NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements include the accounts of U.S. Concrete, Inc. and its subsidiaries (collectively, "we," "us," "our," the "Company," or "U.S. Concrete") and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for reporting interim financial information. Some information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") have been condensed or omitted pursuant to the SEC’s rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 31, 2018 (the "2018 10-K"). In the opinion of our management, all material adjustments necessary to state fairly the information in our unaudited condensed consolidated financial statements have been included. All adjustments are of a normal or recurring nature. All amounts are presented in United States dollars, unless otherwise noted. Certain computations may be impacted by the effect of rounding in this report. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Certain reclassifications have been made to prior year amounts to conform with the current year presentation.
The preparation of financial statements and accompanying notes in conformity with U.S. GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions that we consider significant in the preparation of our financial statements include those related to our allowance for doubtful accounts, business combinations, goodwill, intangibles, valuation of contingent consideration, accruals for self-insurance, income taxes, the valuation of inventory and the valuation and useful lives of property, plant and equipment.
|
|
2.
|
RECENT ACCOUNTING PRONOUNCEMENTS AND SIGNIFICANT ACCOUNTING POLICIES
|
Recently Adopted - Lease Accounting. In February 2016, the Financial Accounting Standards Board ("FASB") issued a new lease accounting standard intended to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new guidance, lessees are required to recognize a right-of-use asset and a lease liability, measured on a discounted basis, at the commencement date for all leases, excluding mineral interest leases, with terms greater than twelve months. Additionally, this guidance requires disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. We adopted the guidance as of January 1, 2019, using the transition approach that permitted application of the new standard at the adoption date instead of the earliest comparative period presented in the financial statements. We implemented processes and information technology tools to assist in our ongoing lease data collection and analysis and in updating internal controls that were impacted by the new guidance.
In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. We also elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements. We elected to exclude leases with an initial term of 12 months or less from the balance sheet. We made an accounting policy election to combine lease and non-lease components when calculating the lease liability under the new standard. Non-lease components, which may include taxes, maintenance, insurance and certain other expenses applicable to the leased property, are primarily considered variable costs. We did not elect the hindsight practical expedient to determine the lease term for existing leases.
As a result of adopting the new standard, we recorded additional lease assets and lease liabilities of approximately $76.9 million and $79.2 million, respectively, on the balance sheet as of January 1, 2019. The additional lease assets equal the lease liabilities, excluding the impact of deferred rent, which was previously recorded in accrued liabilities. The standard did not materially impact our consolidated net earnings and had no impact on cash flows.
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Not Yet Adopted - Credit Losses. In June 2016, the FASB issued an update on the measurement of credit losses on financial instruments, which requires entities to use a forward-looking approach based on expected losses rather than the current model of incurred losses to estimate credit losses on certain types of financial instruments, including trade accounts receivable. Application of the new model may result in the earlier recognition of allowances for losses. The guidance becomes effective for us on January 1, 2020, with early adoption permitted. We are in the process of assessing the impact of this new standard on our consolidated financial statements.
For our other significant accounting policies, see Note 1 to the consolidated financial statements in our 2018 10-K.
3. LEASES
We are the lessee in a lease contract when we obtain the right to control the asset. We lease certain land, office space, equipment and vehicles. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is primarily at our discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.
Certain of our lease agreements include rental payments based on a percentage of volume sold over contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Where observable, we use the implicit interest rate in determining the present value of future payments. Where the implicit interest rate is not observable, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. We give consideration to our outstanding debt as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates.
|
|
|
|
|
|
|
|
|
Leases ($ in millions)
|
|
Balance Sheet Classification
|
|
September 30, 2019
|
|
Assets:
|
|
|
|
|
|
Operating lease assets
|
|
Operating lease assets
|
|
$
|
69.3
|
|
|
Finance lease assets
|
|
Property, plant and equipment, net
|
|
98.0
|
|
(1)
|
Total lease assets
|
|
|
|
$
|
167.3
|
|
|
Liabilities:
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Operating
|
|
Current operating lease liabilities
|
|
$
|
13.5
|
|
|
Finance
|
|
Current maturities of long-term debt
|
|
26.6
|
|
|
Long-term liabilities:
|
|
|
|
|
|
Operating
|
|
Long-term operating lease liabilities
|
|
58.6
|
|
|
Finance
|
|
Long-term debt, net of current maturities
|
|
45.5
|
|
|
Total lease liabilities
|
|
|
|
$
|
144.2
|
|
|
(1) Net of accumulated amortization of $23.6 million.
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease Cost ($ in millions)
|
|
Statement of Operations Classification
|
|
Three Months Ended
September 30, 2019
|
|
Nine Months Ended
September 30, 2019
|
|
Operating lease cost
|
|
Selling, general and administrative expenses
|
|
$
|
6.8
|
|
(1)
|
$
|
19.8
|
|
(2)
|
Finance lease cost:
|
|
|
|
|
|
|
|
Amortization of leased assets
|
|
Depreciation, depletion and amortization
|
|
3.0
|
|
|
8.6
|
|
|
Interest on lease liabilities
|
|
Interest expense, net
|
|
0.6
|
|
|
1.9
|
|
|
Total finance lease cost
|
|
|
|
3.6
|
|
|
10.5
|
|
|
Total
|
|
|
|
$
|
10.4
|
|
|
$
|
30.3
|
|
|
(1) Includes short-term lease and variable lease costs of approximately $1.9 million.
(2) Includes short-term lease and variable lease costs of approximately $5.2 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity of Lease Liabilities ($ in millions)
|
|
Operating Leases
|
|
Finance Leases
|
|
Total
|
2019 (remainder of year)
|
|
$
|
4.6
|
|
|
$
|
10.4
|
|
|
$
|
15.0
|
|
2020
|
|
16.7
|
|
|
24.1
|
|
|
40.8
|
|
2021
|
|
14.9
|
|
|
19.3
|
|
|
34.2
|
|
2022
|
|
11.9
|
|
|
13.4
|
|
|
25.3
|
|
2023
|
|
10.3
|
|
|
7.9
|
|
|
18.2
|
|
2024
|
|
8.5
|
|
|
1.8
|
|
|
10.3
|
|
Thereafter
|
|
23.6
|
|
|
—
|
|
|
23.6
|
|
Total lease payments
|
|
90.5
|
|
|
76.9
|
|
|
167.4
|
|
Less interest
|
|
18.4
|
|
|
4.8
|
|
|
23.2
|
|
Present value of lease liabilities
|
|
$
|
72.1
|
|
|
$
|
72.1
|
|
|
$
|
144.2
|
|
|
|
|
|
|
Lease Term and Discount Rate
|
|
September 30, 2019
|
Weighted-average remaining lease term (years):
|
|
|
Operating leases
|
|
6.6
|
|
Finance leases
|
|
3.2
|
|
Weighted-average discount rate:
|
|
|
Operating leases
|
|
6.2
|
%
|
Finance leases
|
|
3.8
|
%
|
|
|
|
|
|
|
Other Information ($ in millions)
|
|
Nine Months Ended
September 30, 2019
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
Operating cash flows for operating leases
|
|
$
|
14.0
|
|
Operating cash flows for finance leases
|
|
1.9
|
|
Financing cash flows for finance leases
|
|
16.2
|
|
Leased assets obtained in exchange for new finance lease liabilities
|
|
17.1
|
|
Leased assets obtained in exchange for new operating lease liabilities
|
|
4.7
|
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
We completed five acquisitions during 2018 that expanded our ready-mixed concrete operations in the Atlantic Region (which we define to include New York, New Jersey, Washington, D.C. and Pennsylvania) and expanded our ready-mixed concrete, aggregate products and other non-reportable operations in West Texas. The aggregate fair value consideration for these acquisitions, which were all accounted for as business combinations, was $70.8 million. The acquisitions included the assets and certain liabilities of the following:
|
|
•
|
On Time Ready Mix, Inc. ("On Time") located in Flushing, New York on January 10, 2018;
|
|
|
•
|
Cutrell Trucking, LLC, Dumas Concrete, LLC, Pampa Concrete Co., Inc., Panhandle Concrete, LLC, and Texas Sand & Gravel Co., Inc. (collectively "Golden Spread") located in Amarillo, Texas on March 2, 2018;
|
|
|
•
|
Leon River Aggregate Materials, LLC ("Leon River") located in Proctor, Texas on August 29, 2018; and
|
|
|
•
|
Two individually immaterial ready-mixed concrete operations in our Atlantic Region and West Texas Region on March 5, 2018 and September 14, 2018, respectively.
|
The aggregate fair value consideration for these five acquisitions included $69.9 million in cash and fair value contingent consideration of $1.1 million and was net of a working capital receivable of $0.2 million. We funded the cash portion through a combination of cash on hand and borrowings under our Revolving Facility (as defined in Note 7). The combined assets acquired through these acquisitions included 149 mixer trucks, 20 concrete plant facilities and two aggregate facilities. To effect these transactions, during the three and nine months ended September 30, 2018, we incurred $0.3 million and $0.9 million of transaction costs, respectively, which were included in selling and general administrative expenses in our condensed consolidated statements of operations. See Note 6 for a description of our measurement period adjustments.
