LEASE OBLIGATIONS |
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| LEASE OBLIGATIONS | 15. 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. The Company has only committed to a one-year renewal and is evaluating the intent 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 June 30, 2025. The 4.5% interest rate on the operating leases is based on the Company’s incremental borrowing rate at inception. The Company intends to sign a one-year renewal and is evaluating the intent 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 period with a net present value of $140,000 and had a carrying value of $81,000 at June 30, 2025. The 8.5% interest rate on the operating leases is based on the Company’s incremental borrowing rate at inception. The Company has a right-of-use operating lease with Enterprise Fleet Management, Inc. The Company had vehicles on lease at June 30, 2025. The right-of-use operating lease has a carrying value of $2.2 million at June 30, 2025. Each vehicle leased under the master lease program has its own implicit rate ranging from 12.8% to 15.6%. The Company leases office and shop space for Ryan Construction’s headquarters in Bridgeport, West Virginia. The Company renewed the lease for one year effective October 1, 2024 through September 30, 2025. The Company has only committed to a one-year renewal and is evaluating the intent to renew for additional periods. 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 $72,000 at June 30, 2025. The 7.75% interest rate on the operating lease is based on the Company’s incremental borrowing rate at inception. 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 reporting period 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 $4.8 million and $2.5 million, respectively, for the three months ended June 30, 2025 and 2024. Rental expense was $13.8 million and $6.8 million, respectively, for the nine months ended June 30, 2025 and 2024. Schedules related to the Company’s operating leases at June 30, 2025 can be found below: Operating Lease-Weighted Average Remaining Term
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