 1, 2016 (unaudited, in thousands):

Pro forma revenues

Pro forma net income

For the Fiscal Year Ended September 30,

2018

2017

735,197

55,558

661,979

34,671

Pro forma financial information is presented as if the operations of Scruggs had been included in the consolidated results of the
Company since October 1, 2016, and gives effect to transactions that are directly attributable to the Scruggs Acquisition, including
adjustments to:

(a)

Include the pro forma results of operations of Scruggs for the fiscal years ended September 30, 2018 and 2017.

(b) Include additional depreciation and depletion expense related to the fair value of acquired property, plant and equipment
and quarry reserves, as applicable, as if such assets were acquired on October 1, 2016 and consistently applied to the
Company’s depreciation and depletion methodologies.

(c)

Include interest expense under the Compass Term Loan as if the $22.0 million borrowed to partially finance the purchase
price was borrowed on October 1, 2016. Interest expense calculations further assume that no principal payments were
made applicable to the $22.0 million borrowed during the period from October 1, 2016 through September 30, 2018, and
that the interest rate in effect on the date the Company made the additional $22.0 million borrowing on May 15, 2018 was
in effect for the period from October 1, 2016 through September 30, 2018.

(d) Exclude $0.2 million of acquisition-related expenses from the fiscal year ended September 30, 2018, as though such

expenses were incurred prior to the pro forma acquisition date of October 1, 2016.

Pro forma information is presented for informational purposes and may not be indicative of revenue or net income that would have
been achieved if the Scruggs acquisition had occurred on October 1, 2016.

Sand and Gravel Mining Operations

On September 22, 2017, the Company acquired certain ongoing sand and gravel mining operations located in Etowah, Elmore and
Autauga counties in Alabama in order to expand our aggregate production facilities. This acquisition was accounted for as a
business combination in accordance with ASC 805, Business Combinations. Consideration paid to consummate the acquisition
consisted of $10.8 million cash paid on the closing date. The Company also entered into a purchase commitment with the seller to
purchase $3.1 million of inventory over the two years following the acquisition. Of that amount, $2.3 million had been purchased
as of September 30, 2018.

Identifiable assets acquired and liabilities assumed were recorded at their estimated fair values based on the methodology
described under "Fair Value Measurements" in Note 3 - Significant Accounting Policies. The amount of consideration paid in
excess of the fair value of net assets acquired is recorded as goodwill, which is deductible for income tax purposes. The following
summarizes the fair value of identifiable assets acquired (in thousands):

Inventory

Quarry reserves

Land

Plant

Equipment

Goodwill

1,179

4,800

1,746

1,247

1,228

643

10,843

The results of operations associated with this acquisition are included in the consolidated financial statements since the acquisition
date and were not material to the Consolidated Statements of Income. Pro forma results of operations as if the acquisition had been
consummated on October 1, 2015 would not be material to the Consolidated Statements of Income.

Note 6 - Contracts Receivable Including Retainage, net

Contracts receivable including retainage, net consisted of the following at September 30, 2018 and September 30, 2017 (in thousands):

Contracts receivable

Retainage

Allowance for doubtful accounts

Contracts receivable including retainage, net

September 30,

2018

2017

104,541

16,848

121,389
(1,098)
120,291

109,538

13,180

122,718
(1,734)
120,984

The following is a summary of changes in the allowance for doubtful accounts balance during the fiscal years ended September 30,
2018 and September 30, 2017 (in thousands):

For the Fiscal Year Ended
September 30,

2018

2017

Balance at beginning of period

Charged to bad debt expense

Write-off of contracts receivable including retainage

Balance at end of period

1,734

604
(1,240)
1,098

1,039

1,445
(750)
1,734

Retainage receivables have been billed, but are not due until contract completion and acceptance by the customer.

Note 7 - Costs and Estimated Earnings on Uncompleted Contracts

Costs and estimated earnings compared to billings on uncompleted contracts at September 30, 2018 and September 30, 2017 consisted
of the following (in thousands):

Costs on uncompleted contracts

Estimated earnings to date on uncompleted contracts

Billings to date on uncompleted contracts

Net billings in excess of costs and estimated earnings on uncompleted contracts

September 30,

2018

2017

743,322

489,661

95,155

838,477
(867,881)
(29,404) $

62,193

551,854

(579,370)

(27,516)

Reconciliation of net billings in excess of costs and estimated earnings to amounts reflected on the Company’s Consolidated Balance
Sheets at September 30, 2018 and September 30, 2017 is follows (in thousands):

Costs and estimated earnings in excess of billings on uncompleted contracts

Billings in excess of costs and estimated earnings on uncompleted contracts

Net billings in excess of costs and estimated earnings on uncompleted contracts

September 30,

2018

2017

9,334
(38,738)
(29,404) $

4,592

(32,108)

(27,516)

Note 8 - Other Assets

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following at September 30, 2018 and September 30, 2017 (in thousands):

Settlement receivable

Prepaid expenses

Other current assets

Total prepaid expenses and other current assets

September 30,

2018

2017

7,874

4,989

1,274

14,137

Other Assets

Other assets consisted of the following at September 30, 2018 and September 30, 2017 (in thousands):

Settlement receivable

Notes receivable
Other assets

Total other assets

September 30,

2018

2017

7,224

2,561
485

10,270

—

1,503

3,017

4,520

—

1,106
1,377

2,483

Note 9 - Property, Plant and Equipment

Property, plant and equipment at September 30, 2018 and September 30, 2017 consisted of the following (in thousands):

Construction equipment
Asphalt plants
Land and improvements
Quarry reserves
Buildings
Furniture and fixtures
Leasehold improvements

Total property, plant and equipment, gross

Accumulated depreciation, depletion and
amortization
Construction in progress

Total property, plant and equipment, net

September 30,

2018

2017

190,420
79,563
29,624
20,908
12,416
4,422
765
338,118

154,911
66,379
20,991
7,219
9,848
3,870
765
263,983

(160,795)
1,369
178,692

(148,072)
—
115,911

Depreciation, depletion and amortization expense related to property, plant and equipment for the fiscal years ended September 30,
2018 and September 30, 2017 was $24.8 million and $20.8 million, respectively.

Note 10 - Goodwill and Other Intangible Assets

The following presents goodwill activity during the fiscal years ended September 30, 2018 and September 30, 2017 (in thousands):

Balance at September 30, 2016

Additions

Balance at September 30, 2017

Additions

Balance at September 30, 2018

29,957

643

30,600

2,319

32,919

A summary of other intangible assets at September 30, 2018 and September 30, 2017 is as follows (in thousands):

September 30,

2017

2018

Useful
Life

Gross

Accumulated
Amortization

Net Book
Value

Gross

Accumulated
Amortization

Net Book
Value

Indefinite

2,000

— $

2,000

— $

2,000

Indefinite-lived:

License

Definite-lived:

Customer relationship

8 years

Acquired construction
backlog

17 months

—

Non-compete agreements

5 years

1,500

(950)

—

550

1,100

594

1,500

(52)

1,048

(157)

(1,250)

437

250

Total intangible assets

3,500

(950) $

2,550

5,194

(1,459) $

3,735

Total amortization expense related to definite-lived intangible assets was $0.5 million and $0.3 million for the fiscal years ended
September 30, 2018 and September 30, 2017, respectively.

