UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, ~~2018~~2019

o 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: 001-34530

U.S. CONCRETE, INC.

(Exact name of registrant as specified in its charter)



Delaware		76-0586680
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

~~331 N. Main Street, Euless, Texas 76039~~

(Address of principal executive offices, including zip ~~code)~~code: 331 N. Main Street, Euless, Texas 76039

~~(817) 835-4105~~

(Registrant’s telephone number, including area ~~code)~~code: (817) 835-4105

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 þ No ¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting 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 þ	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨	Emerging growth company ¨
		~~(Do not check if a 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 Exchange Act). Yes ¨ No þ

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



Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, par value $.001	USCR	The Nasdaq Stock Market LLC

There were ~~16,810,089~~16,616,234 shares of common stock, par value $.001 per share, of the registrant outstanding as of May 1, ~~2018.~~

2019.

~~U.S. CONCRETE, INC.~~

INDEX



		Page No.
Part I – Financial Information
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	31
	Condensed Consolidated Statements of Operations	42
	Condensed Consolidated Statements of Total Equity	53
	Condensed Consolidated Statements of Cash Flows	64
	Notes to Condensed Consolidated Financial Statements	86
	1. Basis of Presentation	86
	2. Recent Accounting Pronouncements and Significant Accounting Policies	86
	3. ~~Revenue~~Leases	97
	4. Business Combinations	108
	5. Inventories	1411
	6. Goodwill and Other ~~Intangibles~~Intangible Assets	1411
	7. Debt	1613
	8. Fair Value Disclosures	1714
	9. Income Taxes	1916
	10. Net Earnings (Loss) Per Share	2016
	11. Commitments and Contingencies	2217
	12. Segment Information	2419
	13. Supplemental Condensed Consolidating Financial Information	2622
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3329
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4539
Item 4.	Controls and Procedures	4539

Part II – Other Information
Item 1.	Legal Proceedings	4640
Item 1A.	Risk Factors	4640
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4640
Item 4.	Mine Safety Disclosures	4640
Item 6.	Exhibits	4741

~~Signatures~~Signature		4842

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

U.S. CONCRETE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

~~(in thousands)~~


	March 31, 2018			December 31, 2017
	(Unaudited)
($ in millions)							March 31, 2019			December 31, 2018
ASSETS							(Unaudited)
Current assets:
Cash and cash equivalents	$	36,616		$	22,581		$	23.9		$	20.0
Trade accounts receivable, net of allowances of $6,175 and $5,785 as of March 31, 2018, and December 31, 2017, respectively	213,354			214,221
Trade accounts receivable, net of allowances of $5.9 as of March 31, 2019 and $6.1 as of December 31, 2018							225.6			226.6
Inventories	47,341			48,085			50.5			51.2
Prepaid expenses	9,460			5,297
Other receivables	16,073			19,191			19.7			18.4
Other current assets	1,479			2,310
Prepaid expenses and other							10.0			7.9
Total current assets	324,323			311,685			329.7			324.1
Property, plant and equipment, net of accumulated depreciation, depletion and amortization of $191,087 and $178,168 as of March 31, 2018, and December 31, 2017, respectively	664,594			636,268
Property, plant and equipment, net of accumulated depreciation, depletion and amortization of $246.7 as of March 31, 2019 and $236.1 as of December 31, 2018							672.6			680.2
Operating lease assets							74.0			—
Goodwill	220,107			204,731			239.5			239.3
Intangible assets, net	126,134			118,123			110.5			116.6
Other assets	7,161			5,327			11.1			11.1
Total assets	$	1,342,319		$	1,276,134		$	1,437.4		$	1,371.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	115,729		$	117,070		$	110.3		$	125.8
Accrued liabilities	84,038			65,420			109.8			96.3
Current maturities of long-term debt	25,902			25,951			30.2			30.8
Current operating lease liabilities							13.5			—
Total current liabilities	225,669			208,441			263.8			252.9
Long-term debt, net of current maturities	729,826			667,385			678.8			683.3
Long-term operating lease liabilities							62.8			—
Other long-term obligations and deferred credits	84,533			93,341			51.5			54.8
Deferred income taxes	3,123			4,825			45.1			43.1
Total liabilities	1,043,151			973,992			1,102.0			1,034.1
Commitments and contingencies (Note 11)
Equity:
Preferred stock	—			—			—			—
Common stock	18			18			—			—
Additional paid-in capital	321,216			319,016			331.5			329.6
Accumulated deficit	(17,642		)	(13,784		)
Retained earnings							13.5			16.2
Treasury stock, at cost	(26,032		)	(24,799		)	(34.5		)	(33.4		)
Total shareholders' equity	277,560			280,451			310.5			312.4
Non-controlling interest	21,608			21,691			24.9			24.8
Total equity	299,168			302,142			335.4			337.2
Total liabilities and equity	$	1,342,319		$	1,276,134		$	1,437.4		$	1,371.3

The accompanying notes are an integral part of these condensed consolidated financial statements.

U.S. CONCRETE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

~~(in thousands, except per share amounts)~~

Three Months Ended
March 31,
2018
2017
Revenue $ 327,787

$ 299,133
Cost of goods sold before depreciation, depletion and amortization 267,232

235,759
Selling, general and administrative expenses 32,276

25,817
Depreciation, depletion and amortization 20,575

15,859
Change in value of contingent consideration 368
608
Gain on sale of assets, net (190 )
(192 )
Operating income 7,526

21,282
Interest expense, net 11,309

10,142
Derivative income —
(1,856 )
Other income, net (1,619 )
(708 )
Income (loss) from continuing operations before income taxes (2,164 )
13,704
Income tax expense 1,652

6,702
Income (loss) from continuing operations (3,816 )
7,002
Loss from discontinued operations, net of taxes —

(122 )
Net income (loss) (3,816 )
6,880
Less: Net income attributable to non-controlling interest (42 ) —
Net income (loss) attributable to U.S. Concrete $ (3,858 ) $ 6,880

Basic income (loss) per share attributable to U.S. Concrete:

Income (loss) from continuing operations $ (0.23 )
$ 0.45
Loss from discontinued operations, net of taxes —

(0.01 )
Net income (loss) per share attributable to U.S. Concrete - basic $ (0.23 )
$ 0.44

Diluted income (loss) per share attributable to U.S. Concrete:

Income (loss) from continuing operations $ (0.23 ) $ 0.43
Loss from discontinued operations, net of taxes —
(0.01 )
Net income (loss) per share attributable to U.S. Concrete - diluted $ (0.23 )
$ 0.42

Weighted average shares outstanding:

Basic 16,423

15,498
Diluted 16,423
16,483

Net income (loss) attributable to U.S. Concrete:
Income (loss) from continuing operations attributable to U.S. Concrete $ (3,858 ) $ 7,002
Loss from discontinued operations, net of taxes —
(122 )
Total net income (loss) attributable to U.S. Concrete $ (3,858 ) $ 6,880



	Three Months Ended March 31,
(in millions except per share)	2019			2018
Revenue	$	333.1		$	327.8
Cost of goods sold before depreciation, depletion and amortization	268.4			267.2
Selling, general and administrative expenses	32.1			32.3
Depreciation, depletion and amortization	22.8			20.6
Change in value of contingent consideration	1.0			0.3
Loss (gain) on sale/disposal of assets, net	0.9			(0.2		)
Operating income	7.9			7.6
Interest expense, net	11.6			11.4
Other income, net	(0.4		)	(1.6		)
Income (loss) before income taxes	(3.3		)	(2.2		)
Income tax expense (benefit)	(0.7		)	1.7
Net income (loss)	(2.6		)	(3.9		)
Less: Net income attributable to non-controlling interest	(0.1		)	—
Net income (loss) attributable to U.S. Concrete	$	(2.7	)	$	(3.9	)

Earnings (loss) per share attributable to U.S. Concrete:
Basic earnings per share	$	(0.16	)	$	(0.23	)
Diluted earnings per share	$	(0.16	)	$	(0.23	)

Weighted average shares outstanding:
Basic	16.3			16.4
Diluted	16.3			16.4

The accompanying notes are an integral part of these condensed consolidated financial statements.

U.S. CONCRETE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF TOTAL EQUITY

(Unaudited)

~~(in thousands)~~


	Common Stock																					Common Stock
	# of Shares		Par Value		Additional Paid-In Capital		Accumulated Deficit			Treasury Stock			Total Shareholders' Equity (Deficit)			Non-controlling Interest			Total Equity (Deficit)
(in millions)																						# of Shares	Par Value		Additional Paid-In Capital		Retained Earnings (Accumulated Deficit)			Treasury Stock			Total Shareholders' Equity			Non-controlling Interest			Total Equity
BALANCE, December 31, 2017	16,652		$	18	$	319,016	$	(13,784	)	$	(24,799	)	$	280,451		$	21,691		$	302,142		16.7	$	—	$	319.0	$	(13.8	)	$	(24.8	)	$	280.4		$	21.7		$	302.1
Stock-based compensation expense	—		—		2,172		—			—			2,172			—			2,172
Restricted stock vesting	2		—		—		—			—			—			—			—
Stock-based compensation																						—	—		2.2		—			—			2.2			—			2.2
Restricted stock grants, net of cancellations	183		—		—		—			—			—			—			—			0.1	—		—		—			—			—			—			—
Stock options exercised	2		—		28		—			—			28			—			28
Other treasury share purchases	(18	)	—		—		—			(1,233		)	(1,233		)	—			(1,233		)	—	—		—		—			(1.2		)	(1.2		)	—			(1.2		)
Measurement period adjustments for prior year business combinations	—		—		—		—			—			—			(125		)	(125		)	—	—		—		—			—			—			(0.1		)	(0.1		)
Net income (loss)	—		—		—		(3,858		)	—			(3,858		)	42			(3,816		)	—	—		—		(3.9		)	—			(3.9		)	—			(3.9		)
BALANCE, March 31, 2018	16,821		$	18	$	321,216	$	(17,642	)	$	(26,032	)	$	277,560		$	21,608		$	299,168		16.8	$	—	$	321.2	$	(17.7	)	$	(26.0	)	$	277.5		$	21.6		$	299.1

BALANCE, December 31, 2018																						16.6	$	—	$	329.6	$	16.2		$	(33.4	)	$	312.4		$	24.8		$	337.2
Stock-based compensation																						—	—		1.7		—			—			1.7			—			1.7
Stock options exercised																						—	—		0.2		—			—			0.2			—			0.2
Other treasury share purchases																						—	—		—		—			(1.1		)	(1.1		)	—			(1.1		)
Net income (loss)																						—	—		—		(2.7		)	—			(2.7		)	0.1			(2.6		)
BALANCE, March 31, 2019																						16.6	$	—	$	331.5	$	13.5		$	(34.5	)	$	310.5		$	24.9		$	335.4

The accompanying notes are an integral part of these condensed consolidated financial statements.