The following table presents the total consideration for the 2018 acquisitions and the amounts related to the assets acquired and liabilities assumed based on the estimated fair values as of their respective acquisition dates:
|
|
|
|
|
($ in millions)
|
2018 Acquisitions
|
Inventory
|
$
|
1.1
|
|
Other current assets
|
0.1
|
|
Property, plant and equipment
|
37.4
|
|
Definite-lived intangible assets
|
19.8
|
|
Total assets acquired
|
58.4
|
|
Current liabilities
|
0.1
|
|
Other long-term liabilities
|
1.1
|
|
Total liabilities assumed
|
1.2
|
|
Goodwill
|
13.6
|
|
Total consideration (fair value)(1)
|
$
|
70.8
|
|
(1) Included $1.1 million of contingent consideration.
Acquired Intangible Assets and Goodwill
A summary of the intangible assets acquired in 2018 and their estimated useful lives is as follows:
|
|
|
|
|
|
|
($ in millions)
|
Weighted Average Amortization Period (In Years)
|
|
Fair Value At Acquisition Date
|
Customer relationships
|
5.5
|
|
$
|
18.5
|
|
Non-compete agreements
|
5.0
|
|
1.3
|
|
Total
|
|
|
$
|
19.8
|
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 2019, the estimated future aggregate amortization expense of definite-lived intangible assets from the 2018 acquisitions was as follows (in millions):
|
|
|
|
|
|
|
2019 (remainder of the year)
|
$
|
0.9
|
|
2020
|
3.6
|
|
2021
|
2.8
|
|
2022
|
2.6
|
|
2023
|
1.6
|
|
Thereafter
|
1.8
|
|
Total
|
$
|
13.3
|
|
During the three and nine months ended September 30, 2019, we recorded $1.1 million and $3.6 million of amortization expense related to these intangible assets, respectively. For the three months ended September 30, 2019, there were no measurement period adjustments related to these intangible assets. For the nine months ended September 30, 2019, there were measurement period adjustments of $0.5 million related to these intangible assets. During the three and nine months ended September 30, 2018, we recorded $1.1 million and $1.9 million of amortization expense related to these intangible assets, respectively. For the three and nine months ended September 30, 2018, there were measurement period adjustments of $0.2 million and $0.3 million related to these intangible assets, respectively.
The goodwill ascribed to the 2018 acquisitions is related to the synergies we expect to achieve with expansion in the markets in which we already operate as well as entry into new metropolitan areas of our existing geographic markets. The goodwill relates to our ready-mixed concrete and other non-reportable segments in the amounts of $12.8 million and $0.8 million, respectively. We generally expect all $13.6 million of goodwill from the 2018 acquisitions to be deductible for tax purposes. See Note 10 for additional information regarding income taxes.
Impact of Acquisitions
During the three months ended September 30, 2018, we recorded $12.0 million of revenue and $1.4 million of operating loss in our condensed consolidated statements of operations related to the 2018 acquisitions following their respective dates of acquisition. During the nine months ended September 30, 2018, we recorded approximately $33.6 million of revenue and $2.3 million of operating income in our condensed consolidated statements of operations related to the 2018 acquisitions following their respective dates of acquisition.
The information presented below reflects the unaudited pro forma combined financial results for the 2018 acquisitions, excluding the individually immaterial acquisitions as described above, as historical financial results for these operations were not material and were impractical to obtain from the former owners. All other acquisitions have been included and represent our estimate of the 2018 results of operations as if the 2018 acquisitions had been completed on January 1, 2017. The impact to the 2019 results of operations if the 2018 acquisitions had been completed on January 1, 2017 was not materially different from our reported results.
|
|
|
|
|
|
|
|
|
($ in millions except per share)
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
Revenue
|
$
|
405.5
|
|
|
$
|
1,153.1
|
|
Net income attributable to U.S. Concrete
|
$
|
15.2
|
|
|
$
|
27.4
|
|
|
|
|
|
Net income per share attributable to U.S. Concrete - basic
|
$
|
0.92
|
|
|
$
|
1.67
|
|
Net income per share attributable to U.S. Concrete - diluted
|
$
|
0.92
|
|
|
$
|
1.66
|
|
The above pro forma results are unaudited and were prepared based on the historical U.S. GAAP results of the Company and the historical results of the acquired companies for which financial information was available, based on data provided by the former owners. These results are not necessarily indicative of what the Company's actual results would have been had the 2018 acquisitions occurred on January 1, 2017.
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma amounts above reflect the following adjustments:
|
|
|
|
|
|
|
|
|
($ in millions)
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
Decrease (increase) in intangible amortization expense
|
$
|
0.2
|
|
|
$
|
(0.7
|
)
|
Exclusion of buyer transaction costs
|
—
|
|
|
0.7
|
|
Decrease in income tax expense
|
0.2
|
|
|
0.2
|
|
The unaudited pro forma results do not reflect any operational efficiencies or potential cost savings that may occur as a result of consolidation of the operations.
|
|
|
|
|
|
|
|
|
($ in millions)
|
September 30, 2019
|
|
December 31, 2018
|
Raw materials
|
$
|
48.5
|
|
|
$
|
46.4
|
|
Building materials for resale
|
3.6
|
|
|
2.8
|
|
Other
|
1.8
|
|
|
2.0
|
|
Total
|
$
|
53.9
|
|
|
$
|
51.2
|
|
6. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
The accumulated impairment was as follows:
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
September 30, 2019
|
|
December 31, 2018
|
Goodwill, gross
|
|
$
|
245.3
|
|
|
$
|
245.1
|
|
Accumulated impairment
|
|
(5.8
|
)
|
|
(5.8
|
)
|
Goodwill, net
|
|
$
|
239.5
|
|
|
$
|
239.3
|
|
The changes in goodwill by reportable segment were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
Ready-Mixed Concrete Segment
|
|
Aggregate Products Segment
|
|
Other Non-Reportable Segments
|
|
Total
|
Goodwill, net at December 31, 2018
|
|
$
|
147.7
|
|
|
$
|
86.2
|
|
|
$
|
5.4
|
|
|
$
|
239.3
|
|
Measurement period adjustments for prior year business combinations(1)
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
Goodwill, net at September 30, 2019
|
|
$
|
147.9
|
|
|
$
|
86.2
|
|
|
$
|
5.4
|
|
|
$
|
239.5
|
|
|
|
(1)
|
Property, plant and equipment acquired in 2018 was reduced by $0.2 million.
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Other Intangible Assets
Our purchased intangible assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
($ in millions)
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Weighted Average Remaining Life (In Years)
|
Definite-lived intangible assets
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
$
|
108.5
|
|
|
$
|
(55.7
|
)
|
|
$
|
52.8
|
|
|
4.1
|
Trade names
|
|
44.5
|
|
|
(13.1
|
)
|
|
31.4
|
|
|
19.3
|
Non-competes
|
|
18.3
|
|
|
(14.6
|
)
|
|
3.7
|
|
|
2.4
|
Leasehold interests
|
|
12.5
|
|
|
(6.3
|
)
|
|
6.2
|
|
|
5.5
|
Favorable contracts
|
|
4.0
|
|
|
(3.9
|
)
|
|
0.1
|
|
|
1.2
|
Environmental credits
|
|
2.8
|
|
|
(0.2
|
)
|
|
2.6
|
|
|
16.3
|
Total definite-lived intangible assets
|
|
190.6
|
|
|
(93.8
|
)
|
|
96.8
|
|
|
9.3
|
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
|
Land rights(1)
|
|
1.2
|
|
|
—
|
|
|
1.2
|
|
|
|
Total purchased intangible assets
|
|
$
|
191.8
|
|
|
$
|
(93.8
|
)
|
|
$
|
98.0
|
|
|
|
|
|
(1)
|
Land rights acquired in a prior year acquisition will be reclassified to property, plant, and equipment upon the division of certain shared properties and settlement of the associated deferred payment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
($ in millions)
|
|
Gross
|
|
Accumulated Amortization
|
|
Net
|
|
Weighted Average Remaining Life (In Years)
|
Definite-lived intangible assets
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
$
|
108.5
|
|
|
$
|
(43.1
|
)
|
|
$
|
65.4
|
|
|
4.7
|
Trade names
|
|
44.5
|
|
|
(11.1
|
)
|
|
33.4
|
|
|
19.6
|
Non-competes
|
|
18.3
|
|
|
(12.1
|
)
|
|
6.2
|
|
|
2.6
|
Leasehold interests
|
|
12.5
|
|
|
(5.1
|
)
|
|
7.4
|
|
|
5.9
|
Favorable contracts
|
|
4.0
|
|
|
(3.8
|
)
|
|
0.2
|
|
|
1.9
|
Environmental credits
|
|
2.8
|
|
|
—
|
|
|
2.8
|
|
|
17.0
|
Total definite-lived intangible assets
|
|
190.6
|
|
|
(75.2
|
)
|
|
115.4
|
|
|
9.8
|
Indefinite-lived intangible assets
|
|
|
|
|
|
|
|
|
Land rights(1)
|
|
1.2
|
|
|
—
|
|
|
1.2
|
|
|
|
Total purchased intangible assets
|
|
$
|
191.8
|
|
|
$
|
(75.2
|
)
|
|
$
|
116.6
|
|
|
|
|
|
(1)
|
Land rights acquired in a prior year acquisition will be reclassified to property, plant, and equipment upon the division of certain shared properties and settlement of the associated deferred payment.