Estimated future total amortization expense related to definite-lived intangible assets is as follows (in thousands):

Fiscal Year

Estimated Amortization Expense

2019

2020

2021

2022

2023

Thereafter

Total

825

138

358

1,735

Note 11 - Liabilities

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following at September 30, 2018 and September 30, 2017 (in
thousands):

Accrued payroll and benefits
Treasury stock purchase obligation
Accrued insurance costs
Other current liabilities

Total accrued expenses and other current liabilities $

September 30,

2018

2017

12,802
569
1,750
2,399
17,520

13,364
2,569
1,198
2,905
20,036

Other Long-Term Liabilities

Other long-term liabilities consisted of the following at September 30, 2018 and September 30, 2017 (in thousands):

Treasury stock purchase obligation
Accrued insurance costs
Other

Total other long-term liabilities

September 30,

2018

2017

— $

4,826
469
5,295

569
3,796
655
5,020

Note 12 - Debt

The Company maintains various credit facilities from time to time to finance acquisitions, the purchase of real estate, construction
equipment, asphalt plants and other fixed assets, and for general working capital purposes. Debt at September 30, 2018 and
September 30, 2017 consisted of the following (in thousands):

Long-term debt:

Compass Term Loan

Compass Revolving Credit Facility

Other long-term debt

Total long-term debt

Deferred debt issuance costs

Debt discount

Current maturities of long-term debt

Long-term debt, net of current maturities

Compass Credit Agreement

September 30,

2018

2017

57,300

5,000

964

63,264
(362)
(14)
(14,773)
48,115

47,500

10,000

—

57,500
(364)
—
(10,000)
47,136

On June 30, 2017, Construction Partners Holdings, Inc. (“Construction Partners Holdings”), the Company’s wholly owned subsidiary,
entered into a credit agreement with Compass Bank as agent, sole lead arranger and sole bookrunner (as amended, the “Compass
Credit Agreement”), providing for a $50.0 million term loan (the “Compass Term Loan”) and a $30.0 million revolving credit facility
(the “Compass Revolving Credit Facility”). The Compass Credit Agreement was used to refinance all existing long-term and short-
term debt, as described below. In connection with the Scruggs Acquisition, the Company amended the Compass Credit Agreement on
May 15, 2018 and borrowed an additional $22.0 million under the Compass Term Loan to fund a portion of the purchase price as
disclosed in Note 5 - Business Acquisitions. The principal amount of the Compass Term Loan, including the additional borrowing,
must be paid in quarterly installments of $3.6 million. All amounts borrowed under the Compass Credit Agreement mature on July 1,
2022.

Construction Partners Holdings’ obligations under the Compass Credit Agreement are guaranteed by the Company and all of
Construction Partners Holdings’ direct and indirect subsidiaries and are secured by a first priority security interest in substantially all of
the Company’s assets.

Under the Compass Credit Agreement, borrowings can be designated as base rate loans or Euro-Dollar Loans. The interest rate on base
rate loans fluctuates and is equal to (i) the highest of: (a) the rate of interest in effect for such day as publicly announced from time to
time by the Agent as its “prime rate,” (b) the federal funds rate plus 0.50% and (c) the quotient of the London Interbank Offered Rate
(“LIBOR”) for deposits in U.S. dollars as obtained from Reuters, Bloomberg or another commercially available source designated by
the Agent two Euro-Dollar Business Days (as defined in the Compass Credit Agreement) before the first day of the applicable interest
period divided by 1.00 minus the Euro-Dollar Reserve Percentage (as defined in the Compass Credit Agreement) plus 1.0% for a one-
month interest period, plus (ii) the applicable rate, which ranges from 2.0% to 2.25%. The interest rate for Euro-Dollar loans fluctuates
and is equal to the sum of the applicable rate, which ranges from 2.0% to 2.25%, plus LIBOR for the interest period selected by the
Agent. In order to economically hedge against changes in interest rates, on June 30, 2017, the Company entered into an interest rate
swap agreement with a notional amount of $25.0 million, under which the Company pays a fixed percentage rate of 2.015% and
receives a credit based on the applicable LIBOR rate. In connection with amendments to the Compass Credit Agreement and the
additional borrowing on May 15, 2018, the Company entered into an additional $11.0 million notional interest rate swap agreement
applicable to the $22.0 million additional debt under the Compass Term Loan. Under this additional interest rate swap agreement, the
Company pays a fixed percentage rate of 3.01% and receives a credit based on the applicable LIBOR rate. These interest rate swap
agreements do not meet the criteria for hedge accounting treatment in accordance with GAAP. At September 30, 2018 and
September 30, 2017, the aggregate notional value of these interest rate swap agreements was $28.7 million and $23.8 million,
respectively, and the fair value was $0.3 million and $(0.2) million, respectively, which is included within other assets or other
liabilities on the Company's Consolidated Balance Sheets.

Construction Partners Holdings must pay a commitment fee of 0.35% per annum on the aggregate unused revolving commitments
under the Compass Credit Agreement, as well as fees with respect to any letters of credit issued under the Compass Credit Agreement.

The Compass Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not
limited to, restrictions on Construction Partners Holdings’ ability to make acquisitions, make loans or advances, make capital

expenditures and investments, create or incur indebtedness, create liens, wind up or dissolve, consolidate, merge or liquidate, or sell,
transfer or dispose of assets. The Compass Credit Agreement requires Construction Partners Holdings to satisfy certain financial
covenants, including a minimum fixed charge coverage ratio of 1.20 to 1.00. The Compass Credit Agreement also requires the
Company to maintain a maximum consolidated leverage ratio of 2.00 to 1.00, subject to certain adjustments, as further described in the
Compass Credit Agreement. The Compass Credit Agreement includes customary events of default, including, among other things,
payment default, covenant default, breach of representation or warranty, bankruptcy, cross-default, material ERISA events, certain
changes of control, material money judgments and failure to maintain subsidiary guarantees. The Compass Credit Agreement prevents
Construction Partners Holdings from paying dividends or otherwise distributing cash to the Company unless, after giving effect to such
dividend, Construction Partners Holdings would be in compliance with the financial covenants and, at the time any such dividend is
paid, no default or event of default exists or would result from the payment of such dividend. At September 30, 2018, the Company
was in compliance with all covenants under the Compass Credit Agreement.

Acquired Debt

In connection with the Scruggs Acquisition, the Company assumed $1.1 million of debt, representing loans used to finance equipment
purchases and collateralized by the purchased equipment. These loans are reflected as other long-term debt in the table above at
September 30, 2018. Assumed debt includes three zero-interest notes payable that were used to finance equipment purchases and are
collateralized by the purchased equipment. The aggregate estimated fair value of these zero-interest loans at the acquisition date was
$0.4 million, determined in accordance with the methodology described under "Fair Value Measurements" in Note 3 - Significant
Accounting Policies, and are scheduled to be repaid via monthly payments with maturity dates between February 2020 and May 2020.
The Company also assumed $0.7 million of debt in connection with the Scruggs Acquisition, representing loans used to finance
equipment with fixed interest rates ranging from 4.50% - 5.95%. These notes payable require monthly payments and have maturity
dates ranging from 2019 through 2023.

CIT Credit Facility (repaid in full and terminated June 30, 2017)

On December 12, 2014, the Company and its wholly owned subsidiaries entered a credit agreement with a consortium of six financial
institutions represented by CIT Finance LLC acting as Administrative Agent and Collateral Agent (the “CIT Credit Facility”). The
$76.0 million facility consisted of a $49.0 million term loan (the “CIT Term Loan”) and capacity for additional borrowings of $27.0
million to finance future purchases of certain fixed assets. In connection with incurring this debt, the Company recorded $2.3 million
in deferred debt issuance costs, which were amortized to interest expense over the original term of the facility. At June 30, 2017, the
remaining $0.9 million unamortized balance of deferred debt issuance costs was recorded as a loss on extinguishment of debt upon
repayment of the loan in conjunction with the refinancing described above.

The CIT Credit Facility bore interest at an annual rate of 3-month LIBOR plus 3.5% and was subject to certain payment restrictions
and a mandatory prepayment provision if the aggregate balance outstanding to any borrower exceeded defined limits. Principal on the
CIT Term Loan was payable quarterly at 3.125% of aggregate gross borrowings, with a final payment of the outstanding principal
amount on December 12, 2019. On June 30, 2017, the Company repaid all outstanding principal and interest in the amount of $32.0
million and terminated the CIT Credit Facility.

Capitala Term Loan (repaid in full and terminated June 30, 2017)

On December 12, 2014, the Company and certain of its subsidiaries entered into a second lien credit agreement with Capitala Finance
Corp., which provided for a $12.5 million interest-only term loan (the “Capitala Term Loan”). In connection with incurring this debt,
the Company recorded $1.4 million in deferred debt issuance costs, which were amortized to interest expense over the term of the
Capitala Term Loan. At June 30, 2017, the remaining $0.7 million unamortized balance of deferred debt issuance costs was recorded
as a loss on extinguishment of debt upon repayment of the loan in conjunction with the refinancing described above.