U.S. CONCRETE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

~~(in thousands)~~


	Three Months Ended March 31,
($ in millions)							Three Months Ended March 31,
	2018			2017			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(3,816	)	$	6,880		$	(2.6	)	$	(3.9	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	20,575			15,859			22.8			20.6
Amortization of debt issuance costs	463			519			0.4			0.5
Amortization of discount on long-term incentive plan and other accrued interest	194			185
Amortization of premium on long-term debt	(388		)	(388		)
Derivative income	—			(1,856		)
Change in value of contingent consideration	368			608			1.0			0.3
Net gain on disposal of assets	(190		)	(192		)
Loss (gain) on sale/disposal of assets, net							0.9			(0.2		)
Deferred income taxes	(547		)	2,761			2.2			(0.5		)
Provision for doubtful accounts and customer disputes	982			718			0.4			1.0
Stock-based compensation	2,172			1,619			1.7			2.2
Unrealized foreign exchange gain	(13		)	—
Other, net							(0.5		)	(0.2		)
Changes in assets and liabilities, excluding effects of acquisitions:
Accounts receivable	(128		)	6,749			0.6			(0.1		)
Inventories	1,418			182			0.7			1.4
Prepaid expenses and other current assets	(1,785		)	(2,246		)	(3.5		)	(1.8		)
Other assets and liabilities	(1,346		)	(77		)	(1.0		)	(1.3		)
Accounts payable and accrued liabilities	7,977			(1,777		)	(1.2		)	7.9
Net cash provided by operating activities	25,936			29,544			21.9			25.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(8,375		)	(10,718		)	(7.2		)	(8.4		)
Payments for acquisitions, net of cash acquired	(60,250		)	(2,731		)	—			(60.3		)
Proceeds from disposals of property, plant and equipment	262			485
Proceeds from disposal of businesses	72			294
Proceeds from disposals of businesses and property, plant and equipment							0.4			0.4
Insurance proceeds from property loss claims	1,634			—			—			1.6
Net cash used in investing activities	(66,657		)	(12,670		)	(6.8		)	(66.7		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolver borrowings	135,650			—			76.3			135.7
Repayments of revolver borrowings	(69,650		)	—			(74.8		)	(69.7		)
Proceeds from issuance of debt	—			211,500
Proceeds from exercise of warrants and stock options	28			327
Proceeds from stock option exercises							0.2			—
Payments of other long-term obligations	(3,540		)	(4,500		)	(3.7		)	(3.5		)
Payments for other financing	(6,419		)	(4,246		)	(8.1		)	(6.4		)
Debt issuance costs	—			(3,170		)
Other treasury share purchases	(1,233		)	(735		)	(1.1		)	(1.2		)
Net cash provided by financing activities	54,836			199,176
Net cash provided by (used in) financing activities							(11.2		)	54.9
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	(80		)	—			—			(0.1		)
NET INCREASE IN CASH AND CASH EQUIVALENTS	14,035			216,050			3.9			14.0
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	22,581			75,774			20.0			22.6
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	36,616		$	291,824		$	23.9		$	36.6

U.S. CONCRETE, INC. AND SUBSIDARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited)

(in ~~thousands)~~millions)

Three Months Ended
March 31,
2018 2017
Supplemental Disclosure of Cash Flow Information:

Cash paid for interest $ 1,420
$ 542
Cash paid for income taxes $ 557
$ 5,732

Supplemental Disclosure of Non-cash Investing and Financing Activities:
Capital expenditures funded by capital leases and promissory notes $ 2,735
$ 4,708
Acquisitions funded by contingent consideration $ 893
$ —



	Three Months Ended March 31,
	2019		2018
Supplemental Disclosure of Cash Flow Information:
Net cash paid for interest	$	1.7	$	1.4
Net cash paid for income taxes	$	—	$	0.6
Capital expenditures funded by finance leases and promissory notes	$	1.3	$	2.7
Acquisitions funded by contingent consideration	$	—	$	0.9
Leased assets obtained in exchange for new operating lease liabilities	$	0.8	$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.	BASIS OF PRESENTATION

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, ~~2017~~2018 (the ~~"2017 Form~~"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.

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, ~~programs,~~ 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

~~Standards/Updates Adopted This Quarter~~

~~Revenue Recognition.~~ In May 2014, the FASB issued guidance that outlines a single comprehensive model for accounting for revenue arising from contracts with customers, which supersedes most of the existing revenue recognition guidance. The core principle of the guidance is that an entity should 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 those goods or services and also requires certain additional disclosures. We adopted this guidance and related amendments as of January 1, 2018, applying the modified retrospective transition approach to all contracts. Adoption of the new guidance did not result in changes in the amount of revenue recognized or the timing of when such revenue is recognized.

~~Clarification of the Definition of a Business in Business Combinations.~~ In January 2017, the FASB issued an update under business combinations in an effort to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or as business combinations. The amendments in this update provide a screen to determine when a set of assets is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The adoption of this standard did not have a material impact on our financial condition and results of operations.

~~Classification of Certain Cash Receipts and Cash Payments.~~ In August 2016, the FASB issued guidance to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. Adoption of this standard did not result in any material changes to our statements of cash flows.

~~U.S. CONCRETE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Standards/Updates Not Yet Adopted~~

Lease Accounting. In February 2016, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued ~~an amendment related to leases~~a new lease accounting standard intended to increase transparency and comparability among organizations by ~~reorganizing~~recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new guidance, lessees ~~will be~~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 ~~will require~~requires disclosures to help investors and other financial statement users to better understand the amount, timing and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. We ~~expect to adopt~~adopted the guidance as of January 1, 2019, using ~~a modified retrospective~~the transition ~~approach. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual periods.~~approach that permits application of the new standard at the adoption date instead of the earliest comparative period presented in the financial statements. We ~~are currently evaluating the potential impact on our financial position~~implemented processes and ~~results of operations upon adoption of this guidance. This guidance will result~~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 ~~operating~~agreements. We elected to exclude leases ~~for certain real estate and equipment, to be recognized on our~~with an initial term of 12 months or less from the balance sheet. We ~~will further analyze our~~made an accounting policy election to combine lease ~~arrangements as we complete our assessment~~ and ~~implementation of this new guidance. The evaluation process will include reviewing all forms of leases, performing a completeness assessment over~~non-lease components when calculating the lease ~~population, analyzing~~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 ~~expedients and assessing the need to make any changes to our lease accounting technology system in order~~expedient to determine the ~~best implementation strategy.~~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.

For ~~a description of~~ our other significant accounting policies, see Note 1 ofto the consolidated financial statements in our ~~2017 Form~~2018 10-K.

~~3. REVENUE~~

We derive substantially all of our revenue from the production and delivery of ready-mixed concrete, aggregates and related building materials. Revenue from the sale of these products is recognized when there is persuasive evidence of an arrangement and control passes to the customer, which generally occurs at the point in time when products are delivered. We do not deliver product unless we have an order or other documentation authorizing delivery to our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. Sales and other taxes we collect concurrently with revenue-producing activities are excluded from revenue. Incidental items, such as mix formulation and testing services that are immaterial in the context of the revenue contract and completed in close proximity to the revenue-producing activities, are recorded within cost of goods sold as incurred. We generally do not provide post-delivery services, such as paving or finishing. Customer dispute costs are recorded as a reduction of revenue at the end of each period and are estimated by using a combination of historical customer experience and a customer-by-customer analysis.

Amounts billed to customers for delivery costs are classified as a component of total revenue. Our payment terms vary by the type and location of our customer and the products offered. The term between invoicing and when payment is due is not significant. As permitted under U.S. GAAP, we have elected not to assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customer and the transfer of the promised goods to the customer will be one year or less.

~~See~~ ~~Note 12~~ ~~for disaggregation of revenue by segment and product as we believe that best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors.~~

~~We do not have any customer contracts that meet the definition of unsatisfied performance obligations in accordance with U.S. GAAP.~~

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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	March 31, 2019
Assets:
Operating lease assets	Operating lease assets	$	74.0
Finance lease assets	Property, plant and equipment, net	86.2		⁽¹⁾
Total lease assets		$	160.2
Liabilities:
Current liabilities:
Operating	Current operating lease liabilities	$	13.5
Finance	Current maturities of long-term debt	20.4
Long-term liabilities
Operating	Long-term operating lease liabilities	62.8
Finance	Long-term debt, net of current maturities	46.8
Total lease liabilities		$	143.5

(1) Net of accumulated amortization of $21.9 million.



Lease Cost ($ in millions)	Statement of Operations Classification	Three Months Ended March 31, 2019
Operating lease cost	Selling, general and administrative expenses	$	6.4	⁽¹⁾
Finance lease cost
Amortization of leased assets	Depreciation, depletion and amortization	2.7
Interest on lease liabilities	Interest expense, net	0.6
Total finance lease cost		3.3
Total		$	9.7

(1) Includes short-term lease and variable lease costs of approximately $1.5 million.

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Maturity of Lease Liabilities ($ in millions)	Operating Leases		Finance Leases		Total
2019 (remainder of year)	$	13.4	$	17.4	$	30.8
2020	15.7		21.5		37.2
2021	14.0		16.7		30.7
2022	11.3		10.7		22.0
2023	9.8		5.4		15.2
2024	8.1		0.5		8.6
Thereafter	25.1		—		25.1
Total lease payments	97.4		72.2		169.6
Less interest	21.1		5.0		26.1
Present value of lease liabilities	$	76.3	$	67.2	$	143.5



Lease Term and Discount Rate	March 31, 2019
Weighted-average remaining lease term (years):
Operating leases	5.9
Finance leases	3.6
Weighted-average discount rate:
Operating leases	6.1	%
Finance leases	3.9	%



Other Information ($ in millions)	Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	4.8
Operating cash flows for finance leases	0.6
Financing cash flows for finance leases	5.1
Leased assets obtained in exchange for new finance lease liabilities	1.3
Leased assets obtained in exchange for new operating lease liabilities	0.8


4.	BUSINESS COMBINATIONS

The accounting for business combinations requires the significant use of estimates and is based on information that was available to management at the time these condensed consolidated financial statements were prepared. The estimates used for determining the fair value of certain liabilities related to acquisitions are considered Level 3 inputs (as defined in ~~Note 8). We utilized recognized valuation techniques, including the income approach, sales approach, and cost approach to value the net assets acquired. See~~ ~~Note 8~~ for additional information related to contingent consideration obligations, including maximum payout amounts and how the fair value was estimated. Any changes to the provisional business combination accounting will be made as soon as practical, but no later than one year from the respective acquisition dates.

~~2018 Acquisitions~~

We completed ~~three~~five acquisitions during ~~the three months ended March 31,~~ 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, ~~and~~ 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 ~~$60.8~~$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

~~One~~Two individually immaterial ready-mixed concrete ~~operation~~operations in our Atlantic Region and West Texas Region on March 5, ~~2018.~~2018 and September 14, 2018, respectively.