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 2019, the estimated remaining amortization of our definite-lived intangible assets was as follows (in millions):
|
|
|
|
|
2019 (remainder of the year)
|
$
|
5.5
|
|
2020
|
20.9
|
|
2021
|
18.6
|
|
2022
|
12.7
|
|
2023
|
6.3
|
|
Thereafter
|
32.8
|
|
Total
|
$
|
96.8
|
|
Also included in other long-term obligations and deferred credits in the accompanying condensed consolidated balance sheets were unfavorable lease intangibles with a gross carrying amount of $1.5 million as of both September 30, 2019 and December 31, 2018, and a net carrying amount of $0.6 million and $0.8 million as of September 30, 2019 and December 31, 2018, respectively. These unfavorable lease intangibles had a weighted average remaining life of 4.1 years as of September 30, 2019.
We recorded $5.8 million and $6.4 million of amortization expense on our definite-lived intangible assets and unfavorable lease intangibles for the three months ended September 30, 2019 and 2018, respectively. We recorded $18.4 million and $17.9 million of amortization expense on our definite-lived intangible assets and unfavorable lease intangibles for the nine months ended September 30, 2019 and 2018, respectively.
|
|
|
|
|
|
|
|
|
($ in millions)
|
September 30, 2019
|
|
December 31, 2018
|
Senior unsecured notes due 2024 and unamortized premium(1)
|
$
|
607.2
|
|
|
$
|
608.4
|
|
Asset based revolving credit facility
|
11.1
|
|
|
15.0
|
|
Finance leases
|
72.1
|
|
|
71.2
|
|
Other financing
|
23.0
|
|
|
28.5
|
|
Debt issuance costs
|
(7.7
|
)
|
|
(9.0
|
)
|
Total debt
|
705.7
|
|
|
714.1
|
|
Less: current maturities
|
(35.6
|
)
|
|
(30.8
|
)
|
Long-term debt, net of current maturities
|
$
|
670.1
|
|
|
$
|
683.3
|
|
|
|
(1)
|
The effective interest rate for these notes was 6.56% as of both September 30, 2019 and December 31, 2018.
|
Asset Based Revolving Credit Facility
As of September 30, 2019, we had $17.5 million of undrawn standby letters of credit under our senior secured credit facility ("Revolving Facility"). Loans under the Revolving Facility are in the form of either base rate loans or LIBOR loans denominated in U.S. dollars. The interest rate for the facility was 5.25% as of September 30, 2019.
Our actual maximum credit availability under the Revolving Facility varies from time to time and is determined by calculating the value of our eligible accounts receivable, inventory, mixer trucks and machinery, minus reserves imposed by the lenders and certain other adjustments. Our availability under the Revolving Facility at September 30, 2019 was $236.1 million. We are required, upon the occurrence of certain events, to maintain a fixed charge coverage ratio of at least 1.0 to 1.0 for each period of 12 calendar months. As of September 30, 2019, we were in compliance with all covenants under the loan agreement that governs the Revolving Facility.
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
8.
|
FAIR VALUE DISCLOSURES
|
Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. Accounting guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. We review the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain assets and liabilities within the fair value hierarchy. There were no transfers of assets or liabilities between the fair value measurement levels for the three and nine months ended September 30, 2019 or the year ended December 31, 2018.
We estimate the fair value of acquisition-related contingent consideration arrangements using a Monte Carlo simulation model, an income approach or a discounted cash flow technique, as appropriate. The fair value of the contingent consideration arrangements is sensitive to changes in the forecasts of earnings and/or the relevant operating metrics and changes in discount rates. The fair value of the contingent consideration is reassessed quarterly based on assumptions used in our latest projections and input provided by practice leaders and management. Any change in the fair value estimate is recorded in our consolidated statement of operations for that period. The current portion of contingent consideration is included in accrued liabilities while the long-term portion is included in other long-term obligations and deferred credits, both of which are in our condensed consolidated balance sheets. The use of different estimates and assumptions could increase or decrease the estimated fair value of our contingent consideration liability, which would result in different impacts to our consolidated balance sheets and consolidated statements of operations. These fair value measurements are based on significant inputs not observable in the market, and thus represent Level 3 inputs. Our recurring Level 3 fair value liability, contingent consideration, including the current portion, was $26.0 million as of September 30, 2019 and $60.7 million as of December 31, 2018.
The following tables present the inputs for the models used to value our acquisition-related contingent consideration:
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2019
|
Valuation Inputs
|
|
Monte Carlo Simulation
|
|
Income Approach
|
Fair value (in millions)
|
|
$
|
23.6
|
|
|
$
|
2.4
|
|
Discount rate
|
|
11.00
|
%
|
|
3.70% - 10.75%
|
|
Payment cap (in millions)
|
|
$
|
26.3
|
|
|
$
|
2.5
|
|
Expected payment period remaining (in years)
|
|
2.6
|
|
|
0 - 4
|
|
Management projections of the payout criteria
|
|
EBITDA
|
|
Volumes
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018
|
Valuation Inputs
|
|
Monte Carlo Simulation
|
|
Income Approach
|
|
Discounted Cash Flow Technique
|
Fair value (in millions)
|
|
$
|
33.2
|
|
|
$
|
26.5
|
|
|
$
|
1.0
|
|
Discount rate
|
|
10.75% - 12.25%
|
|
|
3.70% - 5.00%
|
|
|
6.03% - 15.75%
|
|
Payment cap (in millions)
|
|
$
|
37.3
|
|
|
$
|
27.3
|
|
|
$
|
1.1
|
|
Expected payment period remaining (in years)
|
|
1-3
|
|
|
1
|
|
|
1-4
|
|
Management projections of the payout criteria
|
|
EBITDA/Volumes
|
|
Permitted reserves/Volumes
|
|
Volumes
|
The following table provides a reconciliation of the changes in Level 3 fair value measurements from December 31, 2018 to September 30, 2019:
|
|
|
|
|
($ in millions)
|
Contingent Consideration
|
Balance at December 31, 2018
|
$
|
60.7
|
|
Change in valuation
|
1.6
|
|
Payments of contingent consideration
|
(36.3
|
)
|
Balance at September 30, 2019
|
$
|
26.0
|
|
Other Financial Instruments
Our other financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and long-term debt. We consider the carrying values of cash and cash equivalents, accounts receivable, and accounts payable to be representative of their respective fair values because of their short-term maturities or expected settlement dates. The fair value of our 6.375% senior unsecured notes due 2024 ("2024 Notes"), which was estimated based on quoted market prices (i.e., Level 2 inputs), was $615.7 million as of September 30, 2019. The carrying value of the outstanding amounts under our Revolving Facility approximates fair value due to the floating interest rate.
Other Assets and Liabilities Measured on a Non-Recurring Basis
In connection with our acquisitions described in Note 4, the assets acquired and liabilities assumed were recorded at their fair value on a non-recurring basis as of their respective acquisition dates. We generally use a third-party valuation firm to assist us with developing our estimates of fair value. The fair value of property, plant and equipment was based primarily on a market valuation approach. Additionally, we may use a cost valuation approach to value long-lived assets when a market valuation approach is unavailable. In determining the fair value of intangible assets, we utilized the cost approach (primarily through the cost-to-recreate method), the market approach and the income approach. The income approach may incorporate the use of a discounted cash flow method. In applying the discounted cash flow method, the estimated future cash flows and residual values for each intangible asset are discounted to a present value using a discount rate based on an estimated weighted average cost of capital for the building materials industry. These cash flow projections were based on management’s estimates of economic and market conditions including revenue growth rates, operating margins, capital expenditures and working capital requirements. The valuations were prepared using Level 3 inputs.
|
|
9.
|
STOCK-BASED COMPENSATION
|
Effective February 13, 2019, we amended the U.S. Concrete, Inc. Long Term Incentive Plan (the "Amendment") to reserve an additional 0.9 million shares of common stock for future issuance as equity-based awards to management and employees. On March 1, 2019, the Compensation Committee of the Board of Directors approved grants of 0.3 million restricted stock units (the "2019 RSU Grant"), conditioned upon obtaining stockholder approval of the Amendment. The Amendment was approved by the Company's stockholders at the Company's annual meeting in May 2019, and the stockholder approval condition related to the 2019 RSU Grant was satisfied.