The Capitala Term Loan bore interest at an annual rate of 11.5%, with 100% of the outstanding principal amount due on June 12, 2020.
On June 30, 2017, the Company repaid all outstanding principal and interest in the amount of $12.6 million and terminated the
Capitala Term Loan.

Other Debt (repaid in full and terminated June 30, 2017)

During the fiscal year ended September 30, 2017, the Company repaid in full and terminated certain other term loans and revolving
credit facilities. These loans were collateralized with the assets financed by the borrowings and included terms that varied for each
facility, including interest rates ranging from 3.33% to 11.5% and maturities ranging from December 2016 through June 2020. On June
30, 2017, the Company repaid all outstanding principal and interest under these loans in the amount of $10.1 million, and terminated
all related agreements.

The scheduled contractual repayment terms of long-term debt at September 30, 2018 were as follows:

Fiscal Year
2019

2020

2021

2022

2023

Thereafter

Total

Amount

14,773

14,762

14,555

19,157

—

63,264

Interest expense was $2.0 million and $4.1 million for the fiscal years ended September 30, 2018 and September 30, 2017,
respectively. Amortization of deferred issuance costs and debt discounts included in interest expense was $0.1 million and $0.7 million
for the fiscal years ended September 30, 2018 and September 30, 2017, respectively.

Note 13 - Equity

At September 30, 2018 and September 30, 2017, the Company had authorized for issuance 10,000,000 and 1,000,000 shares of
preferred stock, par value $0.001, respectively. No preferred shares were issued and outstanding at September 30, 2018 or
September 30, 2017.

At September 30, 2017, the Company had authorized for issuance 126,000,000 shares of common stock, par value per share $0.001, of
which 44,987,575 and 41,691,541 were issued and outstanding, respectively. At September 30, 2017, the Company held 3,296,034
shares in treasury, at an average cost of $3.64 per share.

As described in Note 2 - Initial Public Offering, the Company executed an IPO and certain related transactions during the fiscal year
ended September 30, 2018.

As described in Note 15 - Equity-Based Compensation, during the fiscal year ended September 30, 2018, employees holding options
under the 2010 Non-Plan Stock Option Agreement exercised all options to purchase 768,984 shares of Class B common stock at an
exercise price of $5.70 per share. These shares were issued from treasury shares at an average cost of $3.64 per share. The transaction
was executed as a cashless exercise.

The following presents changes to the Company’s outstanding shares of common stock, treasury shares and additional paid-in capital
for the fiscal years ended September 30, 2018 and September 30, 2017 (dollars in thousands):

Shares of
Common
Stock
Outstanding

Shares of Class
A Common
Stock
Outstanding

Shares of Class
B Common
Stock
Outstanding

Additional
Paid-in Capital

Cost

Treasury Shares

Balance, September 30, 2016

41,502,490

Equity-based compensation
expense

Sale of treasury stock

Balance, September 30, 2017

Sale of treasury stock

—

189,051

41,691,541

126,000

Reclassification of common stock

(41,817,541)

—

— $

141,872

(3,485,085) $

(12,621)

—

41,817,537

513

—

189,051

—

638

142,385

(3,296,034)

(11,983)

(453)

—

126,000

—

Conversion of Class B common
stock to Class A common stock in
connection with initial public
offering of Class A common stock

Initial public offering of Class A
common stock, net of offering
costs

Cashless option exercise

Equity-based compensation
expense

Balance, September 30, 2018

—

2,600,000

(2,600,000)

—

9,350,000

—

247,082

—

98,000

1,586

975

—

247,082

(4,078)

—

11,950,000

39,464,619

242,493

(2,922,952) $

(15,603)

458

—

On December 21, 2016, the Company’s Board of Directors declared a special dividend to common stockholders of record as of the
close of business on December 15, 2016 in the amount of $31.3 million ($0.754 per share). The dividend was paid from cash on hand
on January 10, 2017. Management does not expect the Company to declare stock dividends in the foreseeable future; however, the
Company’s future dividend policy will depend upon earnings, financial condition, capital requirements and certain other factors,
including terms of credit agreements that restrict the Company’s ability to declare or pay dividends.

Note 14 - Earnings Per Share

As described in Note 2 - Initial Public Offering, the Company completed an IPO and Reclassification of common stock during the
fiscal year ended September 30, 2018.

The following table summarizes the weighted-average number of basic common shares outstanding and the calculation of basic
earnings per share for the periods presented (in thousands, except share and per share amounts):

For the Fiscal Year Ended
September 30,

2018

2017

Numerator

Net income attributable to common shareholders

50,791

26,040

Denominator

Weighted average number of common shares outstanding, basic

45,605,845

41,550,293

Net income per common share attributable to common shareholders, basic

1.11

0.63

The following table summarizes the calculation of the weighted-average number of diluted common shares outstanding and the
calculation of diluted earnings per share for the periods presented (in thousands, except share and per share amounts):

Numerator

Net income attributable to common stockholders

50,791

26,040

For the Fiscal Year Ended September 30,

2018

2017

Denominator

Weighted average number of basic common
shares outstanding, basic

Effect of dilutive securities:

2010 non-plan stock option agreement options

2018 restricted stock grants

Weighted average number of diluted common
shares outstanding:

Net income per diluted common share attributable
to common stockholders

45,605,845

41,550,293

272,915

40,888

—

45,919,648

41,550,293

1.11

0.63

The Company had 768,984 common stock equivalents that were excluded from the calculation of diluted earnings per share for the
fiscal year ended September 30, 2017, since their inclusion would be anti-dilutive (see "2010 Non-Plan Stock Option Agreement"
described in Note 15 - Equity-Based Compensation). There were no anti-dilutive securities excluded from the calculation of diluted
earnings per share for the fiscal year ended September 30, 2018.

Note 15 - Equity-Based Compensation

Restricted Stock Awards

On February 23, 2018, the Company sold to certain employees a total of 126,000 restricted shares of common stock at a purchase price
of $0.04 per share. The Company recorded proceeds of $5,000 from the sale of these restricted shares, which were issued from
treasury shares. The Company recorded a reduction to additional paid-in capital of approximately $0.5 million representing the cost of
treasury shares issued in excess of the purchase price paid by the employees.

Half of the shares vested immediately on February 23, 2018, and the remaining half of the shares vested on July 1, 2018, upon the
respective employees' continuous employment through the vesting date. The grant date fair value of the shares was estimated to be
$7.78 per share.

During the fiscal year ended September 30, 2018, the Company recorded compensation expense in connection with these grants in the
amount of $1.0 million, which is reflected as general and administrative expenses on the Company’s Consolidated Statements of
Income. At September 30, 2018, there was no unrecognized compensation expense related to these awards.

2017 Options

On March 7, 2017, the Company granted to a certain employee a non-plan option to purchase 74,592 shares of the Company’s
common stock at an exercise price of approximately $0.04 per share. The option has an expiration date of March 7, 2027. The options
are classified as equity awards. The grant date fair value was $5.52 per share, calculated using the Black-Scholes option pricing model
applied to the following inputs.

Risk-free rate

Expected term (in years)

Expected volatility

Expected dividend yield

Value of underlying stock

2.04%

50%

5.56

The option vested 100% at the date of grant and is exercisable only during a change in control event as defined by the award, which
has not occurred. Unrecognized compensation expense in connection with this option at September 30, 2018 was $0.4 million. At

September 30, 2018, all 74,592 options were outstanding and vested. No portion of this option was exercisable or had intrinsic value at
September 30, 2018 because a change of control event had not occurred through that date.

2016 Equity Incentive Plan

On August 22, 2016, the Company granted to certain employees options to purchase 252,000 shares of the Company’s common stock
with an exercise price of $3.37 per share and an expiration date of August 22, 2026 pursuant to the Company's 2016 Equity Incentive
Plan (the "2016 Equity Incentive Plan").