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The aggregate fair value consideration for these ~~three~~five acquisitions included ~~$59.9~~$69.9 million in cash and fair value contingent consideration of ~~$0.9~~$1.1 million and was net of a working capital receivable of $0.2 million. We funded the cash portion ~~of the 2018 acquisitions~~ through a combination of cash on hand and borrowings under our Revolving Facility (as defined in Note 7). The combined assets acquired through these ~~2018~~ acquisitions included ~~140~~149 mixer trucks, ~~19 ready-mix~~20 concrete ~~plants~~plant facilities and ~~one aggregates facility. During~~2 aggregate facilities. To effect these transactions, during the three months ended March 31, 2018, we incurred $0.5 million of transaction costs, ~~to effect the 2018 acquisitions,~~ which ~~are~~were included in selling and general administrative expenses in our condensed consolidated statements of operations.

Our accounting for Leon River and the immaterial West Texas acquisition described above is preliminary, while the accounting for the other 2018 ~~business combinations~~acquisitions is ~~preliminary.~~final. We expect to record adjustments as we accumulate information needed to estimate the fair value of assets acquired and liabilities assumed, including working capital balances, estimated fair value of identifiable intangible assets, property, plant and equipment, total consideration and goodwill. See Note 6 for a description of our measurement period adjustments.

The following table presents the total consideration for the 2018 acquisitions and the ~~preliminary~~ amounts related to the assets acquired and liabilities assumed based on the estimated fair values as of ~~the~~their respective acquisition ~~dates (in thousands):~~dates:


	2018 Acquisitions
($ in millions)			2018 Acquisitions
Inventory	$	674	$	1.1
Other current assets	77		0.1
Property, plant and equipment	30,287		37.4
Definite-lived intangible assets	13,125		19.8
Total assets acquired	44,163		58.4
Current liabilities			0.1
Other long-term liabilities			1.1
Total liabilities assumed	153		1.2
Goodwill	16,830		13.6
Total consideration (fair value) ⁽¹⁾	$	60,840	$	70.8

(1) Included ~~$0.9~~$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	5.8	$	18.5
Non-compete agreements	5.0	1.3
Total		$	19.8

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~2017 Acquisitions~~

~~We completed eight acquisitions during 2017 that expanded our ready-mixed concrete and aggregate products operations in our~~ ~~Atlantic Region, expanded~~ our ready-mixed concrete operations in Northern California and facilitated vertical integration on the West Coast. The aggregate fair value consideration for these acquisitions, which were all accounted for as business combinations, was $327.9 million. The acquisitions included the assets and certain liabilities of the following:

~~Corbett Aggregate Companies, LLC. ("Corbett") located in Quinton, New Jersey on April 7, 2017;~~

~~Harbor Ready-Mix ("Harbor") located in Redwood City, California on September 29, 2017;~~

~~A-1 Materials, Inc. ("A-1”) and L.C. Frey Company, Inc. ("Frey") (collectively “A-1/Frey”) located in San Carlos, California on September 29, 2017;~~

~~Action Supply Co., Inc. ("Action Supply") located in Philadelphia, Pennsylvania on September 29, 2017;~~

~~Polaris Materials Corporation ("Polaris") located in British Columbia, Canada on November 17, 2017; and~~

~~Three individually immaterial acquisitions in December 2017 consisting of two ready-mixed concrete operations and a software company.~~

The aggregate fair value consideration for these eight acquisitions, included $298.4 million in cash, $5.5 million in payments deferred over a four-year period, and fair value contingent consideration of $24.0 million. The combined assets acquired through these 2017 acquisitions included 409 acres of land, two aggregate facilities with approximately 130 million tons of proven aggregates reserves, 51 mixer trucks, seven ready-mix concrete plants and four aggregates distribution terminals. We funded the cash portion of the acquisitions through a combination of cash on hand and borrowings under our Revolving Facility (as defined in ~~Note 7~~). Prior to the completion of the Polaris acquisition, we received two promissory notes from Polaris aggregating $18.1 million Canadian dollars, which were subsequently reclassified as intercompany loans upon completion of the acquisition and have been eliminated from our consolidated balance sheet. During the three months ended March 31, 2017, we incurred $0.2 million of transaction costs to effect the 2017 acquisitions, which are included in selling and general administrative expenses in our condensed consolidated statements of operations.

Our accounting for the 2017 business combinations is preliminary except for the Corbett acquisition. We expect to record adjustments as we accumulate information needed to estimate the fair value of assets acquired and liabilities assumed, including working capital balances, estimated fair value of identifiable intangible assets, property, plant and equipment, adjustments related to determination of the conclusion of tax attributes as of the acquisition date, total consideration and goodwill.

~~U.S. CONCRETE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

The following table presents the total consideration for the 2017 acquisitions and the preliminary amounts related to the assets acquired and liabilities assumed based on the estimated fair values as of the respective acquisition dates (in thousands):

Polaris 2017 Acquisitions (Excluding Polaris)
Cash $ 20,678
$ —
Accounts receivable⁽¹⁾
4,661
1,110
Inventory 6,022
695
Other current assets 1,522
48
Property, plant and equipment 198,703
63,145
Other long-term assets 896
—
Definite-lived intangible assets —
8,378
Total assets acquired 232,482
73,376
Current liabilities⁽²⁾
26,465
1,057
Other long-term liabilities 2,999
62
Total liabilities assumed 29,464
1,119
Non-controlling interest 21,442
—
Goodwill 61,192
12,842
Total consideration (fair value)⁽³⁾
$ 242,768
$ 85,099


~~(1)~~	Except for Polaris, the aggregate fair value of the 2017 acquisitions' acquired accounts receivable approximated the aggregate gross contractual amount. The fair value of Polaris's acquired accounts receivable was $4.7 million, which represented an aggregate gross contractual amount of $5.0 million, less estimated amounts not expected to be collected.


~~(2)~~	~~Current liabilities for Polaris included $14.2 million payable to the Company, which was eliminated in consolidation.~~


~~(3)~~	~~Included $29.5 million of deferred and contingent consideration for acquisitions other than Polaris.~~

~~Acquired Intangibles and Goodwill~~

~~A summary of the intangible assets acquired in 2018 and 2017 and their estimated useful lives is as follows (in thousands):~~

Weighted Average Amortization Period (In Years) Fair Value At Acquisition Date
Customer relationships 7.20 $ 19,325
Non-compete agreements 5.00 1,794
Favorable Contract 3.67 384
Total $ 21,503

~~U.S. CONCRETE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

As of March 31, ~~2018,~~2019, the estimated future aggregate amortization expense of definite-lived intangible assets from the 2018 ~~and 2017~~ acquisitions was as follows (in ~~thousands)~~millions):


	Year Ending December 31,
2018 (remainder of the year)	$	2,499
2019	3,332
2019 (remainder of the year)			$	2.8
2020	3,315		3.8
2021	3,194		3.0
2022	3,165		2.8
2023			1.8
Thereafter	5,387		1.8
Total	$	20,892	$	16.0

During the three months ended March 31, 2019 and 2018, we recorded ~~$0.3~~$0.9 million and $0.1 million of amortization expense related to these intangible ~~assets. During the three months ended March 31, 2017, there was no amortization expense related to these intangible~~ assets, ~~as they were all subsequently acquired.~~respectively.

The goodwill ascribed to ~~our~~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 ~~aggregate products segments. See~~ ~~Note 6~~ ~~for~~other non-reportable segments in the ~~allocation~~amounts of $12.8 million and $0.8 million, respectively. We generally expect all $13.6 million of goodwill ~~to our segments. We expect~~from the ~~goodwill~~2018 acquisitions to be deductible for tax purposes. See Note 9 for additional information regarding income taxes.

Actual Impact of Acquisitions

During the three months ended March 31, ~~2018,~~2019, we recorded approximately ~~$30.3~~$13.3 million of revenue and ~~$0.1~~$1.0 million of operating ~~loss~~income in our condensed consolidated statements of operations related to the ~~2017 and~~ 2018 acquisitions following their respective dates of acquisition. During the three months ended March 31, ~~2017, there were no acquisitions.~~2018, we recorded approximately $5.0 million of revenue and $1.0 million of operating income in our condensed consolidated statements of operations in 2018 related to the 2018 acquisitions following their respective dates of acquisition.

Unaudited Pro Forma Impact of Acquisitions

The information presented below reflects the unaudited pro forma combined financial results for the ~~acquisitions completed during~~ 2018 ~~and 2017,~~acquisitions, excluding the individually immaterial acquisitions ~~in 2018 and 2017~~ 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 ~~for the three months ended March 31, 2018 and 2017,~~ as if the 2018 acquisitions had been completed on January 1, ~~2017 and~~2017. The impact to the ~~2017~~2019 results of operations if the 2018 acquisitions had been completed on January 1, ~~2016 (in thousands, except per share information):~~2017 was not material.

Three Months Ended
March 31,
2018 2017
Revenue from continuing operations $ 342,525
$ 342,017
Net income attributable to U.S. Concrete $ (2,731 ) $ 7,620

Net income per share attributable to U.S. Concrete - basic $ (0.17 ) $ 0.49
Net income per share attributable to U.S. Concrete - diluted $ (0.17 ) $ 0.46



($ in millions except per share)	Three Months Ended March 31, 2018
Revenue	$	343.4
Net income (loss) attributable to U.S. Concrete	$	(4.1	)

Net income (loss) per share attributable to U.S. Concrete - basic	$	(0.25	)
Net income (loss) per share attributable to U.S. Concrete - diluted	$	(0.25	)

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, and the 2017 acquisitions occurred on January 1, 2016.~~2017.

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma ~~net income attributable to U.S. Concrete and per share~~ amounts above reflect the following ~~adjustments (in thousands):~~adjustments:

Three Months Ended
March 31,
2018 2017
Increase in intangible amortization expense $ (479 ) $ (766 )
Increase in depreciation expense —
(1,175 )
Exclusion of buyer transaction costs 499
231
Exclusion of seller transaction costs —
3,224
Increase in expenses related to conversions from IFRS⁽¹⁾ to U.S. GAAP
—
(69 )
Decrease in income tax expense 426
359
Increase in non-controlling loss —
137



($ in millions)	Three Months Ended March 31, 2018
Increase in intangible amortization expense	$	0.8
Exclusion of buyer transaction costs	0.5
Decrease in income tax expense	0.1


~~(1)~~	~~IFRS is defined as International Financial Reporting Standards as issued by the International Accounting Standards Board.~~

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.


5.	~~INVENTORIES~~

5. INVENTORIES

~~Inventories were as follows (in thousands):~~


	March 31, 2018		December 31, 2017
($ in millions)					March 31, 2019		December 31, 2018
Raw materials	$	42,849	$	44,238	$	45.4	$	46.4
Building materials for resale	2,871		2,192		3.0		2.8
Other	1,621		1,655		2.1		2.0
Total inventories	$	47,341	$	48,085
Total					$	50.5	$	51.2

6. GOODWILL AND OTHER ~~INTANGIBLES~~INTANGIBLE ASSETS

Goodwill

The accumulated impairment was as follows:



($ in millions)	March 31, 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 ~~from December 31, 2017 to March 31, 2018~~ were as ~~follows (in thousands):~~follows:

Ready-Mixed Concrete Segment Aggregate Products Segment Other Non-Reportable Segments Total
Goodwill, gross at December 31, 2017 $ 139,834
$ 57,438
$ 13,212
$ 210,484
2018 acquisitions 15,971
—
859
16,830
Measurement period adjustments for prior year business combinations ⁽¹⁾
(337 ) (2,133 ) 1,016
(1,454 )
Goodwill, gross at March 31, 2018 155,468
55,305
15,087
225,860
Accumulated impairment at December 31, 2017 and March 31, 2018 (4,414 ) (1,339 ) —
(5,753 )
Goodwill, net at March 31, 2018 $ 151,054
$ 53,966
$ 15,087
$ 220,107



($ 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 March 31, 2019	$	147.9	$	86.2	$	5.4	$	239.5


(1)	~~The measurement period adjustments~~Adjustments for the ~~2017~~2018 acquisitions recorded during ~~2018 primarily~~2019 included ~~$2.0~~a $0.2 million reduction of property, plant, and ~~equipment and $0.4 million of definite-lived intangible assets.~~equipment.