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
We recognized stock-based compensation expense of $5.3 million and $16.4 million during the three and nine months ended September 30, 2019, respectively, and $2.9 million and $8.1 million during the three and nine months ended September 30, 2018, respectively. Stock-based compensation expense is reflected in selling, general and administrative expenses in our consolidated statements of operations.
The 2019 RSU Grant consisted of a 60% time-vested component that vests annually over a three-year period and a 40% stock performance hurdle component. The stock performance hurdle component triggers vesting upon our stock price reaching certain thresholds and may vest up to 200% of the target number of performance stock units granted.
The fair value of the 2019 RSU Grant subject only to time-based vesting restrictions was determined based upon the closing price of our common stock on the effective date of the grant. The fair value of the 2019 RSU Grant subject to market performance hurdles was determined utilizing a Monte Carlo financial valuation model. Compensation expense determined utilizing the Monte Carlo simulation is recognized regardless of whether the common stock reaches the defined thresholds, provided that each grantee remains an employee at the end of the expected term. The assumptions used to estimate the fair value of performance-based restricted stock units granted in 2019 were as follows:
|
|
|
|
Expected term (years)
|
|
0 to 0.5
|
Expected volatility
|
|
41.1%
|
Risk-free interest rate
|
|
2.1%
|
Vesting price(1)
|
|
$45.90 - $58.60
|
Grant date fair value per share
|
|
$39.60 - $48.75
|
|
|
(1)
|
The vesting price is the average of the daily volume-weighted average share price of U.S. Concrete's common stock over any period of 20 consecutive trading days within the three-year period beginning on the date of grant. These hurdles were established on March 1, 2019.
|
We recorded income tax expense of $8.3 million for both the three and nine months ended September 30, 2019. For both periods ended September 30, 2019, our effective tax rate was negatively impacted by (i) losses generated by certain of our Canadian subsidiaries for which no income tax benefit was recognized due to a related full valuation allowance, (ii) our estimated annual interest expense limitation in accordance with the Tax Cuts and Jobs Act (the "Tax Act") and related proposed regulations for which a full valuation allowance is anticipated, (iii) our estimated global intangible low-taxed income ("GILTI") inclusion for U.S. tax purposes, (iv) anticipated Section 162(m) limitations on executive compensation and (v) net unfavorable discrete items, including a net tax shortfall recognized for share-based compensation. These unfavorable discrete items were partially offset by certain additional federal and state income tax benefits.
For the three and nine months ended September 30, 2018, we recorded income tax expense of $8.6 million and $14.5 million, respectively. For both periods ended September 30, 2018, our effective tax rate differed from the federal statutory rate primarily due to (i) losses generated by certain of our Canadian subsidiaries for which no income tax benefit was recognized due to a related full valuation allowance, (ii) adjustments related to the tax rate change enacted as part of the Tax Act and (iii) state income taxes.
In accordance with U.S. GAAP, we reduce the value of deferred tax assets to the amount that is more likely than not to be realized in future periods. The ultimate realization of the benefit of deferred tax assets from deductible temporary differences or tax carryovers depends on generating sufficient taxable income during the periods in which those temporary differences become deductible. We considered the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on these considerations, we relied upon the reversal of certain deferred tax liabilities to realize a portion of our deferred tax assets and maintained valuation allowances as of September 30, 2019 and December 31, 2018 for certain deferred tax assets because of uncertainty regarding their ultimate realization. Our total net deferred tax liability was $40.0 million as of September 30, 2019 and $38.0 million as of December 31, 2018, of which $44.9 million and $43.1 million, respectively, were recorded as non-current liabilities. Deferred tax assets for certain state and foreign taxing jurisdictions, which were recorded as non-current assets, were $4.9 million as of September 30, 2019 and $5.1 million as of December 31, 2018.
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
We record changes in our unrecognized tax benefits based on anticipated federal and state tax filing positions on a quarterly basis. For the three and nine months ended September 30, 2019, we recognized a net of $0.5 million and $0.1 million, respectively, for previously unrecognized tax benefits. For the three and nine months ended September 30, 2018, we recorded unrecognized tax benefits of $0.1 million and $0.3 million, respectively.
The potentially dilutive shares excluded from the diluted earnings per share calculation related to unvested restricted stock awards and restricted stock units, as their effect would have been anti-dilutive or they had not met their performance target, and totaled 0.3 million and 0.4 million for the three and nine months ended September 30, 2019, respectively, and 0.2 million for both the three and nine months ended September 30, 2018. The potentially dilutive shares for the three and nine months ended September 30, 2019 included the maximum number of shares of common stock that may be issued for performance stock units.
|
|
12.
|
COMMITMENTS AND CONTINGENCIES
|
Legal Proceedings
From time to time, and currently, we are subject to various claims and litigation brought by employees, customers and other third parties for, among other matters, personal injuries, property damages, product defects and delay damages that have, or allegedly have, resulted from the conduct of our operations. As a result of these types of claims and litigation, we must periodically evaluate the probability of damages being assessed against us and the range of possible outcomes. In each reporting period, if we determine that the likelihood of damages being assessed against us is probable, and if we believe we can estimate a range of possible outcomes, then we will record a liability. The amount of the liability will be based upon a specific estimate, if we believe a specific estimate to be likely, or it will reflect the low end of our range. Currently, there are no material legal proceedings pending against us.
In the future, we may receive funding deficiency demands related to multi-employer pension plans to which we contribute. We are unable to estimate the amount of any potential future funding deficiency demands because the actions of each of the other contributing employers in the plans has an effect on each of the other contributing employers, and the development of a rehabilitation plan by the trustees and subsequent submittal to and approval by the Internal Revenue Service is not predictable. Further, the allocation of fund assets and return assumptions by trustees are variable, as are actual investment returns relative to the plan assumptions.
As of November 8, 2019, there were no material product defect claims pending against us. Accordingly, our existing accruals for claims against us do not reflect any material amounts relating to product defect claims. While our management is not aware of any facts that would reasonably be expected to lead to material product defect claims against us that would have a material adverse effect on our business, financial condition or results of operations, it is possible that claims could be asserted against us in the future. We do not maintain insurance that would cover all damages resulting from product defect claims. In particular, we generally do not maintain insurance coverage for the cost of removing and rebuilding structures. In addition, our indemnification arrangements with contractors or others, when obtained, generally provide only limited protection against product defect claims. Due to inherent uncertainties associated with estimating unasserted claims in our business, we cannot estimate the amount of any future loss that may be attributable to such unasserted product defect claims related to ready-mixed concrete we have delivered prior to September 30, 2019.
We believe that the resolution of any litigation currently pending or threatened against us or any of our subsidiaries will not materially exceed our existing accruals for those matters. However, because of the inherent uncertainty of litigation, there is a risk that we may have to increase our accruals for one or more claims or proceedings to which we or any of our subsidiaries is a party as more information becomes available or proceedings progress, and any such increase in accruals could have a material adverse effect on our consolidated financial condition or results of operations. We expect in the future that we and our operating subsidiaries will, from time to time, be a party to litigation or administrative proceedings that arise in the normal course of our business.
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
We are subject to federal, state and local environmental laws and regulations concerning, among other matters, air emissions and wastewater discharge. Our management believes we are in substantial compliance with applicable environmental laws and regulations. From time to time, we receive claims from federal and state environmental regulatory agencies and entities asserting that we may be in violation of environmental laws and regulations. Based on experience and the information currently available, our management does not believe that these claims will materially exceed our related accruals. Despite compliance and experience, it is possible that we could be held liable for future charges, which might be material, but are not currently known to us or cannot be estimated by us. In addition, changes in federal or state laws, regulations or requirements, or discovery of currently unknown conditions, could require additional expenditures.
As permitted under Delaware law, we have agreements that provide indemnification of officers and directors for certain events or occurrences while the officer or director is or was serving at our request in such capacity. The maximum potential amount of future payments that we could be required to make under these indemnification agreements is not limited; however, we have a director and officer insurance policy that potentially limits our exposure and enables us to recover a portion of future amounts that may be paid. As a result of the insurance policy coverage, we believe the potential liability of these indemnification agreements is minimal. Accordingly, we have not recorded any liabilities for these agreements as of September 30, 2019.
We and our subsidiaries are parties to agreements that require us to provide indemnification in certain instances when we acquire businesses and real estate and in the ordinary course of business with our customers, suppliers, lessors and service providers. As of November 8, 2019, there were no material pending claims related to such indemnification.
Royalty Assessment
In 2014, Eagle Rock Materials Ltd. (“ERM”), a subsidiary of our Canadian aggregates operation, Polaris Materials ("Polaris"), was notified by the British Columbia Ministry of Forests, Lands and Natural Resource Operations that royalties were due for 2012 and 2013, based on the tenure date, in respect of Polaris's quarrying lease for the Eagle Rock Quarry project. In 2016, ERM was notified that further royalties were due for 2014, 2015 and 2016 (up to October) based on the tenure date, and in 2017, ERM was notified of interest charges. While the Company had previously disputed the claim, ERM settled the claim in May 2019 for CAD $4 million and entered into a repayment agreement that extended the payment terms, as defined.