The options are classified as equity awards and do not contain performance conditions or market conditions. The grant date fair value
was $2.90 per share, calculated using the Black-Scholes option pricing model applied to the following inputs:

Risk-free rate

Expected term (in years)

Expected volatility

Expected dividend yield

Value of underlying stock

1.31%

50%

4.97

On May 8, 2017, all agreements evidencing options granted under the 2016 Equity Incentive Plan were modified to immediately vest
all remaining unvested options outstanding. Accordingly, all remaining unrecognized compensation expense was recognized during
that period. Total compensation expense recorded during the fiscal year ended September 30, 2017 in connection with these options
was $0.5 million and there was no unrecognized compensation expense related to these options at September 30, 2017. Accordingly,
there was no compensation expense incurred in connection with these options during the fiscal year ended September 30, 2018, and
there was no unrecognized compensation expense at September 30, 2018.

The following is a summary of changes to the number of unvested options under the 2016 Equity Incentive Plan during the fiscal years
ended September 30, 2017 and September 30, 2018:

Unvested options outstanding at September 30, 2016

Granted

Vested

Forfeited

Unvested options outstanding at September 30, 2017

Granted

Vested

Forfeited

Unvested options outstanding at September 30, 2018

189,000

—

(189,000)

—
—

—

The intrinsic value of options exercised during the fiscal year ended September 30, 2017 was $0.4 million. No options were
outstanding under the 2016 Equity Incentive Plan at September 30, 2018 or September 30, 2017.

The following is a summary of activity related to options under the 2016 Equity Incentive Plan during the fiscal years ended
September 30, 2018 and September 30, 2017:

Outstanding, September 30, 2016

Granted

Exercised

Forfeited or expired

Outstanding, September 30, 2017

Outstanding, September 30, 2018

189,050

—

189,050

—

The Company received proceeds of $0.6 million from option holders upon exercises during the fiscal year ended September 30, 2017.
Shares were issued from treasury shares.

2010 Non-Plan Stock Option Agreement

In June 2018, certain employees of the Company exercised options to purchase 768,984 shares of Class B common stock at an exercise
price of $5.70 per share. These options were granted in 2010 pursuant to a non-plan option agreement and were classified as equity
awards. These shares were issued from treasury shares at an average cost of approximately $3.64 per share. The transaction was executed
as a cashless exercise through which the Company concurrently repurchased from the option holders the number of shares of Class B
common stock required to fund the exercise price for all options and meet statutory federal, state and payroll tax withholding requirements
applicable to the employees associated with their exercises. The Company purchased a total of 521,902 shares of Class B common stock,
at the $13.17 per share closing price of the Company’s Class A common stock on the date of exercise, resulting in a net increase of 247,082
shares of Class B common stock outstanding. Of the aggregate repurchase price, the Company retained $4.4 million which was recorded
to additional paid-in capital reflecting the total exercise price, and withheld $2.5 million which was submitted to taxing authorities for
employees’ payroll tax obligations.

Note 16 - Provision for Income Taxes

The Company files a consolidated United States income tax return and income tax returns in various states. Management evaluated the
Company’s tax positions based on appropriate provisions of applicable enacted tax laws and regulations and believes that they are
supportable based on their specific technical merits and the facts and circumstances of the transactions.

The provision for income taxes for the fiscal years ended September 30, 2018 and September 30, 2017 consists of the following (in
thousands):

For the Fiscal Year Ended
September 30,

2018

2017

9,380
1,626
11,006

(1,003)
522
(481)
10,525

11,977

1,900

13,877

711

154

865

14,742

Current

U.S. Federal

State

Total current

Deferred

U.S. Federal

State

Total deferred

Provision for income taxes

Differences exist between income and expenses reported on the consolidated financial statements and those deducted for U.S. Federal
and state income tax reporting. The Company’s deferred tax assets and liabilities consisted of the following temporary difference tax
effects at September 30, 2018 and September 30, 2017 (in thousands):

September 30,

2018

2017

Deferred tax assets

Allowance for bad debt

Amortization of finite-lived intangible assets

State net operating loss

Employee benefits

Accrued insurance claims

Other

Total deferred tax assets, net

Deferred tax liabilities

Amortization of goodwill

Property, plant and equipment

Other

Total deferred tax liabilities, net

Net deferred tax assets (liabilities)

444

499

1,695

—

1,202

—

3,840

(3,925)

(7,162)

(63)

(11,150)

936

751

1,928

243

1,417

506

5,781

(5,022)

(8,550)

—

(13,572)

(7,791)

(7,310) $

The Consolidated Balance Sheets at September 30, 2018 and September 30, 2017 include gross deferred tax assets of $3.8 million and
$5.8 million, respectively. In assessing the realization of deferred tax assets, management considers whether it is more likely than not
that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation
of future taxable income during the periods in which those temporary differences are deductible. Management considers the scheduled
reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected taxable income,
and tax-planning strategies in making this assessment. Based on the weight of all evidence known and available as of the balance sheet
date, management believes that these tax benefits are more likely than not to be realized in the future. To the extent that management
does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established.

Income taxes payable have been reduced by fuel tax credits of $0.3 million for each of the fiscal years ended September 30, 2018 and
September 30, 2017. The remaining amount of goodwill expected to be deductible for tax purposes was $14.9 million and $15.3
million at September 30, 2018 and September 30, 2017, respectively.

The following is a reconciliation of net deferred tax assets (liabilities) to amounts reflected on the Company’s Consolidated Balance
Sheets at September 30, 2018 and September 30, 2017 (in thousands):

Asset: Deferred income taxes, net

Liability: Deferred income taxes, net

Net deferred tax assets (liabilities)

September 30,

2018

2017

1,580

(8,890)

(7,310) $

1,876

(9,667)

(7,791)

At September 30, 2018 and September 30, 2017, the Company had a state net operating loss carryforward of $38.3 million and $52.5
million, respectively. The state net operating loss credit carryforwards expire in varying amounts between the fiscal years ended
September 30, 2020 and September 30, 2030.

The U.S. statutory income tax rate applicable to the Company was 35.0% during the fiscal year ended September 30, 2017. On
December 22, 2017, the U.S. government enacted comprehensive tax legislation known as the Tax Cuts and Jobs Act (the “Tax Act”).
The Tax Act included broad and complex changes to the U.S. tax code, including a reduction in the U.S. federal corporate income tax
rate from 35% to 21% effective January 1, 2018. The Company completed its accounting for the income tax effects of the Tax Act
during fiscal 2018 and recorded a discrete tax benefit of $4.6 million related to the Tax Act, primarily due to adjusting its U.S. deferred
tax liabilities by the same amount, reflecting the reduction in the U.S. federal corporate tax rate. This net reduction in deferred tax
liabilities also included the estimated impact on the Company’s net state deferred tax assets. Accordingly, the Company recorded its

income tax provision for the fiscal year ended September 30, 2018 based on a blended U.S. statutory tax rate of 24.5%, which was
based on a proration of the applicable tax rates before and after the effective date of the Tax Act, and the effect of applicable state
income taxes. The federal statutory rate of 21% applies for fiscal years beginning after September 30, 2018. During the fiscal year
ended September 30, 2018, the Company also realized a $2.3 million permanent tax benefit, including $1.4 million resulting from the
deduction of the excess fair market value of options exercised under the 2010 Non-Plan Stock Option Agreement over the exercise
price.

The following table reconciles income taxes based on the U.S. statutory tax rate to the Company’s income before provision for income
taxes for the fiscal years ended September 30, 2018 and September 30, 2017 (in thousands):

For the Fiscal Year Ended
September 30,

2018

2017

Provision for income tax at federal statutory rate

State income taxes

Change in deferred federal income taxes due to Tax Act

Permanent differences

Other

15,023 $
1,622

(4,552)

(2,282)

714

Provision for income taxes

10,525

14,260
1,268
—
(686)
(100)
14,742

Uncertain Tax Positions

ASC Topic 740, Income Taxes prescribes a recognition threshold and measurement model for the financial statement recognition and
measurement of a tax position taken, or expected to be taken, in a tax return and provides guidance on derecognition classification,
interest and penalties, accounting in interim periods, disclosure and transition.