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other Intangible Assets

Our purchased intangible assets were as ~~follows (in thousands):~~follows:


	As of March 31, 2018								March 31, 2019
	Gross		Accumulated Amortization			Net		Weighted Average Remaining Life (In Years)
($ in millions)									Gross		Accumulated Amortization			Net		Weighted Average Remaining Life (In Years)
Definite-lived intangible assets
Customer relationships	$	101,618	$	(31,246	)	$	70,372	5.36	$	108.5	$	(47.2	)	$	61.3	4.5
Trade names	44,456		(8,888		)	35,568		19.80	44.5		(11.8		)	32.7		19.5
Non-competes	18,668		(9,347		)	9,321		3.17	18.3		(12.9		)	5.4		2.5
Leasehold interests	12,480		(3,799		)	8,681		6.47	12.5		(5.5		)	7.0		5.8
Favorable contracts	4,034		(3,320		)	714		1.30	4.0		(3.8		)	0.2		1.7
Environmental credits									2.8		(0.1		)	2.7		16.8
Total definite-lived intangible assets	181,256		(56,600		)	124,656		9.37	190.6		(81.3		)	109.3		9.3
Indefinite-lived intangible assets
Land rights⁽¹⁾	1,478		—			1,478			1.2		—			1.2
Total purchased intangible assets	$	182,734	$	(56,600	)	$	126,134		$	191.8	$	(81.3	)	$	110.5


(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.


	As of December 31, 2017								December 31, 2018
	Gross		Accumulated Amortization			Net		Weighted Average Remaining Life (In Years)
($ in millions)									Gross		Accumulated Amortization			Net		Weighted Average Remaining Life (In Years)
Definite-lived intangible assets
Customer relationships	$	89,933	$	(28,092	)	$	61,841	5.47	$	108.5	$	(43.1	)	$	65.4	4.7
Trade names	44,456		(8,120		)	36,336		19.87	44.5		(11.1		)	33.4		19.6
Non-competes	16,875		(8,510		)	8,365		2.93	18.3		(12.1		)	6.2		2.6
Leasehold interests	12,480		(3,378		)	9,102		6.66	12.5		(5.1		)	7.4		5.9
Favorable contracts	4,034		(3,033		)	1,001		1.35	4.0		(3.8		)	0.2		1.9
Environmental credits									2.8		—			2.8		17.0
Total definite-lived intangible assets	167,778		(51,133		)	116,645		9.83	190.6		(75.2		)	115.4		9.8
Indefinite-lived intangible assets
Land rights⁽¹⁾	1,478		—			1,478			1.2		—			1.2
Total purchased intangible assets	$	169,256	$	(51,133	)	$	118,123		$	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 March 31, ~~2018,~~2019, the estimated remaining amortization of our definite-lived intangible assets was as follows (in ~~thousands)~~millions):


	Year Ending December 31,
2018 (remainder of the year)	$	17,514
2019	21,633
2019 (remainder of the year)			$	17.3
2020	19,425		21.0
2021	17,881		18.7
2022	12,155		12.8
2023			6.5
Thereafter	36,048		33.0
Total	$	124,656	$	109.3

Also included in other ~~non-current liabilities~~long-term obligations and deferred credits in the accompanying condensed consolidated balance sheets are unfavorable lease intangibles with a gross carrying amount of $1.5 million as of both March 31, 2019 and December 31, 2018, and a net carrying amount of ~~$1.0~~$0.7 million and $0.8 million as of ~~both~~ March 31, ~~2018~~2019 and December 31, ~~2017.~~2018, respectively. These unfavorable lease intangibles ~~have~~had a weighted average remaining life of ~~4.77~~4.2 years as of March 31, ~~2018.~~2019.

We recorded ~~$5.4~~$6.0 million and ~~$5.2~~$5.4 million of amortization expense on our definite-lived intangible assets and unfavorable lease intangibles for the three months ended March 31, 2019 and 2018, ~~and 2017,~~ respectively. ~~This amortization expense is included in the accompanying condensed consolidated statements of operations.~~


7.	DEBT

~~Our debt and capital leases were as follows (in thousands):~~


	March 31, 2018			December 31, 2017
6.375% senior unsecured notes due 2024 and unamortized premium⁽¹⁾	$	609,562		$	609,949
Senior secured credit facility	75,000			9,000
Capital leases	51,546			53,324
($ in millions)							March 31, 2019			December 31, 2018
Senior unsecured notes due 2024 and unamortized premium⁽¹⁾							$	608.0		$	608.4
Asset based revolving credit facility							16.6			15.0
Finance leases							67.2			71.2
Other financing	29,980			31,886			25.8			28.5
Debt issuance costs	(10,360		)	(10,823		)	(8.6		)	(9.0		)
Total debt	755,728			693,336			709.0			714.1
Less: current maturities	(25,902		)	(25,951		)	(30.2		)	(30.8		)
Long-term debt, net of current maturities	$	729,826		$	667,385		$	678.8		$	683.3


(1)	The effective interest ~~rates~~rate for these notes ~~were 6.57%~~was 6.56% as of both March 31, ~~2018~~2019 and ~~6.56%as of~~ December 31, ~~2017.~~ 2018.

~~Senior Secured~~Asset Based Revolving Credit Facility

As of March 31, ~~2018,~~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 ~~weighted average~~ interest rate for the facility was ~~2.95%~~5.75% as of March 31, ~~2018.~~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 March 31, ~~2018~~2019 was ~~$137.7~~$201.0 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 March 31, ~~2018,~~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 quarter ended March 31, 2019 and 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 $58.3 million as of March 31, 2019 and $60.7 million as of December 31, 2018.

The following tables present the valuation inputs for our ~~fair value hierarchy for liabilities measured at fair value on a recurring basis as~~three model types of ~~March 31, 2018 and December 31, 2017 (in thousands):~~acquisition-related contingent consideration arrangements.

March 31, 2018
Total Level 1 Level 2 Level 3
Contingent consideration, including current portion ⁽¹⁾
$ 60,997
$ —
$ —
$ 60,997
$ 60,997
$ —
$ —
$ 60,997



	March 31, 2019
Valuation Inputs	Monte Carlo Simulation		Income Approach		Discounted Cash Flow Technique
Fair value (in millions)	$	32.5	$	24.9	$	0.9
Discount rate	10.75% - 12.25%		3.70% - 5.00%		1.67% - 15.75%
Payment cap (in millions)	$	36.0	$	25.0	$	1.0
Expected payment period remaining (in years)	1-3		0-1		0-4
Management projections of the payout criteria	EBITDA/Volumes		Permitted reserves/Volumes		Volumes

December 31, 2017
Total Level 1 Level 2 Level 3
Contingent consideration, including current portion ⁽¹⁾
$ 61,817
$ —
$ —
$ 61,817
$ 61,817
$ —
$ —
$ 61,817


~~(1)~~	The current portion of contingent consideration is included in accrued liabilities in our condensed consolidated balance sheets. The long-term portion of contingent consideration is included in other long-term obligations and deferred credits in our condensed consolidated balance sheets.

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following tables present the valuation inputs for the fair value estimates of our contingent consideration associated with the 2015 acquisition of Ferrara Bros. Building Materials Corp. ("Ferrara Bros"), 2017 acquisition of Corbett, 2015 acquisition of Right Away Redy Mix, Inc. ("Right Away"), 2018 acquisition of On Time, 2015 acquisition of DuBrook Concrete, Inc. ("DuBrook") and two of the individually immaterial 2017 acquisitions ("Other").

As of March 31, 2018
Valuation Inputs Ferrara Bros Corbett Right Away On Time DuBrook Other
Fair value (in millions) $ 33.1
$ 21.0
$ 2.1
$ 0.9
$ 0.5
$ 3.4
Discount rate 11.75 % 5.00 % 9.75 % 3.70 % 15.75 % 3.70 %
Payment cap (in millions) $ 35.0
$ 23.0
$ 2.2
$ 1.0
$ 0.5
$ 3.9
Expected payment period remaining (in years) 4 5 2 1 1 5
Management projections of the payout criteria EBITDA Permitted reserves Volumes Volumes Volumes Certain other criteria


	As of December 31, 2017															December 31, 2018
Valuation Inputs	Ferrara Bros			Corbett			Right Away			DuBrook			Other			Monte Carlo Simulation		Income Approach		Discounted Cash Flow Technique
Fair value (in millions)	$	33.0		$	20.9		$	4.1		$	0.5		$	3.3		$	33.2	$	26.5	$	1.0
Discount rate	11.75		%	5.00		%	9.75		%	15.75		%	3.70		%	10.75% - 12.25%		3.70% - 5.00%		6.03% - 15.75%
Payment cap (in millions)	$	35.0		$	23.0		$	4.3		$	0.5		$	3.9		$	37.3	$	27.3	$	1.1
Minimum payment period from the acquisition date (in years)	4			2			4			2			5
Expected payment period remaining (in years)																1-3		1		1-4
Management projections of the payout criteria	EBITDA			Permitted reserves			Volumes			Volumes			Certain other 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, ~~2017~~2018 to March 31, ~~2018 (in thousands):~~2019:

Contingent Consideration
Balance at December 31, 2017 $ 61,817
Acquisitions ⁽¹⁾
893
Increases in contingent consideration valuation 368
Payments of contingent consideration (2,081 )
Balance at March 31, 2018 $ 60,997


~~(1)~~	~~Represents the fair value of the contingent consideration associated with the On Time acquisition as of the acquisition date.~~

The liabilities for the Right Away earn-out and the Ferrara Bros contingent consideration were valued using Monte Carlo simulations, which incorporated probability-weighted assumptions related to the achievement of specific milestones mentioned above. The liabilities for the Corbett and the On Time contingent consideration were valued using the income approach, which incorporated probability-weighted assumptions related to the achievement of specific milestones mentioned above. The liability for the DuBrook earn-out was valued using a discounted cash flow technique. Inputs into the models were based upon observable market data where possible. Where observable market data did not exist, we modeled inputs based upon similar observable inputs.



($ in millions)	Contingent Consideration
Balance at December 31, 2018	$	60.7
Change in valuation	1.0
Payments of contingent consideration	(3.4		)
Balance at March 31, 2019	$	58.3

~~U.S. CONCRETE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

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 ~~$623.2~~$610.5 million as of March 31, ~~2018.~~2019. The carrying value of the outstanding amounts under our Revolving Facility approximates fair value due to the floating interest rate.