Eminent Domain Matter
In 2018, we incurred $0.7 million of expenses to dismantle and move a ready-mixed concrete plant and office to another location, because the District of Columbia exercised its power of eminent domain over the former site. We incurred certain additional expenditures that were capitalized for the new facilities. In June 2019, we received $5.3 million, net of attorney's fees, from the District of Columbia as reimbursement for our costs, which is reported in other income, net, in our consolidated statement of operations. We expect to file an additional request for reimbursement of certain other expenses not included in the initial submission, but have not recognized a receivable for such reimbursement pending approval by a third-party right-of-way agent and the District of Columbia Department of Transportation.
Insurance Programs
We maintain third-party insurance coverage against certain workers’ compensation, automobile and general liability risks. Under certain components of our insurance program, we share the risk of loss with our insurance underwriters by maintaining high deductibles subject to aggregate annual loss limitations. Generally, our insurance program deductible retentions per occurrence are $1.0 million to $2.0 million for workers’ compensation and general liability and $2.0 million to $10.0 million for automobile, although certain of our operations are self-insured for workers’ compensation. We have deductibles and record an expense for expected losses under the programs. The expected losses are determined using a combination of our historical loss experience and subjective assessments of our future loss exposure. The estimated losses are subject to uncertainty, including changes in claims reporting patterns, claims settlement patterns, judicial decisions, legislation and economic conditions. Although we believe that the estimated losses we have recorded are reasonable, significant differences related to the items noted above could materially affect our insurance obligations and future expense. The amount accrued for self-insurance claims, which was recorded in accrued liabilities and other long-term obligations, was $19.4 million as of September 30, 2019 and $20.4 million as of December 31, 2018.
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Performance Bonds
In the normal course of business, we and our subsidiaries were contingently liable under $18.4 million in performance bonds that various contractors, states and municipalities have required as of September 30, 2019. The bonds principally relate to construction contracts, reclamation obligations, licensing and permitting. We and our subsidiaries have indemnified the underwriting insurance company against any exposure under the performance bonds. No material claims have been made against these bonds.
Our two reportable segments consist of ready-mixed concrete and aggregate products as described below.
Our ready-mixed concrete segment produces and sells ready-mixed concrete. This segment serves the following markets: Texas, California, New York, New Jersey, Washington, D.C., Pennsylvania, Oklahoma and the U.S. Virgin Islands. Our aggregate products segment produces crushed stone, sand and gravel and serves the markets in which our ready-mixed concrete segment operates as well as the West Coast and Hawaii. Other operations and products not associated with a reportable segment include our aggregates distribution operations, building materials stores, hauling operations, ARIDUS® Rapid Drying Concrete technology, brokered product sales and recycled aggregates. Other operations and products also previously included lime slurry operations until they were sold on September 5, 2018.
Our customers are generally involved in the construction industry, which is a cyclical business and is subject to general and more localized economic conditions. In addition, our business is impacted by seasonal variations in weather conditions, which vary by regional market. Accordingly, demand for our products and services during the winter months is typically lower than in other months of the year because of inclement weather. Also, sustained periods of inclement weather and other adverse weather conditions could cause the delay of construction projects during other times of the year.
Our chief operating decision maker evaluates segment performance and allocates resources based on Adjusted EBITDA. We define Adjusted EBITDA as our net income (loss), excluding the impact of income tax expense (benefit), depreciation, depletion and amortization, net interest expense and certain other non-cash, non-recurring and/or unusual, non-operating items including, but not limited to: non-cash stock compensation expense, non-cash change in value of contingent consideration, impairment of assets, acquisition-related costs, officer transition expenses, quarry dredge costs for specific event, and hurricane-related losses, net of recoveries. Acquisition-related costs consist of fees and expenses for accountants, lawyers and other professionals incurred during the negotiation and closing of strategic acquisitions and certain acquired entities' management severance costs. Acquisition-related costs do not include fees or expenses associated with post-closing integration of strategic acquisitions. Many of the impacts excluded to derive Adjusted EBITDA are similar to those excluded in calculating our compliance with our debt covenants.
We consider Adjusted EBITDA to be an indicator of the operational strength and performance of our business. We have included Adjusted EBITDA because it is a key financial measure used by our management to (1) internally measure our operating performance and (2) assess our ability to service our debt, incur additional debt, and meet our capital expenditure requirements.
Adjusted EBITDA should not be construed as an alternative to, or a better indicator of, operating income or loss, is not based on U.S. GAAP, and is not a measure of our cash flows or ability to fund our cash needs. Our measurements of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies, and may not be comparable to similarly titled measures used in the agreements governing our debt.
We generally account for inter-segment sales at market prices. Corporate includes executive, administrative, financial, legal, human resources, business development and risk management activities that are not allocated to reportable segments and are excluded from segment Adjusted EBITDA. Eliminations include transactions to account for intercompany activity.
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following tables set forth certain financial information relating to our operations by reportable segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
($ in millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue by Segment:
|
|
|
|
|
|
|
|
|
Ready-mixed concrete
|
|
|
|
|
|
|
|
|
Sales to external customers
|
|
$
|
354.1
|
|
|
$
|
346.3
|
|
|
$
|
958.5
|
|
|
$
|
985.5
|
|
Aggregate products
|
|
|
|
|
|
|
|
|
Sales to external customers
|
|
37.9
|
|
|
41.1
|
|
|
105.8
|
|
|
100.9
|
|
Intersegment sales
|
|
15.0
|
|
|
12.4
|
|
|
39.5
|
|
|
35.3
|
|
Total aggregate products
|
|
52.9
|
|
|
53.5
|
|
|
145.3
|
|
|
136.2
|
|
Total reportable segment revenue
|
|
407.0
|
|
|
399.8
|
|
|
1,103.8
|
|
|
1,121.7
|
|
Other products and eliminations
|
|
1.9
|
|
|
4.5
|
|
|
5.7
|
|
|
14.6
|
|
Total revenue
|
|
$
|
408.9
|
|
|
$
|
404.3
|
|
|
$
|
1,109.5
|
|
|
$
|
1,136.3
|
|
|
|
|
|
|
|
|
|
|
Reportable Segment Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
Ready-mixed concrete
|
|
$
|
51.5
|
|
|
$
|
47.5
|
|
|
$
|
124.1
|
|
|
$
|
140.3
|
|
Aggregate products
|
|
16.3
|
|
|
12.2
|
|
|
38.9
|
|
|
29.1
|
|
Total reportable segment Adjusted EBITDA
|
|
$
|
67.8
|
|
|
$
|
59.7
|
|
|
$
|
163.0
|
|
|
$
|
169.4
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Total Reportable Segment Adjusted EBITDA to Net Income:
|
|
|
|
|
|
|
|
|
Total reportable segment Adjusted EBITDA
|
|
$
|
67.8
|
|
|
$
|
59.7
|
|
|
$
|
163.0
|
|
|
$
|
169.4
|
|
Other products and eliminations from operations
|
|
1.3
|
|
|
16.6
|
|
|
2.8
|
|
|
21.0
|
|
Corporate overhead
|
|
(14.3
|
)
|
|
(15.7
|
)
|
|
(51.2
|
)
|
|
(45.8
|
)
|
Depreciation, depletion and amortization for reportable segments
|
|
(20.7
|
)
|
|
(23.7
|
)
|
|
(64.8
|
)
|
|
(63.8
|
)
|
Acquisition-related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
Impairment of assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.3
|
)
|
Hurricane-related loss recoveries, net
|
|
—
|
|
|
—
|
|
|
2.1
|
|
|
0.2
|
|
Quarry dredge costs for specific event
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.8
|
)
|
Purchase accounting adjustments for inventory
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
Interest expense, net
|
|
(11.6
|
)
|
|
(11.7
|
)
|
|
(34.8
|
)
|
|
(34.6
|
)
|
Change in value of contingent consideration for reportable segments
|
|
(0.3
|
)
|
|
(0.4
|
)
|
|
(1.6
|
)
|
|
0.9
|
|
Eminent domain matter
|
|
—
|
|
|
(0.6
|
)
|
|
5.3
|
|
|
(0.6
|
)
|
Loss on mixer truck fire
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|
—
|
|
Corporate, other products and eliminations other income (loss), net
|
|
(0.3
|
)
|
|
0.4
|
|
|
0.1
|
|
|
(0.2
|
)
|
Income from operations before income taxes
|
|
21.9
|
|
|
24.4
|
|
|
20.2
|
|
|
42.7
|
|
Income tax expense
|
|
8.3
|
|
|
8.6
|
|
|
8.3
|
|
|
14.5
|
|
Net income
|
|
$
|
13.6
|
|
|
$
|
15.8
|
|
|
$
|
11.9
|
|
|
$
|
28.2
|
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
($ in millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Capital Expenditures:
|
|
|
|
|
|
|
|
|
Ready-mixed concrete
|
|
$
|
4.1
|
|
|
$
|
4.3
|
|
|
$
|
15.7
|
|
|
$
|
17.7
|
|
Aggregate products
|
|
6.3
|
|
|
6.9
|
|
|
11.9
|
|
|
13.0
|
|
Other products and corporate
|
|
0.1
|
|
|
0.2
|
|
|
1.0
|
|
|
1.5
|
|
Total capital expenditures
|
|
$
|
10.5
|
|
|
$
|
11.4
|
|
|
$
|
28.6
|
|
|
$
|
32.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
($ in millions)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue by Product:
|
|
|
|
|
|
|
|
|
Ready-mixed concrete
|
|
$
|
354.1
|
|
|
$
|
346.3
|
|
|
$
|
958.5
|
|
|
$
|
985.5
|
|
Aggregate products
|
|
37.9
|
|
|
41.1
|
|
|
105.8
|
|
|
100.9
|
|
Building materials
|
|
8.6
|
|
|
7.0
|
|
|
21.5
|
|
|
20.2
|
|
Aggregates distribution
|
|
6.5
|
|
|
6.1
|
|
|
18.2
|
|
|
16.5
|
|
Hauling
|
|
1.2
|
|
|
1.2
|
|
|
3.5
|
|
|
3.9
|
|
Lime
|
|
—
|
|
|
1.9
|
|
|
—
|
|
|
7.4
|
|
Other
|
|
0.6
|
|
|
0.7
|
|
|
2.0
|
|
|
1.9
|
|
Total revenue
|
|
$
|
408.9
|
|
|
$
|
404.3
|
|
|
$
|
1,109.5
|
|
|
$
|
1,136.3
|
|
|
|
|
|
|
|
|
|
|
|
($ in millions)
|
|
September 30, 2019
|
|
December 31, 2018
|
Identifiable Property, Plant and Equipment Assets:
|
|
|
|
|
Ready-mixed concrete
|
|
$
|
293.6
|
|
|
$
|
295.5
|
|
Aggregate products
|
|
356.4
|
|
|
355.0
|
|
Other products and corporate
|
|
26.3
|
|
|
29.7
|
|
Total identifiable assets
|
|
$
|
676.3
|
|
|
$
|
680.2
|
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
14.