The Company is subject to tax audits in various jurisdictions in the United States. Tax audits by their nature are often complex. In the
normal course of business, the Company is subject to challenges from the Internal Revenue Service ("IRS") and other tax authorities
regarding amounts of taxes due. These challenges may alter the timing or amount of taxable income or deductions, or the allocation of
income among tax jurisdictions. As part of the calculation of the provision for income taxes on earnings, management determines
whether the benefits of the Company’s tax positions are at least more likely than not to be sustained upon audit based on the technical
merits of the tax position. For tax positions that are more likely than not to be sustained upon audit, management accrues the largest
amount of the benefit that is more likely than not to be sustained. Such accruals require management to make estimates and judgments
with respect to the ultimate outcome of a tax audit. Actual results could vary materially from these estimates. The Company performed
an analysis of its tax positions and determined that no uncertain tax positions existed at September 30, 2018 or 2017. Accordingly,
there was no liability for uncertain tax positions at September 30, 2018 or September 30, 2017. Based on the provisions of ASC 740,
the Company had no material unrecognized tax benefits at September 30, 2018 or September 30, 2017. Due to the utilization of net
operating loss carryforwards, the Company’s federal income tax returns for fiscal years ended September 30, 2012 through
September 30, 2018 are subject to examination. Various state income tax returns for fiscal years ended September 30, 2011 through
September 30, 2018 are also subject to examination.

Note 17 - Employee Benefit Plans

The Company offers a 401(k) retirement plan covering substantially all employees who are at least 18 years old and have more than
one year of service. The Company makes discretionary employer contributions, subject to IRS safe harbor rules. Employer
contributions charged to earnings during the fiscal years ended September 30, 2018 and September 30, 2017 were $2.3 million and
$1.8 million, respectively.

Note 18 - Related Parties

On December 31, 2017, the Company sold a wholly owned subsidiary to an immediate family member of a Senior Vice President of
the Company ("Purchaser of subsidiary") in consideration for a note receivable in the amount of $1.0 million, which approximated the
net book value of the disposed entity. In connection with this transaction, the Company also received a note receivable from the
disposed entity ("Disposed entity") on December 31, 2017 in the amount of $0.9 million representing certain accounts payable of the
disposed subsidiary that were paid by the Company. At September 30, 2018, $0.8 million and $0.9 million, respectively, was reflected
on the Company’s Consolidated Balance Sheet representing the remaining balances on the consideration note receivable and accounts
payable note receivable. Principal and interest payments are scheduled to be made in periodic installments from January 2018 through
December 2023.

From time to time, the Company conducts business with the following related parties:

•

On January 30, 2015, a subsidiary of the Company entered into a master services subcontract with Austin Trucking, LLC
(“Austin Trucking”), an entity owned by an immediate family member of a Senior Vice President of the Company. Pursuant to
the agreement, Austin Trucking performs subcontract work for the subsidiary of the Company, including trucking services.

From time to time, a subsidiary of the Company provides construction services to various companies owned by a family
member of a Senior Vice President of the Company ("Construction Services").

For periodic corporate events, the Company charters a boat from Deep South Adventures, LLC, which is owned by a Senior
Vice President of the Company.

On June 1, 2014, the Company entered into an access agreement with Island Pond Corporate Services, LLC (“Island Pond”)
regarding certain property owned by the Chairman of the Company's Board of Directors who is also the Managing Partner of
SunTx. Pursuant to the access agreement, Island Pond grants the Company the non-exclusive right to use certain land located
in Baker County, Georgia for the purposes of business development.

The Company rents vehicles from an entity owned by a family member of a Senior Vice President of the Company ("Vehicle
Rentals"). The vehicles are rented on a month-to-month basis.

Family members of a Senior Vice President of the Company provide consulting services to a subsidiary of the Company
("Consulting Services").

A law firm owned by a family member of a Senior Vice President of the Company provides legal services to a subsidiary of
the Company ("Legal Services").

A subsidiary of the Company leases office space for its Dothan, Alabama office from H&K, Ltd. (“H&K”), an entity partially
owned by a Senior Vice President of the Company. The office space is leased through early 2020. Under the lease agreement,
the Company pays a fixed minimum rent per month.

A subsidiary of the Company leased office space for its Montgomery, Alabama office from H&A Properties LLC (“H&A”),
an entity partially owned by two Senior Vice Presidents of the Company. Under the lease agreement, the Company paid a
fixed minimum rent per month. In September 2018, the subsidiary purchased this office from H&A for $0.5 million.

A company owned by an immediate family member of a Senior Vice President of the Company provides subcontracting
services to a subsidiary of the Company ("Subcontracting Services")

The Company is party to a management services agreement with SunTx, under which the Company pays $0.25 million per
fiscal quarter and reimburses certain travel expenses.

The following table presents revenues earned and expenses incurred by the Company during the fiscal years ended September 30, 2018
and September 30, 2017, and accounts receivable and accounts payable balances at September 30, 2018 and 2017, related to
transactions with the related parties described above (in millions):

Revenue Earned (Expense Incurred)
For the Fiscal Year Ended September 30,

Accounts Receivable (Payable)
September 30,

2018

2017

2018

2017

Purchaser of subsidiary

Disposed entity

Austin Trucking

Construction Services

Deep South Adventures, LLC

Island Pond

Vehicle Rentals

Consulting Services

Legal Services

H&K

H&A

Subcontracting Services

SunTx

—

$
(13.0) (1) $
$
1.8
— (2) $
(0.3) (2) $
(1.2) (2) $
(0.3) (2) $
(0.1) (2) $
(0.1) (2) $
(0.1) (2) $
(0.2) (1) $
(1.5) (2) $

—

—
(11.8) (1)
6.3
(0.3) (2)
(0.3) (2)
(1.2) (2)
(0.2) (2)
(0.3) (2)
(0.1) (2)
(0.1) (2)
— (1)
(1.3) (2)

0.9

0.8
(0.8)
2.9

—

—
(0.1)
—

—

—
(1.0)
5.3

—

(1) Cost is reflected as cost of revenues on the Company's Consolidated Statements of Income
(2) Cost is reflected as general and administrative expenses on the Company's Consolidated Statements of Income

Note 19 - Commitments and Contingencies

Operating Leases

The Company leases office premises and equipment. Where leases contain escalation clauses or concessions, such as rent holidays and
landlord/tenant incentives or allowances, the impact of such adjustment is recognized on a straight-line basis over the minimum lease
period. Certain leases provide for renewal options and require the payment of real estate taxes or other occupancy costs, which are also
subject to escalation clauses. Operating lease expense amounted to approximately $11.2 million and $9.1 million for the fiscal years
ended September 30, 2018 and September 30, 2017, respectively, which is primarily included in cost of revenues in the Consolidated
Statements of Income.

Future minimum obligations under non-cancelable operating leases at September 30, 2018 were as follows (in thousands):

2019
2020

2021

2022

2023

Thereafter

Total

Fiscal Year

Amount

9,007
6,192
2,820
922
208
188
19,337

These amounts include obligations to related parties described in Note 18 - Related Parties of $0.2 million in fiscal year 2019 and $0.1
million in fiscal year 2020.

Litigation, Claims, and Assessments

The Company, from time to time, is subject to various inquiries or audits by taxing authorities (income taxes or other) originating from
its operations, covering a wide range of matters that arise in the ordinary course of business. Each of these matters is subject to various
uncertainties, and it is possible that some of these matters may not be resolved in the Company’s favor. The Company is also involved
in other legal and administrative proceedings arising in the ordinary course of business. The outcomes of these inquiries and legal
proceedings are not expected to have a material effect on the Company’s financial position or results of operations on an individual
basis, although adverse outcomes in a significant number of such ordinary course inquiries and legal proceedings could, in the
aggregate, have a material adverse effect on the Company’s financial condition and results of operations.

Letters of Credit

Under the Compass Revolving Credit Facility, the Company has a total capacity of $30.0 million that may be used for a combination
of cash borrowings and letters of credit issuances. At September 30, 2018 and September 30, 2017, the Company had aggregate letters
of credit outstanding in the amount of $11.8 million and $8.7 million, respectively, primarily related to certain insurance policies as
described in Note 3 - Significant Accounting Policies.