Other Assets Measured on a Non-Recurring Basis

In connection with our acquisitions described in Note 4, the assets acquired 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 comparable sales. 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.

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


9.	INCOME TAXES

We recorded an income tax benefit of $0.7 million and an income tax expense ~~allocated to continuing operations~~ of $1.7 ~~million and $6.7~~ million for the three months ended March 31, 2019 and 2018, respectively. For the three months ended March 31, 2019, our effective tax rate was 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 interest expense limitation in accordance with the Tax Cuts and ~~2017, respectively.~~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, and (iv) unfavorable discrete items occurring in the first quarter including a net tax shortfall recognized for share-based compensation. These unfavorable items were partially offset by additional state income tax benefits recognized. For the three months ended March 31, 2018, our effective tax rate differed from the federal statutory rate primarily due to ~~the fact that~~losses generated by our Canadian operations ~~had a net pre-tax loss~~ for which no income tax benefit ~~is recorded because of~~was recognized due to a related full valuation allowance. Our other entities had net pre-tax income and ~~recorded~~recognized corresponding net income tax expense, which included cumulative adjustments ~~related~~ to deferred income taxes in the amount of $1.3 million. For the three months ended March 31, 2017, our effective tax rate was higher than the federal statutory tax rate primarily due to adjustments related to certain state net operating loss carryforwards that will not be utilized prior to expiration and other cumulative adjustments to deferred income taxes, which resultedresulting in additional income tax ~~expense. In addition, both periods were impacted by certain state income taxes that were calculated on a basis other than pre-tax income (loss).~~expense of $1.3 million.

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 ~~established~~maintained valuation allowances as of March 31, ~~2018~~2019 and December 31, ~~2017~~2018 for other deferred tax assets because of uncertainty regarding their ultimate realization. Our total net deferred tax liability was approximately ~~$3.1~~$40.2 million as of March 31, ~~2018~~2019 and ~~$4.8~~$38.0 million as of December 31, ~~2017.~~2018, of which $45.1 million and $43.1 million were recorded as non-current liabilities. Deferred tax assets for certain state taxing jurisdictions, which were recorded as non-current assets, were $4.9 million as of March 31, 2019, and $5.1 million as of December 31, 2018.

We record changes in our unrecognized tax benefits based on anticipated federal and state tax filing positions on a quarterly basis. For the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, we recorded unrecognized tax benefits of ~~$0.1~~$0.3 million and ~~$0.6~~$0.1 million, respectively.

On December 22, 2017, the President signed into law “H.R.1” for U.S. tax reform legislation (the “Tax Act”). Among other items, the Tax Act lowered the corporate federal statutory tax rate from 35% to 21%. We estimate a decrease to our 2018 tax expense primarily due to the lower blended effective U.S. federal tax rate.

The Tax Act also contains certain provisions that could impact our taxable income beginning in tax year 2018, including, but not limited to (1) a Base Erosion Anti-abuse Tax ("BEAT"), which is a new minimum tax; (2) general elimination of U.S. federal income taxes on dividends from foreign subsidiaries; (3) a mechanism to tax currently global intangible low taxed income ("GILTI"), which allows for the possibility of utilizing foreign tax credits and a deduction equal to 50% to offset the income tax liability (subject to some limitations); (4) allowing us to elect treatment of the GILTI as a period cost or in deferred taxes; (5) a limit on the amount of deductible interest expense; (6) the repeal of the domestic production activity deduction; (7) limitations on the deductibility of certain executive compensation; and (8) limitations on the utilization of foreign tax credits to reduce the U.S. income tax liability.

~~U.S. CONCRETE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Shortly after the Tax Act was enacted, the Securities and Exchange Commission ("SEC") staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the Tax Act’s impact. This guidance provides a measurement period, which in no case should extend beyond one year from the Tax Act enactment date. For the period ended December 31, 2017, we recorded provisional amounts related to the remeasurement of our deferred income tax assets and liabilities based on the income tax rates that are expected to be in effect at the time the tax deduction or taxable item will be reported in our income tax returns, as well as assessed our ability to realize deferred income tax assets in the future under the new rules of the Tax Act. Additionally, we assessed the impacts of the new provisions associated with the deductibility of executive compensation under Internal Revenue Code Section 162(m), and the associated “grandfathering” rules within the Tax Act to provide taxpayers transition relief when applying the change in law. At March 31, 2018, we have not completed our accounting for the income tax effects of the Tax Act; however, in certain cases, we have made a reasonable estimate of the effects on our existing deferred income tax balances. We will monitor future guidance set forth by the U.S. Department of Treasury with regard to the new provisions under the Tax Act, and true up provisional amounts as appropriate within the one-year measurement period required under SAB 118.


10.	~~NET~~ EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net earnings (loss) attributable to U.S. Concrete by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) attributable to U.S. Concrete per share is computed by dividing net earnings (loss) ~~attributable to U.S. Concrete~~ by the weighted average number of common shares outstanding during the period after giving effect to all potentially dilutive securities outstanding during the period.

The following is a reconciliation of the components of the basic and diluted earnings (loss) per share ~~calculations for the three months ended March 31, 2018 and 2017 (in thousands):~~calculations:

Three Months Ended
March 31,

2018 ⁽¹⁾
2017
Numerator for basic and diluted earnings per share:
Income (loss) from continuing operations attributable to U.S. Concrete $ (3,858 ) $ 7,002
Loss from discontinued operations, net of taxes —
(122 )
Net income (loss) attributable to U.S. Concrete $ (3,858 ) $ 6,880

Denominator for diluted earnings per share:
Basic weighted average common shares outstanding 16,423
15,498
Restricted stock and restricted stock units —
117
Warrants —
851
Stock options —
17
Diluted weighted average common shares outstanding 16,423
16,483



	Three Months Ended March 31,
(in millions)	2019⁽¹⁾			2018⁽¹⁾
Numerator for basic and diluted earnings per share:
Net income (loss) attributable to U.S. Concrete	$	(2.7	)	$	(3.9	)

Denominator for earnings per share:
Basic weighted average common shares outstanding	16.3			16.4
Diluted weighted average common shares outstanding	16.3			16.4


(1)	We reported a loss ~~from continuing operations~~ attributable to U.S. Concrete for the three months ended March 31, 2019 and 2018; therefore, the share ~~count~~counts used in the basic and diluted earnings per share ~~calculation is~~calculations were the same.

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The ~~following table shows the type and number (in thousands) of~~ potentially dilutive shares excluded from the diluted earnings ~~(loss)~~ per share ~~calculations~~calculation for the periods presented related to unvested restricted stock awards and restricted stock units, as their effect would have been anti-dilutive or they ~~have~~had not met their performance ~~target:~~

Three Months Ended
March 31,
2018 2017
Potentially dilutive shares:
Unvested restricted stock awards and restricted stock units 386
165
Stock options 17
—
Total potentially dilutive shares 403
165
target and totaled 249,000 for the three months ended March 31, 2019 and 403,000 for the three months ended March 31, 2018.

~~U.S. CONCRETE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~


11.	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~~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 ~~March 31, 2018,~~May 9, 2019, there ~~are~~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 March 31, ~~2018.~~2019.

We believe that the resolution of ~~all~~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.

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.

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 estimated fair value of these indemnification agreements is minimal. Accordingly, we have not recorded any liabilities for these agreements as of March 31, ~~2018.~~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.

~~U.S. CONCRETE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

As of May 9, 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 ~~subsidiary,~~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 of $0.4 million.~~charges. The total royalties and interest claimed to date are approximately ~~$2.2~~CAD $3.8 million ~~which~~($2.9 million). Although the Company through its Polaris subsidiary, is disputing. Polaris’s position is that royalties are only payable based on actual production, in accordance with a written undertaking from the responsible government agency prior to commencement of the lease, and as the project has ~~not been developed, no royalties are currently due. Accordingly, the Company has currently not~~ recorded a provision for a portion of the ~~royalty assessment.~~assessment, it continues to dispute and negotiate certain aspects of the claim, including interest charges and the timing of payment.

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. We have filed reimbursement claims for all of our costs, 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'~~workers’ compensation, automobile and general liability ~~risks in amounts we believe are reasonable.~~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 deductible retentions per occurrence for auto, workers’ compensation and general liability insurance programs are ~~$1.0~~$1.0 million,, although certain of our operations are self-insured for workers’ compensation. We fund these deductibles and record an expense for expected losses under the programs. ~~We determine the~~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 ~~we have~~ 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, ~~in our condensed consolidated balance sheet for estimated losses~~ was ~~$19.7~~$21.4 million as of March 31, ~~2018~~2019 and ~~$19.2~~$20.4 million as of December 31, ~~2017~~.2018.

Performance Bonds

In the normal course of business, we ~~are~~and our subsidiaries were contingently liable ~~for performance~~ under ~~$34.5~~$36.4 million in performance bonds that various contractors, states and municipalities have required as of March 31, ~~2018.~~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 as of March 31, 2018.~~

~~Employment Agreements~~

We have employment agreements with executive officers and certain key members of management under which severance payments would become payable in the event of specified terminations without cause or after a change of control. bonds.

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


12.	SEGMENT INFORMATION

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, Northern California, New York, New Jersey, Pennsylvania, Washington, D.C., Oklahoma and the U.S. Virgin Islands. Our aggregate products segment ~~includes~~produces crushed stone, sand and gravel ~~products~~ 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, ~~lime slurry,~~ ARIDUS^® Rapid Drying Concrete technology, brokered product sales and recycled ~~aggregates operation~~aggregates. Other operations and ~~an industrial waterfront marine terminal and sales yard. The financial results of the acquisitions have been~~products also previously included ~~in their respective reportable segment or in other products, as applicable, as of their respective acquisition dates.~~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) ~~from continuing operations~~, excluding the impact of income tax expense (benefit), depreciation, depletion and amortization, net interest expense ~~loss on extinguishment of debt, derivative income (loss), the~~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 ~~goodwill and other~~ assets, ~~hurricane-related losses,~~acquisition-related costs, officer transition expenses, quarry dredge costs for a specific event, ~~purchase accounting adjustments~~and hurricane-related losses, net of recoveries. Acquisition-related costs consist of fees and expenses for ~~inventory~~accountants, lawyers and ~~foreign currency losses resulting from~~other professionals incurred during the ~~Polaris acquisition. Other impacts excluded from our Adjusted EBITDA are non-cash stock compensation expense, acquisition-related~~negotiation and closing of strategic acquisitions and certain acquired entities' management severance costs. Acquisition-related costs ~~and officer transition expenses.~~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 ~~for use~~ 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.

During the quarter ended June 30, 2018, we re-characterized certain results of our Polaris distribution operations, which include shipping and terminal operations, to the aggregate products segment from other products and eliminations. This change was made to better reflect how the Polaris business is viewed and operated by management and more closely aligns our reporting with how we manage and report our other aggregate products operations. As a result of this change, certain first quarter 2018 amounts have been reclassified from those previously reported.