|
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
|
Our 2024 Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by each direct and indirect wholly owned domestic subsidiary of the Company, each a guarantor subsidiary. Each guarantor subsidiary is directly or indirectly 100% owned by the Company. Neither the net book value nor the purchase price of any of our recently acquired guarantor subsidiaries were 20% or more of the aggregate principal amount of our 2024 Notes. The 2024 Notes are not guaranteed by any direct or indirect foreign subsidiaries of the Company or domestic subsidiaries that are not wholly owned, each a non-guarantor subsidiary. Consequently, we are required to provide condensed consolidating financial information in accordance with Rule 3-10 of Regulation S-X.
The following condensed consolidating financial statements present, in separate columns, financial information for (1) the Company, as Parent on a parent-only basis, (2) the guarantor subsidiaries on a combined basis, (3) the non-guarantor subsidiaries on a combined basis, (4) the eliminations and reclassifications necessary to arrive at the information for the Company on a consolidated basis, and (5) the Company on a consolidated basis.
The following condensed consolidating financial statements of U.S. Concrete and its subsidiaries present investments in consolidated subsidiaries using the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2019
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
U.S. Concrete Consolidated
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
17.8
|
|
|
$
|
9.2
|
|
|
$
|
—
|
|
|
$
|
27.0
|
|
Trade accounts receivable, net
|
|
—
|
|
|
239.9
|
|
|
19.4
|
|
|
—
|
|
|
259.3
|
|
Inventories
|
|
—
|
|
|
43.2
|
|
|
10.7
|
|
|
—
|
|
|
53.9
|
|
Other receivables, net
|
|
10.9
|
|
|
9.0
|
|
|
0.5
|
|
|
(7.1
|
)
|
|
13.3
|
|
Prepaid expenses and other
|
|
—
|
|
|
8.4
|
|
|
0.6
|
|
|
—
|
|
|
9.0
|
|
Intercompany receivables
|
|
9.7
|
|
|
—
|
|
|
0.3
|
|
|
(10.0
|
)
|
|
—
|
|
Total current assets
|
|
20.6
|
|
|
318.3
|
|
|
40.7
|
|
|
(17.1
|
)
|
|
362.5
|
|
Property, plant and equipment, net
|
|
—
|
|
|
470.0
|
|
|
206.3
|
|
|
—
|
|
|
676.3
|
|
Operating lease assets
|
|
—
|
|
|
56.0
|
|
|
13.3
|
|
|
—
|
|
|
69.3
|
|
Goodwill
|
|
—
|
|
|
155.7
|
|
|
83.8
|
|
|
—
|
|
|
239.5
|
|
Intangible assets, net
|
|
—
|
|
|
93.7
|
|
|
4.3
|
|
|
—
|
|
|
98.0
|
|
Investment in subsidiaries
|
|
633.2
|
|
|
—
|
|
|
—
|
|
|
(633.2
|
)
|
|
—
|
|
Long-term intercompany receivables
|
|
309.8
|
|
|
—
|
|
|
1.1
|
|
|
(310.9
|
)
|
|
—
|
|
Other assets
|
|
—
|
|
|
9.0
|
|
|
1.7
|
|
|
—
|
|
|
10.7
|
|
Total assets
|
|
$
|
963.6
|
|
|
$
|
1,102.7
|
|
|
$
|
351.2
|
|
|
$
|
(961.2
|
)
|
|
$
|
1,456.3
|
|
LIABILITIES AND EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
—
|
|
|
$
|
131.7
|
|
|
$
|
4.1
|
|
|
$
|
—
|
|
|
$
|
135.8
|
|
Accrued liabilities
|
|
13.9
|
|
|
75.7
|
|
|
7.8
|
|
|
(7.1
|
)
|
|
90.3
|
|
Current maturities of long-term debt
|
|
0.3
|
|
|
34.7
|
|
|
0.6
|
|
|
—
|
|
|
35.6
|
|
Current operating lease liabilities
|
|
—
|
|
|
11.7
|
|
|
1.8
|
|
|
—
|
|
|
13.5
|
|
Intercompany payables
|
|
—
|
|
|
—
|
|
|
10.0
|
|
|
(10.0
|
)
|
|
—
|
|
Total current liabilities
|
|
14.2
|
|
|
253.8
|
|
|
24.3
|
|
|
(17.1
|
)
|
|
275.2
|
|
Long-term debt, net of current maturities
|
|
611.6
|
|
|
56.9
|
|
|
1.6
|
|
|
—
|
|
|
670.1
|
|
Long-term operating lease liabilities
|
|
—
|
|
|
46.8
|
|
|
11.8
|
|
|
—
|
|
|
58.6
|
|
Other long-term obligations and deferred credits
|
|
—
|
|
|
39.0
|
|
|
5.0
|
|
|
—
|
|
|
44.0
|
|
Deferred income taxes
|
|
—
|
|
|
22.4
|
|
|
22.5
|
|
|
—
|
|
|
44.9
|
|
Long-term intercompany payables
|
|
—
|
|
|
192.8
|
|
|
118.1
|
|
|
(310.9
|
)
|
|
—
|
|
Total liabilities
|
|
625.8
|
|
|
611.7
|
|
|
183.3
|
|
|
(328.0
|
)
|
|
1,092.8
|
|
Total shareholders' equity
|
|
337.8
|
|
|
491.0
|
|
|
142.2
|
|
|
(633.2
|
)
|
|
337.8
|
|
Non-controlling interest
|
|
—
|
|
|
—
|
|
|
25.7
|
|
|
—
|
|
|
25.7
|
|
Total equity
|
|
337.8
|
|
|
491.0
|
|
|
167.9
|
|
|
(633.2
|
)
|
|
363.5
|
|
Total liabilities and equity
|
|
$
|
963.6
|
|
|
$
|
1,102.7
|
|
|
$
|
351.2
|
|
|
$
|
(961.2
|
)
|
|
$
|
1,456.3
|
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2018
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
U.S. Concrete Consolidated
|
ASSETS
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
10.8
|
|
|
$
|
9.2
|
|
|
$
|
—
|
|
|
$
|
20.0
|
|
Trade accounts receivable, net
|
|
—
|
|
|
219.7
|
|
|
6.9
|
|
|
—
|
|
|
226.6
|
|
Inventories
|
|
—
|
|
|
42.4
|
|
|
8.8
|
|
|
—
|
|
|
51.2
|
|
Other receivables
|
|
11.1
|
|
|
7.0
|
|
|
0.3
|
|
|
—
|
|
|
18.4
|
|
Prepaid expenses and other
|
|
—
|
|
|
7.1
|
|
|
0.8
|
|
|
—
|
|
|
7.9
|
|
Intercompany receivables
|
|
9.7
|
|
|
—
|
|
|
0.3
|
|
|
(10.0
|
)
|
|
—
|
|
Total current assets
|
|
20.8
|
|
|
287.0
|
|
|
26.3
|
|
|
(10.0
|
)
|
|
324.1
|
|
Property, plant and equipment, net
|
|
—
|
|
|
468.3
|
|
|
211.9
|
|
|
—
|
|
|
680.2
|
|
Goodwill
|
|
—
|
|
|
155.5
|
|
|
83.8
|
|
|
—
|
|
|
239.3
|
|
Intangible assets, net
|
|
—
|
|
|
111.8
|
|
|
4.8
|
|
|
—
|
|
|
116.6
|
|
Investment in subsidiaries
|
|
604.1
|
|
|
—
|
|
|
—
|
|
|
(604.1
|
)
|
|
—
|
|
Long-term intercompany receivables
|
|
308.9
|
|
|
—
|
|
|
1.1
|
|
|
(310.0
|
)
|
|
—
|
|
Other assets
|
|
—
|
|
|
10.8
|
|
|
0.3
|
|
|
—
|
|
|
11.1
|
|
Total assets
|
|
$
|
933.8
|
|
|
$
|
1,033.4
|
|
|
$
|
328.2
|
|
|
$
|
(924.1
|
)
|
|
$
|
1,371.3
|
|
LIABILITIES AND EQUITY
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
—
|
|
|
$
|
122.4
|
|
|
$
|
3.4
|
|
|
$
|
—
|
|
|
$
|
125.8
|
|
Accrued liabilities
|
|
4.7
|
|
|
83.2
|
|
|
8.4
|
|
|
—
|
|
|
96.3
|
|
Current maturities of long-term debt
|
|
0.3
|
|
|
29.9
|
|
|
0.6
|
|
|
—
|
|
|
30.8
|
|
Intercompany payables
|
|
—
|
|
|
—
|
|
|
10.0
|
|
|
(10.0
|
)
|
|
—
|
|
Total current liabilities
|
|
5.0
|
|
|
235.5
|
|
|
22.4
|
|
|
(10.0
|
)
|
|
252.9
|
|
Long-term debt, net of current maturities
|
|
615.5
|
|
|
67.6
|
|
|
0.2
|
|