Note 20 - Joint Venture

In November 2017, one of the Company’s wholly owned subsidiaries entered into a joint venture agreement (the “JV”) with a third
party for the sole purpose of bidding on and, if awarded, performing a construction project for the Alabama Department of
Transportation. The Company and the third-party each own a 50% partnership interest in the JV and share revenue and expenses on a
50/50 basis. The JV is jointly managed by representatives of the Company and the third-party and all labor, material and equipment
required to perform the contract is subcontracted to parties which may include both the subsidiary of the Company that is party to the
JV and the third-party.

The Company accounts for this joint venture as an equity method investment in accordance with GAAP. Through September 30, 2018,
the Company invested approximately $0.4 million into the JV, which is reflected as investment in joint venture on the Consolidated
Balance Sheet. During the fiscal year ended September 30, 2018, the Company recognized $1.3 million pre-tax income, respectively,
representing its 50% interest in the earnings of the JV, which is reflected as earnings from investment in joint venture on the
Consolidated Statements of Income and included within investment in joint venture on the Consolidated Balance Sheet. The
Company’s income tax impact attributable to its investment in the JV is included within the provision for income taxes on its
Consolidated Statements of Income.

Note 21 - Settlement Agreement

On April 19, 2018, certain of the Company’s subsidiaries entered into settlement agreements with a third party, pursuant to which they
will receive aggregate net payments of approximately $15.7 million, payable in four equal installments between January 2019 and July
2020, in exchange for releasing and waiving all current and future claims against the third party relating to compensation to the
Company for a business interruption event that occurred more than five years ago, which did not directly relate to the Company’s
business and which has not, and is not expected to, recur (the “Settlement”). The Company recorded a pre-tax gain of $14.8 million
during the fiscal year ended September 30, 2018 related to the Settlement, which is reflected as settlement income on the Consolidated
Statements of Income. Future payments are reflected on the Consolidated Balance Sheets as other current assets and other assets in the
amount of $7.9 million and $7.2 million, respectively.

Note 22 - Condensed Financial Statements of Registrant

CONSTRUCTION PARTNERS, INC.
PARENT COMPANY ONLY
CONDENSED BALANCE SHEETS
(in thousands, except share and per share data)

ASSETS

Cash and cash equivalents

Investment in subsidiaries

Due from subsidiaries

Other assets

Total current assets

Property, plant and equipment

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Treasury stock purchase obligation

Due to subsidiaries

Other current liabilities

Total short-term liabilities

Long-term liabilities:

Due to subsidiaries

Treasury stock purchase obligation

Total long-term liabilities

Total liabilities

Stockholders’ Equity

Preferred stock, par value $0.001; 10,000,000 shares authorized at September 30, 2018 and 1,000,000 shares
authorized at September 30, 2017 and no shares issued and outstanding

Class A common stock, par value $0.001; 400,000,000 shares authorized, 11,950,000 shares issued and

outstanding at September 30, 2018, and no shares authorized, issued and outstanding at September 30, 2017

Class B common stock, par value $0.001; 100,000,000 shares authorized, 42,387,571 shares issued and

39,464,619 shares outstanding at September 30, 2018, and no shares authorized, issued and outstanding at
September 30, 2017

Common stock, $.001 par value, no shares authorized, issued and outstanding at September 30, 2018, and

126,000,000 shares authorized, 44,987,575 shares issued and 41,691,541 shares outstanding at September
30, 2017

Additional paid-in capital

Treasury stock, at cost

Retained earnings

Total stockholders’ equity

Total liabilities and stockholders’ equity

See note to condensed financial statements of parent company.

September 30,

2018

2017

53,352
247,944
545
1,226
303,067
131
303,198

569
800
187
1,556

2,177
—
2,177
3,733

—

1,330

162,274

—

2,196
165,800
—
165,800

2,569
6,449
1,062
10,080

2,971
569
3,540
13,620

—

—
242,489
(15,603)
72,525
299,465
303,198

45
142,385
(11,983)
21,733
152,180
165,800

CONSTRUCTION PARTNERS, INC.
PARENT COMPANY ONLY
CONDENSED STATEMENTS OF INCOME
(in thousands, except per share amounts)

Equity in net income of subsidiaries

Equity-based compensation expense

General and administrative expenses

Loss on extinguishment of debt

Interest expense, net

Income before provision for income taxes

Income tax benefit

Net income

Net income per share attributable to common stockholders:

Basic

Diluted

Weighted average number of common shares outstanding:

Basic

Diluted

See note to condensed financial statements of parent company.

For the Fiscal Year Ended
September 30,

2018

2017

51,515

28,312

(975)

(1,542)

—

49,070

1,721

50,791

1.11

(513)

(388)

(714)

(1,338)

25,359

681

26,040

0.63

45,605,845

45,919,648

41,550,293

For the Fiscal Year Ended
September 30,

2018

2017

50,791

26,040

6
—
—
975
(51,515)

—
969
(3,369)
(2,143)

—
(131)
(34,155)
(34,286)

(6,994)
—
(2,569)
98,009
5
—
88,451

52,022

1,330

53,352

216

714

350

513

(28,312)

1,061

(1,603)

—

(1,021)

27,000

—

27,000

20,305

(12,500)

(3,000)

—

638

(31,293)

(25,850)

129

1,201

1,330

CONSTRUCTION PARTNERS, INC.
PARENT COMPANY ONLY
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)

Cash flows from operating activities:

Net income

Adjustments to reconcile net income to net cash used in operating activities:

Amortization of deferred debt issuance costs

Loss on extinguishment of debt

Deferred income taxes

Equity-based compensation expense

Equity in net income of subsidiaries

Changes in operating assets and liabilities:

Other current liabilities

Other current assets

Other liabilities

Net cash used in operating activities

Cash flows from investing activities:

Return of investments in subsidiaries

Purchases of property, plant and equipment

Investment in subsidiary
Net cash (used in) provided by investing activities

Cash flows from financing activities:

Change in amounts due to (from) subsidiaries, net

Repayments of long-term debt

Payment of treasury stock purchase obligation

Proceeds from initial public offering of Class A common stock, net of offering costs

Proceeds from sale of treasury stock

Common stock dividend paid

Net cash provided by (used in) financing activities

Net change in cash and cash equivalents

Cash and cash equivalents:

Beginning of period

End of period

See note to condensed financial statements of parent company.

Note to Condensed Financial Statements of Parent Company

These condensed parent company-only financial statements have been prepared in accordance with Rule 12-04, Schedule I of
Regulation S-X, as the restricted net assets of the subsidiaries of Construction Partners, Inc. (as defined in Rule 4-08(e)(3) of
Regulation S-X) exceed 25% of the consolidated net assets of the Company. The ability of Construction Partners, Inc.’s operating
subsidiaries to pay dividends is restricted by the terms of the credit facilities described in Note 12 - Debt.

These condensed parent company-only financial statements have been prepared using the same accounting principles and policies
described in the notes to the consolidated financial statements, with the exception that the parent company accounts for its subsidiaries
using the equity method. These condensed parent company-only financial statements should be read in conjunction with the
consolidated financial statements and related notes thereto.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be
disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management,
including our President and Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required
disclosure.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and
procedures can only provide reasonable assurance of achieving their control objectives.

Our management, under the supervision of our President and Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the
end of the period covered by this Annual Report on Form 10-K. As a result of the material weaknesses described below, our President
and Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this Annual Report
on Form 10-K, our disclosure controls and procedures were not effective at the reasonable assurance level.

Internal Control Over Financial Reporting

This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial
reporting or an attestation report of our registered public accounting firm due to a transition period established by SEC rules for newly
public companies.

Nevertheless, in the course of preparing the consolidated financial statements for the fiscal years ended September 30, 2018 and 2017,
our management determined we have material weaknesses in our internal control over financial reporting relating to the design and
operation of our information technology general controls and overall closing and financial reporting controls, including our accounting
for significant and unusual transactions. We have concluded that these material weaknesses in our internal control over financial
reporting are primarily due to the fact that we have historically operated as a private company with limited resources and had neither
formally designed and implemented the necessary business processes and related internal controls nor employed personnel with the
appropriate level of experience and technical expertise to oversee (i) our business processes and controls surrounding information
technology general controls, (ii) our closing and financial reporting processes, or (iii) the accounting and financial reporting
requirements related to significant and unusual transactions.