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following tables set forth certain financial information relating to our ~~continuing~~ operations by reportable ~~segment (in thousands):~~segment:


	Three Months Ended March 31,						Three Months Ended March 31,
	2018			2017
Revenue:
($ in millions)							2019			2018
Revenue by Segment:
Ready-mixed concrete
Sales to external customers	$	289,240		$	275,456		$	290.4		$	289.2
Aggregate products
Sales to external customers	19,455			9,297			31.8			24.7
Intersegment sales	13,223			8,527			11.1			9.5
Total aggregate products	32,678			17,824			42.9			34.2
Total reportable segment revenue	321,918			293,280			333.3			323.4
Other products and eliminations	5,869			5,853			(0.2		)	4.4
Total revenue	$	327,787		$	299,133		$	333.1		$	327.8

Reportable Segment Adjusted EBITDA:
Ready-mixed concrete	$	40,967		$	41,504		$	34.5		$	41.0
Aggregate products	5,030			3,997			10.4			4.7
Total reportable segment Adjusted EBITDA	$	45,997		$	45,501		$	44.9		$	45.7

Reconciliation of Total Reportable Segment Adjusted EBITDA to Income (Loss) From Continuing Operations:
Reconciliation of Total Reportable Segment Adjusted EBITDA to Net Income (Loss):
Total reportable segment Adjusted EBITDA	$	45,997		$	45,501		$	44.9		$	45.7
Other products and eliminations from operations	(1,639		)	2,857			(0.1		)	1.1
Corporate overhead	(15,470		)	(10,992		)	(14.5		)	(15.5		)
Depreciation, depletion and amortization for reportable segments	(18,271		)	(14,853		)	(20.8		)	(19.2		)
Hurricane-related losses for reportable segments	(307		)	—
Quarry dredge costs for specific event for reportable segment	(191		)	—
Acquisition-related costs							—			(1.0		)
Hurricane-related losses, net of recoveries							—			(0.3		)
Quarry dredge costs for specific event							—			(0.2		)
Purchase accounting adjustments for inventory	(706		)	—			—			(0.7		)
Interest expense, net	(11,309		)	(10,142		)	(11.6		)	(11.4		)
Corporate derivative income	—			1,856
Change in value of contingent consideration for reportable segments	(368		)	(608		)	(1.0		)	(0.3		)
Loss on mixer truck fire							(0.6		)	—
Corporate, other products and eliminations other income, net	100			85			0.4			(0.4		)
Income (loss) from continuing operations before income taxes	(2,164		)	13,704
Income tax expense	(1,652		)	(6,702		)
Income (loss) from continuing operations	$	(3,816	)	$	7,002

Capital Expenditures:
Ready-mixed concrete	$	6,518		$	6,107
Aggregate products	828			4,268
Other products and corporate	1,029			343
Total capital expenditures	$	8,375		$	10,718
Income from operations before income taxes							(3.3		)	(2.2		)
Income tax benefit (expense)							0.7			(1.7		)
Net income (loss)							$	(2.6	)	$	(3.9	)

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended
March 31,
2018 2017
Revenue by Product:
Ready-mixed concrete $ 289,240
$ 275,456
Aggregate products 19,455
9,297
Aggregates distribution 9,392
5,453
Building materials 5,861
4,070
Lime 2,292
2,695
Hauling 1,112
1,341
Other 435
821
Total revenue $ 327,787
$ 299,133



	Three Months Ended March 31,
($ in millions)	2019		2018
Capital Expenditures:
Ready-mixed concrete	$	5.8	$	6.5
Aggregate products	1.2		0.9
Other products and corporate	0.2		1.0
Total capital expenditures	$	7.2	$	8.4



	Three Months Ended March 31,
($ in millions)	2019		2018
Revenue by Product:
Ready-mixed concrete	$	290.4	$	289.2
Aggregate products	31.8		24.7
Aggregates distribution	5.3		4.1
Building materials	4.6		5.9
Lime	—		2.3
Hauling	0.9		1.1
Other	0.1		0.5
Total revenue	$	333.1	$	327.8


	As of March 31, 2018		As of December 31, 2017
($ in millions)					March 31, 2019		December 31, 2018
Identifiable Property, Plant and Equipment Assets:
Ready-mixed concrete	$	281,171	$	266,584	$	288.6	$	295.5
Aggregate products	328,020		314,573		355.0		355.0
Other products and corporate	55,403		55,111		29.0		29.7
Total identifiable assets	$	664,594	$	636,268	$	672.6	$	680.2

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


13.	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 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, 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 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, Inc. 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

MARCH 31, 2019

(in millions)



	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations and Reclassifications			U.S. Concrete Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	13.6	$	10.3	$	—		$	23.9
Trade accounts receivable, net	—		214.8		10.8		—			225.6
Inventories	—		41.3		9.2		—			50.5
Other receivables	3.0		16.5		0.2		—			19.7
Prepaid expenses and other	—		9.5		0.5		—			10.0
Intercompany receivables	9.7		—		0.3		(10.0		)	—
Total current assets	12.7		295.7		31.3		(10.0		)	329.7
Property, plant and equipment, net	—		463.9		208.7		—			672.6
Operating lease assets	—		60.3		13.7		—			74.0
Goodwill	—		155.7		83.8		—			239.5
Intangible assets, net	—		105.9		4.6		—			110.5
Investment in subsidiaries	607.3		—		—		(607.3		)	—
Long-term intercompany receivables	321.7		—		3.6		(325.3		)	—
Other assets	—		9.7		1.4		—			11.1
Total assets	$	941.7	$	1,091.2	$	347.1	$	(942.6	)	$	1,437.4
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—	$	107.9	$	2.4	$	—		$	110.3
Accrued liabilities	13.9		87.6		8.3		—			109.8
Current operating lease liabilities	—		11.9		1.6		—			13.5
Current maturities of long-term debt	0.3		29.5		0.4		—			30.2
Intercompany payables	—		—		10.0		(10.0		)	—
Total current liabilities	14.2		236.9		22.7		(10.0		)	263.8
Long-term debt, net of current maturities	617.0		61.6		0.2		—			678.8
Long-term operating lease liabilities	—		50.5		12.3		—			62.8
Other long-term obligations and deferred credits	—		48.4		3.1		—			51.5
Deferred income taxes	—		21.5		23.6		—			45.1
Long-term intercompany payables	—		201.9		123.4		(325.3		)	—
Total liabilities	631.2		620.8		185.3		(335.3		)	1,102.0
Total shareholders' equity	310.5		470.4		136.9		(607.3		)	310.5
Non-controlling interest	—		—		24.9		—			24.9
Total equity	310.5		470.4		161.8		(607.3		)	335.4
Total liabilities and equity	$	941.7	$	1,091.2	$	347.1	$	(942.6	)	$	1,437.4

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING BALANCE SHEET

~~MARCH~~DECEMBER 31, 2018

(in ~~thousands)~~millions)


	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations and Reclassifications			U.S. Concrete Consolidated		Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations and Reclassifications			U.S. Concrete Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	19,533	$	17,083	$	—		$	36,616	$	—	$	10.8	$	9.2	$	—		$	20.0
Trade accounts receivable, net	—		207,691		5,663		—			213,354		—		219.7		6.9		—			226.6
Inventories	—		41,404		5,937		—			47,341		—		42.4		8.8		—			51.2
Prepaid expenses	—		9,093		367		—			9,460
Other receivables	2,683		13,325		65		—			16,073		11.1		7.0		0.3		—			18.4
Other current assets	—		1,476		3		—			1,479
Prepaid expenses and other												—		7.1		0.8		—			7.9
Intercompany receivables	14,463		—		—		(14,463		)	—		9.7		—		0.3		(10.0		)	—
Total current assets	17,146		292,522		29,118		(14,463		)	324,323		20.8		287.0		26.3		(10.0		)	324.1
Property, plant and equipment, net	—		445,784		218,810		—			664,594		—		468.3		211.9		—			680.2
Goodwill	—		158,915		61,192		—			220,107		—		155.5		83.8		—			239.3
Intangible assets, net	—		123,736		2,398		—			126,134		—		111.8		4.8		—			116.6
Deferred income taxes	—		—		674		(674		)	—
Investment in subsidiaries	547,526		—		—		(547,526		)	—		604.1		—		—		(604.1		)	—
Long-term intercompany receivables	403,493		—		—		(403,493		)	—		308.9		—		1.1		(310.0		)	—
Other assets	—		6,214		947		—			7,161		—		10.8		0.3		—			11.1
Total assets	$	968,165	$	1,027,171	$	313,139	$	(966,156	)	$	1,342,319	$	933.8	$	1,033.4	$	328.2	$	(924.1	)	$	1,371.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	17	$	113,901	$	1,811	$	—		$	115,729	$	—	$	122.4	$	3.4	$	—		$	125.8
Accrued liabilities	15,556		63,157		5,325		—			84,038		4.7		83.2		8.4		—			96.3
Current maturities of long-term debt	—		25,274		628		—			25,902		0.3		29.9		0.6		—			30.8
Intercompany payables	—		—		14,463		(14,463		)	—		—		—		10.0		(10.0		)	—
Total current liabilities	15,573		202,332		22,227		(14,463		)	225,669		5.0		235.5		22.4		(10.0		)	252.9
Long-term debt, net of current maturities	674,202		55,022		602		—			729,826		615.5		67.6		0.2		—			683.3
Other long-term obligations and deferred credits	830		80,781		2,922		—			84,533		0.9		51.0		2.9		—			54.8
Deferred income taxes	—		3,797		—		(674		)	3,123		—		22.4		20.7		—			43.1
Long-term intercompany payables	—		274,832		128,661		(403,493		)	—		—		188.7		121.3		(310.0		)	—
Total liabilities	690,605		616,764		154,412		(418,630		)	1,043,151		621.4		565.2		167.5		(320.0		)	1,034.1
Total shareholders' equity	277,560		410,407		137,119		(547,526		)	277,560		312.4		468.2		135.9		(604.1		)	312.4
Non-controlling interest	—		—		21,608		—			21,608		—		—		24.8		—			24.8
Total equity	277,560		410,407		158,727		(547,526		)	299,168		312.4		468.2		160.7		(604.1		)	337.2
Total liabilities and equity	$	968,165	$	1,027,171	$	313,139	$	(966,156	)	$	1,342,319	$	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 MARCH 31, 2019

(in millions)