|
—
|
|
|
683.3
|
|
Other long-term obligations and deferred credits
|
|
0.9
|
|
|
51.0
|
|
|
2.9
|
|
|
—
|
|
|
54.8
|
|
Deferred income taxes
|
|
—
|
|
|
22.4
|
|
|
20.7
|
|
|
—
|
|
|
43.1
|
|
Long-term intercompany payables
|
|
—
|
|
|
188.7
|
|
|
121.3
|
|
|
(310.0
|
)
|
|
—
|
|
Total liabilities
|
|
621.4
|
|
|
565.2
|
|
|
167.5
|
|
|
(320.0
|
)
|
|
1,034.1
|
|
Total shareholders' equity
|
|
312.4
|
|
|
468.2
|
|
|
135.9
|
|
|
(604.1
|
)
|
|
312.4
|
|
Non-controlling interest
|
|
—
|
|
|
—
|
|
|
24.8
|
|
|
—
|
|
|
24.8
|
|
Total equity
|
|
312.4
|
|
|
468.2
|
|
|
160.7
|
|
|
(604.1
|
)
|
|
337.2
|
|
Total liabilities and equity
|
|
$
|
933.8
|
|
|
$
|
1,033.4
|
|
|
$
|
328.2
|
|
|
$
|
(924.1
|
)
|
|
$
|
1,371.3
|
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2019
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
U.S. Concrete Consolidated
|
Revenue
|
|
$
|
—
|
|
|
$
|
378.5
|
|
|
$
|
30.4
|
|
|
$
|
—
|
|
|
$
|
408.9
|
|
Cost of goods sold before depreciation, depletion and amortization
|
|
—
|
|
|
300.0
|
|
|
21.2
|
|
|
—
|
|
|
321.2
|
|
Selling, general and administrative expenses
|
|
—
|
|
|
30.0
|
|
|
2.0
|
|
|
—
|
|
|
32.0
|
|
Depreciation, depletion and amortization
|
|
—
|
|
|
19.1
|
|
|
3.2
|
|
|
—
|
|
|
22.3
|
|
Change in value of contingent consideration
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
Loss (gain) on sale/disposal of assets and business, net
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
Operating income
|
|
—
|
|
|
29.3
|
|
|
4.0
|
|
|
—
|
|
|
33.3
|
|
Interest expense, net
|
|
10.1
|
|
|
0.9
|
|
|
0.6
|
|
|
—
|
|
|
11.6
|
|
Other expense (income), net
|
|
0.2
|
|
|
(0.3
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(0.2
|
)
|
Income (loss) before income taxes, equity in earnings of subsidiaries and non-controlling interest
|
|
(10.3
|
)
|
|
28.7
|
|
|
3.5
|
|
|
—
|
|
|
21.9
|
|
Income tax expense/(benefit)
|
|
(3.8
|
)
|
|
11.0
|
|
|
1.1
|
|
|
—
|
|
|
8.3
|
|
Net income (loss) before equity in earnings of subsidiaries and non-controlling interest
|
|
(6.5
|
)
|
|
17.7
|
|
|
2.4
|
|
|
—
|
|
|
13.6
|
|
Equity in earnings of subsidiaries
|
|
19.5
|
|
|
—
|
|
|
—
|
|
|
(19.5
|
)
|
|
—
|
|
Net income (loss)
|
|
13.0
|
|
|
17.7
|
|
|
2.4
|
|
|
(19.5
|
)
|
|
13.6
|
|
Less: Net income attributable to non-controlling interest
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
(0.6
|
)
|
Net income (loss) attributable to U.S. Concrete
|
|
$
|
13.0
|
|
|
$
|
17.7
|
|
|
$
|
1.8
|
|
|
$
|
(19.5
|
)
|
|
$
|
13.0
|
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2018
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
U.S. Concrete Consolidated
|
Revenue
|
|
$
|
—
|
|
|
$
|
370.2
|
|
|
$
|
34.1
|
|
|
$
|
—
|
|
|
$
|
404.3
|
|
Cost of goods sold before depreciation, depletion and amortization
|
|
—
|
|
|
300.0
|
|
|
25.3
|
|
|
—
|
|
|
325.3
|
|
Selling, general and administrative expenses
|
|
—
|
|
|
30.5
|
|
|
1.7
|
|
|
—
|
|
|
32.2
|
|
Depreciation, depletion and amortization
|
|
—
|
|
|
21.3
|
|
|
4.2
|
|
|
—
|
|
|
25.5
|
|
Change in value of contingent consideration
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
Loss (gain) on sale/disposal of assets and business, net
|
|
—
|
|
|
(14.1
|
)
|
|
—
|
|
|
—
|
|
|
(14.1
|
)
|
Operating income
|
|
—
|
|
|
32.1
|
|
|
2.9
|
|
|
—
|
|
|
35.0
|
|
Interest expense, net
|
|
9.7
|
|
|
0.9
|
|
|
1.1
|
|
|
—
|
|
|
11.7
|
|
Other expense (income), net
|
|
—
|
|
|
(1.4
|
)
|
|
0.3
|
|
|
—
|
|
|
(1.1
|
)
|
Income (loss) before income taxes and equity in earnings of subsidiaries
|
|
(9.7
|
)
|
|
32.6
|
|
|
1.5
|
|
|
—
|
|
|
24.4
|
|
Income tax expense (benefit)
|
|
(3.1
|
)
|
|
10.7
|
|
|
1.0
|
|
|
—
|
|
|
8.6
|
|
Net income (loss) before equity in earnings of subsidiaries
|
|
(6.6
|
)
|
|
21.9
|
|
|
0.5
|
|
|
—
|
|
|
15.8
|
|
Equity in earnings of subsidiaries
|
|
22.1
|
|
|
—
|
|
|
—
|
|
|
(22.1
|
)
|
|
—
|
|
Net income (loss)
|
|
15.5
|
|
|
21.9
|
|
|
0.5
|
|
|
(22.1
|
)
|
|
15.8
|
|
Less: Net income attributable to non-controlling interest
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
Net income (loss) attributable to U.S. Concrete
|
|
$
|
15.5
|
|
|
$
|
21.9
|
|
|
$
|
0.3
|
|
|
$
|
(22.1
|
)
|
|
$
|
15.6
|
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2019
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
U.S. Concrete Consolidated
|
Revenue
|
|
$
|
—
|
|
|
$
|
1,019.8
|
|
|
$
|
89.7
|
|
|
$
|
—
|
|
|
$
|
1,109.5
|
|
Cost of goods sold before depreciation, depletion and amortization
|
|
—
|
|
|
823.2
|
|
|
63.2
|
|
|
—
|
|
|
886.4
|
|
Selling, general and administrative expenses
|
|
—
|
|
|
97.9
|
|
|
5.4
|
|
|
—
|
|
|
103.3
|
|
Depreciation, depletion and amortization
|
|
—
|
|
|
58.8
|
|
|
11.4
|
|
|
—
|
|
|
70.2
|
|
Change in value of contingent consideration
|
|
—
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|
1.6
|
|
Loss (gain) on sale/disposal of assets and business, net
|
|
—
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
|
0.8
|
|
Operating income
|
|
—
|
|
|
37.5
|
|
|
9.7
|
|
|
—
|
|
|
47.2
|
|
Interest expense, net
|
|
29.8
|
|
|
2.9
|
|
|
2.1
|
|
|
—
|
|
|
34.8
|
|
Other expense (income), net
|
|
0.2
|
|
|
(6.0
|
)
|
|
(2.0
|
)
|
|
—
|
|
|
(7.8
|
)
|
Income (loss) before income taxes, equity in earnings of subsidiaries and non-controlling interest
|
|
(30.0
|
)
|
|
40.6
|
|
|
9.6
|
|
|
—
|
|
|
20.2
|
|
Income tax expense (benefit)
|
|
(10.9
|
)
|
|
17.6
|
|
|
1.6
|
|
|
—
|
|
|
8.3
|
|
Net income (loss) before equity in earnings of subsidiaries and non-controlling interest
|
|
(19.1
|
)
|
|
23.0
|
|
|
8.0
|
|
|
—
|
|
|
11.9
|
|
Equity in earnings of subsidiaries
|
|
30.1
|
|
|
—
|
|
|
—
|
|
|
(30.1
|
)
|
|
—
|
|
Net income (loss)
|
|
11.0
|
|
|
23.0
|
|
|
8.0
|
|
|
(30.1
|
)
|
|
11.9
|
|
Less: Net income attributable to non-controlling interest
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
(0.9
|
)
|
Net income (loss) attributable to U.S. Concrete
|
|
$
|
11.0
|
|
|
$
|
23.0
|
|
|
$
|
7.1
|
|
|
$
|
(30.1
