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LEASE OBLIGATIONS

12 Months Ended

Sep. 30, 2025

21.

LEASE OBLIGATIONS

The Company leases office space for SQP for $1,500 per month. The lease, which was originally signed on March 25, 2021, is for a period of two years with five one-year renewals available immediately following the end of the base term. As of September 30, 2025, the Company has only committed to one-year renewals and is evaluating whether to renew for additional periods.

The Company has two right-of-use operating leases acquired on April 29, 2022, as part of the Tri-State Paving, LLC transaction. The first operating lease, for the Hurricane, West Virginia facility, had a net present value of $236,000 at inception, and a carrying value of $0 at September 30, 2025. The 4.5% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception. The Company signed a one-year renewal after the lease expired and as of September 30, 2025 is evaluating whether to renew for additional periods.

The second operating lease, for the Chattanooga, Tennessee facility, had a net present value of $144,000 at inception, and expired on August 31, 2024. The lease was renewed for a two-year period with a net present value of $140,000 and had a carrying value of $50,000 at September 30, 2025. The 8.5% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception.

The Company has a right-of-use operating lease with Enterprise acquired on August 11, 2022, as part of the Ryan Environmental acquisition. This lease agreement was initially for thirty-one vehicles with a net present value of $1.2 million. The Company subsequently netted fifty-one additional leased vehicles. The right-of-use operating lease had a carrying value of $1.9 million at September 30, 2025. Each vehicle leased under the master lease program has its own implicit rate.

The Company has a right-of-use operating lease acquired on March 28, 2023. This lease, for the Winchester, Kentucky facility, had a net present value of $290,000 at inception and a carrying value of $44,000 at September 30, 2025. The 7.5% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception.

Schedules related to the Company’s operating leases at fiscal year ended September 30, 2025 can be found below:


Operating Lease-Weighted Average Remaining Term
	Years left	Remaining liability			Lease end	Fiscal year end
Operating lease 1	0.0	$	—		3/31/2025	2025
Operating lease 2	0.5		50,137		8/31/2026	2026
Operating lease 3	3.5		1,949,038		9/30/2028	2028
Operating lease 4	0.0		—		9/30/2024	2024
Operating lease 5	0.8		44,467		3/31/2026	2026
		$	2,043,642

Weighted average remaining term			3.4	years


Operating Lease Maturity Schedule
2026	$	1,291,116
2027		799,632
2028		308,279
2029		101,426
		2,500,453
Less amounts representing interest		(456,811)
Present value of operating lease liabilities	$	2,043,642


	Twelve Months Ended		Twelve Months Ended
	September 30,		September 30,
Operating Lease Expense	2025		2024
Amortization
Operating lease 1	$	45,833	$	87,167
Operating lease 2		72,564		74,042
Operating lease 3		885,178		688,869
Operating lease 4		—		124,701
Operating lease 5		116,461		101,243
Total amortization		1,120,036		1,076,022

Interest
Operating lease 1	$	545	$	3,833
Operating lease 2		7,661		1,892
Operating lease 3		220,615		219,414
Operating lease 4		—		4,899
Operating lease 5		6,847		14,250
Total interest		235,668		244,288
Total amortization and interest	$	1,355,704	$	1,320,310


	Twelve Months Ended			Twelve Months Ended
	September 30,			September 30,
Cash Paid for Operating Leases	2025			2024

Operating lease 1	$	46,378		$	91,000
Operating lease 2		80,225			75,934
Operating lease 3		1,105,793			908,283
Operating lease 4		—			129,600
Operating lease 5		123,308			115,493
	$	1,355,704		$	1,320,310

The Company rents equipment for use on construction projects with rental agreements being week to week or month to month. Rental expense can vary by fiscal year due to equipment requirements on construction projects and the availability of Company owned equipment. Rental expense, which is included in cost of goods sold on the consolidated statements of income, was $16.3 million and $22.9 million for the years ended September 30, 2025, and 2024, respectively.