Changes in Internal Control

As a result of these material weaknesses, we have initiated and will continue to implement remediation measures including, but not
limited to: (i) hiring additional accounting staff members to augment our current staff and to improve the effectiveness of our financial
period close and reporting processes; (ii) engaging a third party to assist us in complying with the accounting and financial reporting
requirements related to significant and unusual transactions; (iii) engaging a third party to assist us in identifying and implementing the
business processes and controls surrounding information technology general controls; and (iv) engaging a third party to assist us with
formalizing our business processes, accounting policies and internal control documentation, strengthening supervisory reviews by our
management, and evaluating the effectiveness of our internal controls in accordance with the framework established by Internal
Control - Integrated Framework (2013) published by the Committee of Sponsoring Organizations of the Treadway Commission.

Notwithstanding the material weaknesses, our management has concluded that the consolidated financial statements included
elsewhere in this Annual Report on Form 10-K present fairly, in all material respects, our financial position, results of operations and
cash flows in conformity with GAAP.

Other than the changes intended to remediate the material weaknesses noted above, there were no changes in our internal control over
financial reporting during the fiscal quarter ended September 30, 2018 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.

Item 9B. Other Information.

None.

Item 10. Directors, Executive Officers and Corporate Governance.

PART III

The information required by this Item is incorporated by reference to the proxy statement for the 2019 annual meeting of stockholders
of the Company to be filed by the Company with the SEC under the Exchange Act (the “2019 Proxy Statement”). We intend to file the
2019 Proxy Statement on or about January 22, 2019, but in any event within 120 days after the fiscal year ended September 30, 2018.

Item 11. Executive Compensation.

The information required by this Item is incorporated by reference to the 2019 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item is incorporated by reference to the 2019 Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this Item is incorporated by reference to the 2019 Proxy Statement.

Item 14. Principal Accounting Fees and Services.

The information required by this Item is incorporated by reference to the 2019 Proxy Statement.

Item 15. Exhibits, Financial Statement Schedules.

(a) Documents Filed as Part of this Report.

(1)

Financial Statements.

PART IV

The consolidated financial statements of Construction Partners, Inc. and its subsidiaries and the parent-only financial

statements of Construction Partners, Inc. included herein at Item 8 are as follows:

•

Report of Independent Registered Public Accounting Firm — RSM US LLP

Consolidated Balance Sheets as of September 30, 2018 and 2017

Consolidated Statements of Income for the fiscal years ended September 30, 2018 and 2017

Consolidated Statements of Changes in Shareholders’ Equity for the fiscal years ended September 30, 2018 and 2017

Consolidated Statements of Cash Flows for the fiscal years ended September 30, 2018 and 2017

Notes to Consolidated Financial Statements for the fiscal years ended September 30, 2018 and 2017

Parent Company Balance Sheets as of September 30, 2018 and 2017

Parent Company Statements of Income for the fiscal years ended September 30, 2018 and 2017

Parent Company Statements of Cash Flows for the fiscal years ended September 30, 2018 and 2017

(2)

Financial Statement Schedules.

The financial statement schedules required to be included pursuant to this Item are not included herein because they are not
applicable or the required information is shown in the consolidated financial statements or notes thereto, which are incorporated by
reference at Item 15(a)(1) above.

(3)

Exhibits.

The exhibits to this report are listed in the exhibit index below.

(b) Description of Exhibits.

The following exhibits are filed or furnished with this report, as applicable, or incorporated by reference:

Exhibit
Number
3.1

3.2

4.1

4.2

10.1†

10.2

10.2A

Description
Amended and Restated Certificate of Incorporation of Construction Partners, Inc. (incorporated by reference to Exhibit
3.1 to Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-224174) filed on April 27, 2018)

Amended and Restated Bylaws of Construction Partners, Inc. (incorporated by reference to Exhibit 3.2 to Amendment
No. 2 to the Registration Statement on Form S-1 (File No. 333-224174) filed on April 27, 2018)

Form of Class A Common Stock Certificate (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the
Registration Statement on Form S-1 (File No. 333-224174) filed on April 23, 2018)

Registration Rights Agreement, dated June 8, 2007, by and among Construction Partners, Inc. (f/k/a SunTx CPI Growth
Company, Inc.) and certain security holders party thereto (incorporated by reference to Exhibit 4.2 to the Registration
Statement on Form S-1 (File No. 333-224174) filed on April 6, 2018)

Form of Indemnification Agreement, by and between Construction Partners, Inc. and each of its directors and executive
officers (incorporated by reference to Exhibit 10.1 to Amendment No. 1 to the Registration Statement on Form S-1 (File
No. 333-224174) filed on April 23, 2018)

Credit Agreement, dated June 30, 2017, by and among Construction Partners Holdings, Inc. (f/k/a Construction
Partners, Inc.), Wiregrass Construction Company, Inc., Fred Smith Construction, Inc., FSC II, LLC, C.W. Roberts
Contracting, Incorporated and Everett Dykes Grassing Co., Inc., as Borrowers, the financial institutions party thereto
from time to time, and Compass Bank, as Agent, Sole Lead Arranger and Sole Bookrunner (incorporated by reference to
Exhibit 10.2 to the Registration Statement on Form S-1 (File No. 333-224174) filed on April 6, 2018)

Amendment to Credit Agreement, dated June 30, 2017, by and among Construction Partners Holdings, Inc. (f/k/a
Construction Partners, Inc.), Wiregrass Construction Company, Inc., Fred Smith Construction, Inc., FSC II, LLC, C.W.
Roberts Contracting, Incorporated, and Everett Dykes Grassing Co., Inc., as Borrowers, Compass Bank, as Agent for
Lenders and as a Lender and Issuing Bank, and ServisFirst Bank, as a Lender (incorporated by reference to Exhibit 10.3
to the Registration Statement on Form S-1 (File No. 333-224174) filed on April 6, 2018)

Exhibit
Number
10.2B

10.2C

10.2D

Description

Loan Modification Agreement and Amendment to Loan Documents, dated November 14, 2017, by and among
Construction Partners Holdings, Inc. (f/k/a Construction Partners, Inc.), Wiregrass Construction Company, Inc., Fred
Smith Construction, Inc., FSC II, LLC, C.W. Roberts Contracting, Incorporated, and Everett Dykes Grassing Co., Inc.,
as Borrowers, Construction Partners, Inc. (f/k/a SunTx CPI Growth Company, Inc.), as Guarantor, Compass Bank, as
Agent for Lenders and as a Lender and Issuing Bank, and ServisFirst Bank, as a Lender (incorporated by reference to
Exhibit 10.4 to the Registration Statement on Form S-1 (File No. 333-224174) filed on April 6, 2018)

Loan Modification Agreement and Amendment to Loan Documents, dated December 31, 2017, by and among
Construction Partners Holdings, Inc. (f/k/a Construction Partners, Inc.), Wiregrass Construction Company, Inc., Fred
Smith Construction, Inc., FSC II, LLC, C.W. Roberts Contracting, Incorporated, and Everett Dykes Grassing Co., Inc.,
as Borrowers, Construction Partners, Inc. (f/k/a SunTx CPI Growth Company, Inc.), as Guarantor, Compass Bank, as
Agent for Lenders and as a Lender and Issuing Bank, and ServisFirst Bank, as a Lender (incorporated by reference to
Exhibit 10.5 to the Registration Statement on Form S-1 (File No. 333-224174) filed on April 6, 2018)

Loan Modification Agreement and Amendment to Loan Documents, dated May 15, 2018, by and among Construction
Partners Holdings, Inc. (f/k/a Construction Partners, Inc.), Wiregrass Construction Company, Inc., Fred Smith
Construction, Inc., FSC II, LLC, C.W. Roberts Contracting, Incorporated, Everett Dykes Grassing Co., Inc. and The
Scruggs Company, as Borrowers, Construction Partners, Inc. (f/k/a SunTx CPI Growth Company, Inc.), as Guarantor,
Compass Bank, as Agent for Lenders and as a Lender and Issuing Bank, and ServisFirst Bank, as a Lender
(incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K (File No. 001-38479) filed on May 25,
2018)