	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations and Reclassifications			U.S. Concrete Consolidated
Revenue	$	—		$	303.1		$	30.0		$	—		$	333.1
Cost of goods sold before depreciation, depletion and amortization	—			247.2			21.2			—			268.4
Selling, general and administrative expenses	—			30.5			1.6			—			32.1
Depreciation, depletion and amortization	—			18.8			4.0			—			22.8
Change in value of contingent consideration	—			1.0			—			—			1.0
Loss (gain) on sale/disposal of assets, net	—			0.9			—			—			0.9
Operating income (loss)	—			4.7			3.2			—			7.9
Interest expense, net	9.9			1.0			0.7			—			11.6
Other expense (income), net	—			(0.4		)	—			—			(0.4		)
Income (loss) before income taxes, equity in earnings of subsidiaries and non-controlling interest	(9.9		)	4.1			2.5			—			(3.3		)
Income tax expense (benefit)	(3.0		)	2.0			0.3			—			(0.7		)
Net income (loss) before equity in earnings of subsidiaries and non-controlling interest	(6.9		)	2.1			2.2			—			(2.6		)
Equity in earnings of subsidiaries	4.2			—			—			(4.2		)	—
Net income (loss)	(2.7		)	2.1			2.2			(4.2		)	(2.6		)
Less: Net income attributable to non-controlling interest	—			—			(0.1		)	—			(0.1		)
Net income (loss) attributable to U.S. Concrete	$	(2.7	)	$	2.1		$	2.1		$	(4.2	)	$	(2.7	)

~~CONDENSED CONSOLIDATING BALANCE SHEET~~

~~DECEMBER 31, 2017~~

~~(in thousands)~~

Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations and Reclassifications U.S. Concrete Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ —
$ 6,970
$ 15,611
$ —
$ 22,581
Trade accounts receivable, net —
208,669
5,552
—
214,221
Inventories —
41,006
7,079
—
48,085
Prepaid expenses —
4,723
574
—
5,297
Other receivables 16,256
2,644
291
—
19,191
Other current assets —
2,307
3
—
2,310
Intercompany receivables 14,628
—
—
(14,628 ) —
Total current assets 30,884
266,319
29,110
(14,628 ) 311,685
Property, plant and equipment, net —
416,888
219,380
—
636,268
Goodwill —
142,221
62,510
—
204,731
Intangible assets, net —
115,570
2,553
—
118,123
Deferred income taxes —
—
674
(674 ) —
Investment in subsidiaries 544,256
—
—
(544,256 ) —
Long-term intercompany receivables 322,193
—
—
(322,193 ) —
Other assets —
4,384
943
—
5,327
Total assets $ 897,333
$ 945,382
$ 315,170
$ (881,751 ) $ 1,276,134
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 17
$ 115,465
$ 1,588
$ —
$ 117,070
Accrued liabilities 6,703
53,097
5,620
—
65,420
Current maturities of long-term debt —
25,284
667
—
25,951
Intercompany payables —
—
14,628
(14,628 ) —
Total current liabilities 6,720
193,846
22,503
(14,628 ) 208,441
Long-term debt, net of current maturities 608,127
58,545
713
—
667,385
Other long-term obligations and deferred credits 2,035
88,743
2,563
—
93,341
Deferred income taxes —
5,499
—
(674 ) 4,825
Long-term intercompany payables —
195,282
126,911
(322,193 ) —
Total liabilities 616,882
541,915
152,690
(337,495 ) 973,992
Total shareholders' equity 280,451
403,467
140,789
(544,256 ) 280,451
Non-controlling interest —
—
21,691
—
21,691
Total equity 280,451
403,467
162,480
(544,256 ) 302,142
Total liabilities and equity $ 897,333
$ 945,382
$ 315,170
$ (881,751 ) $ 1,276,134

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2018

(in ~~thousands)~~millions)


	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations and Reclassifications			U.S. Concrete Consolidated			Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations and Reclassifications			U.S. Concrete Consolidated
Revenue	$	—		$	308,829		$	18,958		$	—		$	327,787		$	—		$	308.8		$	19.0		$	—		$	327.8
Cost of goods sold before depreciation, depletion and amortization	—			250,616			16,616			—			267,232			—			250.6			16.6			—			267.2
Selling, general and administrative expenses	—			29,602			2,674			—			32,276			—			29.6			2.7			—			32.3
Depreciation, depletion and amortization	—			17,285			3,290			—			20,575			—			17.3			3.3			—			20.6
Change in value of contingent consideration	43			325			—			—			368			—			0.3			—			—			0.3
Loss (gain) on sale of assets, net	—			(190		)	—			—			(190		)
Loss (gain) on sale/disposal of assets, net																—			(0.2		)	—			—			(0.2		)
Operating income (loss)	(43		)	11,191			(3,622		)	—			7,526			—			11.2			(3.6		)	—			7.6
Interest expense, net	9,769			891			649			—			11,309			9.8			0.9			0.7			—			11.4
Other income	—			(1,004		)	(615		)	—			(1,619		)
Other expense (income), net																—			(1.0		)	(0.6		)	—			(1.6		)
Income (loss) before income taxes and equity in earnings of subsidiaries	(9,812		)	11,304			(3,656		)	—			(2,164		)	(9.8		)	11.3			(3.7		)	—			(2.2		)
Income tax expense (benefit)	(2,683		)	4,364			(29		)	—			1,652			(2.7		)	4.4			—			—			1.7
Income (loss), net of taxes and before equity in earnings of subsidiaries	(7,129		)	6,940			(3,627		)	—			(3,816		)
Net income (loss) before equity in earnings of subsidiaries																(7.1		)	6.9			(3.7		)	—			(3.9		)
Equity in earnings of subsidiaries	3,271			—			—			(3,271		)	—			3.3			—			—			(3.3		)	—
Net income (loss)	(3,858		)	6,940			(3,627		)	(3,271		)	(3,816		)	(3.8		)	6.9			(3.7		)	(3.3		)	(3.9		)
Less: Net income attributable to non-controlling interest	—			—			(42		)	—			(42		)	—			—			—			—			—
Net income (loss) attributable to U.S. Concrete	$	(3,858	)	$	6,940		$	(3,669	)	$	(3,271	)	$	(3,858	)	$	(3.8	)	$	6.9		$	(3.7	)	$	(3.3	)	$	(3.9	)

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS~~

~~THREE MONTHS ENDED MARCH 31, 2017~~

~~(in thousands)~~

Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations and Reclassifications U.S. Concrete Consolidated
Revenue $ —
$ 294,023
$ 5,110
$ —
$ 299,133
Cost of goods sold before depreciation, depletion and amortization —
231,291
4,468
—
235,759
Selling, general and administrative expenses —
25,198
619
—
25,817
Depreciation, depletion and amortization —
15,368
491
—
15,859
Change in value of contingent consideration 141
467
—
—
608
Loss (gain) on sale of assets, net —
(194 ) 2
—
(192 )
Operating income (loss) (141 ) 21,893
(470 ) —
21,282
Interest expense, net 9,699
443
—
—
10,142
Derivative income (1,856 ) —
—
—
(1,856 )
Other expense (income), net —
(751 ) 43
—
(708 )
Income (loss) from continuing operations, before income taxes and equity in earnings of subsidiaries (7,984 ) 22,201
(513 ) —
13,704
Income tax expense (benefit) (3,765 ) 10,487
(20 ) —
6,702
Income (loss) from continuing operations, net of taxes and before equity in earnings of subsidiaries (4,219 ) 11,714
(493 ) —
7,002
Loss from discontinued operations, net of taxes and before equity in earnings of subsidiaries —
(122 ) —
—
(122 )
Income (loss), net of taxes and before equity in earnings of subsidiaries (4,219 ) 11,592
(493 ) —
6,880
Equity in earnings of subsidiaries 11,099
—
—
(11,099 ) —
Net income (loss) $ 6,880
$ 11,592
$ (493 ) $ (11,099 ) $ 6,880

~~U.S. CONCRETE, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, ~~2018~~2019

(in ~~thousands)~~millions)


	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			U.S. Concrete Consolidated			Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			U.S. Concrete Consolidated
Net cash provided by (used in) operating activities	$	(698	)	$	32,285		$	660		$	(6,311	)	$	25,936		$	(0.9	)	$	26.2		$	2.6		$	(6.0	)	$	21.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	—			(7,828		)	(547		)	—			(8,375		)	—			(7.2		)	—			—			(7.2		)
Payments for acquisitions, net of cash acquired	—			(60,250		)	—			—			(60,250		)
Proceeds from sale of property, plant and equipment	—			254			8			—			262
Proceeds from disposals of businesses	—			72			—			—			72
Insurance proceeds from property loss claims	—			1,634			—			—			1,634
Net cash provided by (used in) investing activities	—			(66,118		)	(539		)	—			(66,657		)
Proceeds from disposals of businesses and property, plant and equipment																—			0.4			—			—			0.4
Net cash used in investing activities																—			(6.8		)	—			—			(6.8		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolver borrowings	135,650			—			—			—			135,650			76.3			—			—			—			76.3
Repayments of revolver borrowings	(69,650		)	—			—			—			(69,650		)	(74.8		)	—			—			—			(74.8		)
Proceeds from exercise of stock options	28			—			—			—			28			0.2			—			—			—			0.2
Payments of other long-term obligations	(1,390		)	(2,150		)	—			—			(3,540		)	(0.7		)	(3.0		)	—			—			(3.7		)
Payments for other financing	—			(6,265		)	(154		)	—			(6,419		)	—			(7.8		)	(0.3		)	—			(8.1		)
Other treasury share purchases	(1,233		)	—			—			—			(1,233		)	(1.1		)	—			—			—			(1.1		)
Intercompany funding	(62,707		)	54,811			1,585			6,311			—			—			(5.6		)	(1.4		)	7.0			—
Net cash provided by (used in) financing activities	698			46,396			1,431			6,311			54,836			(0.1		)	(16.4		)	(1.7		)	7.0			(11.2		)
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	—			—			(80		)	—			(80		)
NET INCREASE IN CASH AND CASH EQUIVALENTS	—			12,563			1,472			—			14,035
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS																(1.0		)	3.0			0.9			1.0			3.9
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	—			6,970			15,611			—			22,581			—			10.8			9.2			—			20.0
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	—		$	19,533		$	17,083		$	—		$	36,616		$	(1.0	)	$	13.8		$	10.1		$	1.0		$	23.9

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, ~~2017~~2018

(in ~~thousands)~~millions)


	Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			U.S. Concrete Consolidated			Parent			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			U.S. Concrete Consolidated
Net cash provided by (used in) operating activities	$	40,091		$	33,791		$	1,536		$	(45,874	)	$	29,544		$	(0.7	)	$	32.2		$	0.7		$	(6.3	)	$	25.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	—			(9,138		)	(1,580		)	—			(10,718		)	—			(7.9		)	(0.5		)	—			(8.4		)
Payments for acquisitions, net of cash acquired	469			(3,200		)	—			—			(2,731		)	—			(60.3		)	—			—			(60.3		)
Proceeds from sale of property, plant and equipment	—			485			—			—			485
Proceeds from disposals of businesses	—			294			—			—			294
Investment in subsidiaries	(646		)	—			—			646			—
Proceeds from disposals of businesses and property, plant and equipment																—			0.4			—			—			0.4
Insurance proceeds from property loss claims																—			1.6			—			—			1.6
Net cash provided by (used in) investing activities	(177		)	(11,559		)	(1,580		)	646			(12,670		)	—			(66.2		)	(0.5		)	—			(66.7		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt	211,500			—			—			—			211,500
Proceeds from exercise of stock options and warrants	327			—			—			—			327
Proceeds from revolver borrowings																135.7			—			—			—			135.7
Repayments of revolver borrowings																(69.7		)	—			—			—			(69.7		)
Payments of other long-term obligations	(2,925		)	(1,575		)	—			—			(4,500		)	(1.4		)	(2.1		)	—			—			(3.5		)
Payments for other financing	—			(4,246		)	—			—			(4,246		)	—			(6.2		)	(0.2		)	—			(6.4		)
Debt issuance costs	(3,170		)	—			—			—			(3,170		)
Other treasury share purchases	(735		)	—			—			—			(735		)	(1.2		)	—			—			—			(1.2		)
Intercompany funding	(244,911		)	199,170			513			45,228			—			(62.7		)	54.8			1.6			6.3			—
Net cash provided by (used in) financing activities	(39,914		)	193,349			513			45,228			199,176			0.7			46.5			1.4			6.3			54.9
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS																—			—			(0.1		)	—			(0.1		)
NET INCREASE IN CASH AND CASH EQUIVALENTS	—			215,581			469			—			216,050			—			12.5			1.5			—			14.0
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	—			75,576			198			—			75,774			—			7.0			15.6			—			22.6
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	—		$	291,157		$	667		$	—		$	291,824		$	—		$	19.5		$	17.1		$	—		$	36.6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

~~For a~~The following discussion ~~of our commitments not discussed below~~should be read in conjunction with the accompanying quarterly unaudited condensed consolidated financial statements and ~~our critical accounting policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of Part II of~~ our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 (the ~~“2017 Form~~“2018 10-K”). Our 2018 10-K includes additional information about our significant and critical accounting policies, as well as a detailed discussion of the most significant risks associated with our financial condition and operating results.