|
)
|
|
$
|
11.0
|
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2018
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
U.S. Concrete Consolidated
|
Revenue
|
|
$
|
—
|
|
|
$
|
1,054.3
|
|
|
$
|
82.0
|
|
|
$
|
—
|
|
|
$
|
1,136.3
|
|
Cost of goods sold before depreciation, depletion and amortization
|
|
—
|
|
|
849.2
|
|
|
63.5
|
|
|
—
|
|
|
912.7
|
|
Selling, general and administrative expenses
|
|
—
|
|
|
90.6
|
|
|
5.8
|
|
|
—
|
|
|
96.4
|
|
Depreciation, depletion and amortization
|
|
—
|
|
|
57.0
|
|
|
11.2
|
|
|
—
|
|
|
68.2
|
|
Change in value of contingent consideration
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
—
|
|
|
(0.9
|
)
|
Impairment of assets
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
Loss (gain) on sale/disposal of assets and business, net
|
|
—
|
|
|
(14.6
|
)
|
|
—
|
|
|
—
|
|
|
(14.6
|
)
|
Operating income
|
|
—
|
|
|
71.7
|
|
|
1.5
|
|
|
—
|
|
|
73.2
|
|
Interest expense, net
|
|
29.6
|
|
|
2.7
|
|
|
2.3
|
|
|
—
|
|
|
34.6
|
|
Other expense (income), net
|
|
0.8
|
|
|
(3.9
|
)
|
|
(1.0
|
)
|
|
—
|
|
|
(4.1
|
)
|
Income (loss) before income taxes and equity in earnings of subsidiaries
|
|
(30.4
|
)
|
|
72.9
|
|
|
0.2
|
|
|
—
|
|
|
42.7
|
|
Income tax expense (benefit)
|
|
(8.9
|
)
|
|
22.3
|
|
|
1.1
|
|
|
—
|
|
|
14.5
|
|
Net income (loss) before equity in earnings of subsidiaries
|
|
(21.5
|
)
|
|
50.6
|
|
|
(0.9
|
)
|
|
—
|
|
|
28.2
|
|
Equity in earnings of subsidiaries
|
|
49.5
|
|
|
—
|
|
|
—
|
|
|
(49.5
|
)
|
|
—
|
|
Net income (loss)
|
|
28.0
|
|
|
50.6
|
|
|
(0.9
|
)
|
|
(49.5
|
)
|
|
28.2
|
|
Less: Net income attributable to non-controlling interest
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
Net income (loss) attributable to U.S. Concrete
|
|
$
|
28.0
|
|
|
$
|
50.6
|
|
|
$
|
(1.1
|
)
|
|
$
|
(49.5
|
)
|
|
$
|
28.0
|
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2019
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
U.S. Concrete Consolidated
|
Net cash provided by (used in) operating activities
|
|
$
|
(24.0
|
)
|
|
$
|
103.6
|
|
|
$
|
7.3
|
|
|
$
|
5.2
|
|
|
$
|
92.1
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
—
|
|
|
(25.4
|
)
|
|
(3.2
|
)
|
|
—
|
|
|
(28.6
|
)
|
Proceeds from disposals of businesses and property, plant and equipment
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|
1.2
|
|
Proceeds from eminent domain matter and property insurance claims
|
|
—
|
|
|
5.3
|
|
|
0.7
|
|
|
—
|
|
|
6.0
|
|
Investment in subsidiaries
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
—
|
|
Net cash provided by (used in) investing activities
|
|
1.0
|
|
|
(18.9
|
)
|
|
(2.5
|
)
|
|
(1.0
|
)
|
|
(21.4
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Proceeds from revolver borrowings
|
|
273.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
273.3
|
|
Repayments of revolver borrowings
|
|
(277.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(277.2
|
)
|
Proceeds from exercise of stock options
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
Payments of other long-term obligations
|
|
(0.8
|
)
|
|
(32.6
|
)
|
|
—
|
|
|
—
|
|
|
(33.4
|
)
|
Payments for other financing
|
|
(0.2
|
)
|
|
(23.6
|
)
|
|
(0.4
|
)
|
|
—
|
|
|
(24.2
|
)
|
Treasury share purchases
|
|
(2.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.2
|
)
|
Intercompany funding
|
|
29.9
|
|
|
(21.5
|
)
|
|
(4.2
|
)
|
|
(4.2
|
)
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
23.0
|
|
|
(77.7
|
)
|
|
(4.6
|
)
|
|
(4.2
|
)
|
|
(63.5
|
)
|
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
(0.2
|
)
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
|
—
|
|
|
7.0
|
|
|
—
|
|
|
—
|
|
|
7.0
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
—
|
|
|
10.8
|
|
|
9.2
|
|
|
—
|
|
|
20.0
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
—
|
|
|
$
|
17.8
|
|
|
$
|
9.2
|
|
|
$
|
—
|
|
|
$
|
27.0
|
|
U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2018
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
U.S. Concrete Consolidated
|
Net cash provided by (used in) operating activities
|
|
$
|
(20.8
|
)
|
|
$
|
108.5
|
|
|
$
|
2.8
|
|
|
$
|
(0.3
|
)
|
|
$
|
90.2
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
—
|
|
|
(29.3
|
)
|
|
(2.9
|
)
|
|
—
|
|
|
(32.2
|
)
|
Payments for acquisitions, net of cash acquired
|
|
—
|
|
|
(72.3
|
)
|
|
—
|
|
|
—
|
|
|
(72.3
|
)
|
Proceeds from disposals of businesses and property, plant and equipment
|
|
—
|
|
|
18.6
|
|
|
—
|
|
|
—
|
|
|
18.6
|
|
Purchases of environmental credits
|
|
—
|
|
|
—
|
|
|
(2.8
|
)
|
|
—
|
|
|
(2.8
|
)
|
Proceeds from eminent domain matter and property insurance claims
|
|
—
|
|
|
1.6
|
|
|
0.5
|
|
|
—
|
|
|
2.1
|
|
Net cash provided by (used in) investing activities
|
|
—
|
|
|
(81.4
|
)
|
|
(5.2
|
)
|
|
—
|
|
|
(86.6
|
)
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Proceeds from revolver borrowings
|
|
338.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
338.2
|
|
Repayments of revolver borrowings
|
|
(310.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(310.7
|
)
|
Proceeds from stock option exercises
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
Payments of other long-term obligations
|
|
(2.2
|
)
|
|
(3.4
|
)
|
|
—
|
|
|
—
|
|
|
(5.6
|
)
|
Payments for other financing
|
|
—
|
|
|
(20.6
|
)
|
|
(0.9
|
)
|
|
—
|
|
|
(21.5
|
)
|
Treasury share purchases
|
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.9
|
)
|
Other proceeds
|
|
—
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
Intercompany funding
|
|
(2.7
|
)
|
|
4.3
|
|
|
(1.9
|
)
|
|
0.3
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
20.8
|
|
|
(19.2
|
)
|
|
(2.8
|
)
|
|
0.3
|
|
|
(0.9
|
)
|
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
|
—
|
|
|
7.9
|
|
|
(5.3
|
)
|
|
—
|
|
|
2.6
|
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
—
|
|
|
7.0
|
|
|
15.6
|
|
|
—
|
|
|
22.6
|
|
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$
|
—
|
|
|
$
|
14.9
|
|
|
$
|
10.3
|
|
|
$
|
—
|
|
|
$
|
25.2
|
|