10.3†

Construction Partners, Inc. (f/k/a SunTx CPI Growth Company, Inc.) 2016 Equity Incentive Plan and forms of Option
Agreement, Option Grant Notice, Restricted Stock Award Agreement and Restricted Stock Award Grant Notice
thereunder (incorporated by reference to Exhibit 10.6 to the Registration Statement on Form S-1 (File No. 333-224174)
filed on April 6, 2018)

10.4†

Construction Partners, Inc. 2018 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 to Amendment No. 1
to the Registration Statement on Form S-1 (File No. 333-224174) filed on April 23, 2018)

10.4A†

Form of Stock Option Award under the Construction Partners, Inc. 2018 Equity Incentive Plan (incorporated by
reference to Exhibit 10.8 to the Registration Statement on Form S-1 (File No. 333-224174) filed on April 6, 2018)

10.4B†

10.4C†

10.4D†

10.4E†

10.5

10.5A

10.6†

10.7†

Form of Restricted Stock Award under the Construction Partners, Inc. 2018 Equity Incentive Plan (incorporated by
reference to Exhibit 10.9 to the Registration Statement on Form S-1 (File No. 333-224174) filed on April 6, 2018)

Form of Restricted Stock Unit Award under the Construction Partners, Inc. 2018 Equity Incentive Plan (incorporated by
reference to Exhibit 10.10 to the Registration Statement on Form S-1 (File No. 333-224174) filed on April 6, 2018)

Form of Stock Appreciation Rights Award (Stock-Settled) under the Construction Partners, Inc. 2018 Equity Incentive
Plan (incorporated by reference to Exhibit 10.11 to the Registration Statement on Form S-1 (File No. 333-224174) filed
on April 6, 2018)

Form of Stock Appreciation Rights Award (Cash-Settled) under the Construction Partners, Inc. 2018 Equity Incentive
Plan (incorporated by reference to Exhibit 10.12 to the Registration Statement on Form S-1 (File No. 333-224174) filed
on April 6, 2018)

Management Services Agreement, dated October 1, 2006, by and between Construction Partners Holdings, Inc. (f/k/a
Construction Partners, Inc.) and SunTx Capital Management Corp. (incorporated by reference to Exhibit 10.13 to the
Registration Statement on Form S-1 (File No. 333-224174) filed on April 6, 2018)

Amendment to Management Services Agreement, dated October 1, 2013, by and between Construction Partners
Holdings, Inc. (f/k/a Construction Partners, Inc.) and SunTx Capital Management Corp. (incorporated by reference to
Exhibit 10.14 to the Registration Statement on Form S-1 (File No. 333-224174) filed on April 6, 2018)

Employment and Non-Compete Agreement, effective as of July 1, 2014, by and between FSC II, LLC and F. Julius
Smith III (incorporated by reference to Exhibit 10.15 to the Registration Statement on Form S-1 (File No. 333-224174)
filed on April 6, 2018)

Form of Construction Partners, Inc. (f/k/a SunTx CPI Growth Company, Inc.) Non-Plan Stock Option Award Agreement
(incorporated by reference to Exhibit 10.16 to the Registration Statement on Form S-1 (File No. 333-224174) filed on
April 6, 2018)

Exhibit
Number
10.7A†

Form of Construction Partners, Inc. (f/k/a SunTx CPI Growth Company, Inc.) First Amendment to Non-Plan Stock
Option Award Agreement (incorporated by reference to Exhibit 10.17 to the Registration Statement on Form S-1 (File
No. 333-224174) filed on April 6, 2018)

Description

10.8†

Option Agreement, dated March 7, 2017, between Construction Partners, Inc. (f/k/a SunTx CPI Growth Company, Inc.)
and F. Julius Smith, III (incorporated by reference to Exhibit 10.18 to the Registration Statement on Form S-1 (File No.
333-224174) filed on April 6, 2018)

14.1*

Code of Business Conduct and Ethics

16.1

Letter of PBMares, LLP (incorporated by reference to Exhibit 16.1 to the Registration Statement on Form S-1 (File No.
333-224174) filed on April 6, 2018)

21.1*

List of Significant Subsidiaries of Construction Partners, Inc.

23.1*

Consent of RSM US LLP

31.1*

31.2*

Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities
Exchange Act of 1934, as amended

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of
1934, as amended

32.1**

Certification of President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350

32.2**

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

95.1*

Mine Safety Disclosures

101*

Interactive Data Files

†

Management contract, compensatory plan or arrangement.

Filed herewith.

Furnished herewith.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on this 14th day of December, 2018.

SIGNATURES

CONSTRUCTION PARTNERS, INC.

By:

/s/ Charles E. Owens

Charles E. Owens

President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.

Name and Signature

Title

Date

/s/ Charles E. Owens

President, Chief Executive Officer and Director

December 14, 2018

Charles E. Owens

(Principal Executive Officer)

/s/ R. Alan Palmer

Executive Vice President and Chief Financial Officer December 14, 2018

R. Alan Palmer

(Principal Financial Officer)

/s/ Todd K. Andrews
Todd K. Andrews

Chief Accounting Officer
(Principal Accounting Officer)

December 14, 2018

/s/ Ned N. Fleming, III Executive Chairman of the Board and Directors

December 14, 2018

Ned N. Fleming, III

/s/ Craig Jennings

Director

Craig Jennings

/s/ Mark R. Matteson

Director

Mark R. Matteson

/s/ Michael H. McKay Director

Michael H. McKay

/s/ Stefan L. Shaffer

Director

Stefan L. Shaffer

December 14, 2018

[This page intentionally left blank]

CORPORATE INFORMATION

COMMON STOCK

CORPORATE OFFICES

Construction Partners, Inc. has a dual class common
stock structure consisting of Class A and Class B
common stock. With respect to each proposal to
come before our stockholders, each share of Class A
common stock is entitled to one vote, and each share
of Class B common stock is entitled to ten votes. As
of January 7, 2019, there were 11,950,000 shares of
Class A common stock outstanding and 39,464,619
shares of Class B common stock outstanding.

Since May 4, 2018, our Class A common stock has
been traded on the Nasdaq Global Select Market
under the ticker symbol “ROAD.”

Construction Partners, Inc.
290 Healhwest Drive, Suite 2
Dothan, Alabama 36303
Phone: (334) 673-9763
Website: www.constructionpartners.net

LEGAL COUNSEL

Akin Gump Strauss Hauer & Feld LLP
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201
Phone: (214) 969-2800

INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM:

FINANCIAL PUBLICATIONS

Our Annual Report on Form 10-K for the fiscal year
ended September 30, 2018 has been filed with the
Securities and Exchange Commission and is available
on the SEC’s website at http://www.sec.gov and at
www.proxyvote.com. Copies of this report and other
filings that we make with the SEC are also available
on our website at www.constructionpartners.net under
the “Investors” tab and may be obtained by submitting
a written request to our Secretary at our corporate
office.

RSM US LLP
216 Summit Blvd., Suite 300
Birmingham, Alabama 35243
Phone: (205) 278-0001

TRANSFER AGENT

Continental Stock Transfer & Trust
1 State Street, 30th Floor
New York, NY 10004
Phone: (212) 509-4000

BOARD OF DIRECTORS

Ned N. Fleming, III

Mark R. Matteson

Charles E. Owens

Craig Jennings

Michael H. McKay

Stefan L. Shaffer

MANAGEMENT TEAM

Todd K. Andrews

Robert P. Flowers

R. Alan Palmer

M. Brett Armstrong

John L. Harper

F. Julius Smith, III

J. Ryan Brooks

Charles E. Owens

John A. Walker

Construction Partners, Inc.
290 Healthwest Drive, Suite 2
Dothan, Alabama 36303
(334) 673-9763
www.constructionpartners.net