~~Our Business~~Overview

~~U.S. Concrete, Inc.~~Our principal business is ~~a Delaware corporation founded~~producing ready-mixed concrete and incorporated in 1997. We began operations in 1999, which is the year we completed our initial public offering. In this report, we refer to U.S. Concrete, Inc. and its consolidated subsidiaries as "we," "us," "our," the "Company" or "U.S. Concrete", unless we specifically state otherwise, or the context or content indicates otherwise. We are a leading producer of ready-mixed concretesupplying aggregates in select geographic markets from our operations in the United States, ~~and the~~ U.S. Virgin ~~Islands.~~Islands and Canada. The geographic markets for our products are generally local, except for our Canadian aggregate products operation, Polaris Materials ("Polaris"), that primarily serves markets in California. Our customers are generally involved in the construction industry, which is a cyclical business and is subject to general and more localized economic conditions as well as seasonal variations in weather conditions. Our operating results are subject to fluctuations in the level and mix of construction activity that occur in our markets. The level of activity affects the demand for our products, while the product mix of activity among the various segments of the construction industry affects both our relative competitive strengths and our operating margins. Commercial and industrial projects generally provide more opportunities to sell value-added products that are designed to meet the high-performance requirements of these types of projects. We ~~operate~~conduct our business primarily through two ~~primary~~reportable segments: ready-mixed concrete and aggregate products. Ready-mixed concrete is an important building material used in the vast majority of commercial, residential and public works construction projects. Aggregate products are granular raw materials essential in the production of ready-mixed concrete.

Ready-Mixed Concrete. Our ready-mixed concrete segment (which represented ~~88.2%~~87.2% of our revenue for the three months ended March 31, ~~2018)~~2019) engages principally in the formulation, preparation and delivery of ready-mixed concrete to our customers’ job sites. We provide our ready-mixed concrete from our operations in Texas, New Jersey, New York, Washington, D.C., Pennsylvania, Northern California, Oklahoma and the U.S. Virgin Islands. Ready-mixed concrete is a highly versatile construction material that results from combining coarse and fine aggregates, such as gravel, crushed stone and sand, with water, various chemical admixtures and cement. We also provide services intended to reduce our customers’ overall construction costs by lowering the installed, or “in-place,” cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control and customized delivery programs to meet our customers’ needs. ~~We generally do not provide paving or other finishing services, which construction contractors or subcontractors typically perform.~~

Aggregate Products. Our aggregate products segment (which represented ~~5.9%~~9.5% of our revenue for the three months ended March 31, ~~2018,~~2019, excluding ~~$13.2~~$11.1 million of intersegment sales) produces crushed stone, sand and gravel from 1917 aggregates facilities located in British Columbia, Canada; New ~~Jersey, Texas, Oklahoma,~~Jersey; Texas; Oklahoma; and the U.S. Virgin ~~Islands and British Columbia, Canada.~~Islands. We sell these aggregates for use in commercial, industrial, and public works projects, as well as consume them internally in the production of ready-mixed ~~concrete in the markets served by the aggregates facilities.~~concrete. We produced approximately ~~1.9~~2.8 million tons of aggregates during the three months ended March 31, ~~2018,~~2019, with ~~British Columbia,~~ Canada representing ~~43%~~50%, Texas / Oklahoma representing ~~38%~~34%, New Jersey representing ~~16%~~13%, and the U.S. Virgin Islands representing 3% of the ~~total. We consumed 49% of our aggregate production internally and sold 51% to third-party customers during the three months ended March 31, 2018.~~total production. We believe ~~our~~our aggregate reserves provide us with additional raw materials sourcing flexibility and supply availability.In addition, we own sand pit operations in Michigan and one quarry in West Texas, which we lease to third parties and receive a royalty based on the volumes produced and sold during the terms of the leases.

~~Cement and Other Raw Materials~~

We obtain most of the materials necessary to manufacture ready-mixed concrete on a daily basis. These materials include cement, other cementitious materials (fly ash and blast furnace slag), and aggregate products (stone, gravel and sand), in addition to certain chemical admixtures. With the exception of chemical admixtures, each plant typically maintains an inventory level of these materials sufficient to satisfy its operating needs for a few days. Our inventory levels do not decline significantly or comparatively with declines in revenue during seasonally low periods. We generally maintain inventory at specified levels to maximize purchasing efficiencies and to be able to respond quickly to customer demand.

Typically, cement, other cementitious materials, and aggregates represent the highest-cost materials used in manufacturing a cubic yard of ready-mixed concrete. We purchase cement from a few suppliers in each of our major geographic markets. Chemical admixtures are generally purchased from suppliers under national purchasing agreements.

Overall, prices for cement and aggregate products increased in the first three months of 2018, compared to the same period in 2017, in most of our major geographic markets. Generally, we negotiate with suppliers on a company-wide basis and at the local market level to obtain the most competitive pricing available for cement and aggregate products. We believe the demand for cement is increasing and will warrant scrutiny as construction activity increases. Today, in most of our markets, we believe there is an adequate supply of cement and aggregate products.

~~Overview~~

~~The geographic markets for our products are generally local, except for our newly acquired Canadian aggregate products operation that primarily serves markets in California. O~~ur operating results are subject to fluctuations in the level and mix of construction activity that occur in our markets. The level of activity affects the demand for our products, while the product mix of activity among the various segments of the construction industry affects both our relative competitive strengths and our operating margins. Commercial and industrial projects generally provide more opportunities to sell value-added products that are designed to meet the high-performance requirements of these types of projects.

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, because of inclement weather, demand for our products and services during the winter months is typically lower than in other months of the year. Also, sustained periods of inclement weather and other adverse weather conditions could cause the delay of construction projects during other times of the year.

In our ready-mixed concrete operations, our average selling prices increased 2.0% for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017, resulting in the 28th consecutive quarter of increased average selling prices year-over-year. Our sales volume also increased 2.2% to 2.1 millioncubic yards for the three months ended March 31, 2018 as compared to the three months ended March 31, 2017. The increases in average selling prices and sales volume were driven largely by ready-mixed concrete segment acquisitions completed in the past year.

Acquisitions and Divestitures

We completed ~~three~~five acquisitions during ~~the three months ended March 31,~~ 2018 that expanded our ready-mixed concrete operations in our Atlantic Region (which we define to include New York, New Jersey, Washington, D.C. and Pennsylvania) and expanded our ready-mixed concrete and aggregate products operations in West Texas. ~~In addition,~~During 2018, we ~~completed eight acquisitions during 2017,~~divested the ~~majority of which occurred during the period from September 29, 2017 to December 31, 2017. The 2017 acquisitions expanded~~following operations that no longer fit into our ~~ready-mixed concrete~~operating plans: our Dallas/Fort Worth area lime operations ~~in Northern California, facilitated vertical integration on the West Coast~~ and ~~expanded our~~a Michigan aggregates ~~operations~~property in the ~~Atlantic Region.~~third quarter and a New Jersey aggregates operation in the fourth quarter.

For additional information on our acquisitions, see Note 4, "Business Combinations" to our condensed consolidated financial statements included in Part I of this report.

Results of Operations

~~The following table sets forth selected statement of operations information.~~


	(amounts in thousands, except selling prices and percentages)							Three Months Ended March 31,						%
	Three Months Ended March 31,						Increase/ (Decrease)
	2018			2017			%⁽¹⁾
	(unaudited)
($ in millions except selling prices)								2019			2018			Change⁽¹⁾
Revenue	$	327,787		$	299,133		9.6%	$	333.1		$	327.8		1.6%
Cost of goods sold before depreciation, depletion and amortization	267,232			235,759			13.3	268.4			267.2			0.4
Selling, general and administrative expenses	32,276			25,817			25.0	32.1			32.3			(0.6)
Depreciation, depletion and amortization	20,575			15,859			29.7	22.8			20.6			10.7
Change in value of contingent consideration	368			608			(39.5)	1.0			0.3			233.3
Gain on sale of assets, net	(190		)	(192		)	(1.0)
Loss (gain) on sale/disposal of assets, net								0.9			(0.2		)	NM
Operating income	7,526			21,282			(64.6)	7.9			7.6			3.9
Interest expense, net	11,309			10,142			11.5	11.6			11.4			1.8
Derivative income	—			(1,856		)	(100.0)
Other income, net	(1,619		)	(708		)	128.7	(0.4		)	(1.6		)	(75.0)
Income (loss) from continuing operations before income taxes	(2,164		)	13,704			(115.8)
Income tax expense	1,652			6,702			(75.4)
Income (loss) from continuing operations	(3,816		)	7,002			(154.5)
Loss from discontinued operations, net of taxes	—			(122		)	(100.0)
Income (loss) before income taxes								(3.3		)	(2.2		)	(50.0)
Income tax expense (benefit)								(0.7		)	1.7			(141.2)
Net income (loss)	(3,816		)	6,880			(155.5)	(2.6		)	(3.9		)	33.3
Less: Net income attributable to non-controlling interest	(42		)	—			NM	(0.1		)	—			NM
Net income (loss) attributable to U.S. Concrete	$	(3,858	)	$	6,880		(156.1)%	$	(2.7	)	$	(3.9	)	30.8

Ready-mixed Concrete Data:
Average selling price per cubic yard	$	136.99		$	134.28		2.0%	$	139.60		$	136.99		1.9%
Sales volume in cubic yards	2,095			2,049			2.2%
Sales volume in thousand cubic yards								2,077			2,095			(0.9)%

Aggregate Products Data:
Average selling price per ton	$	14.36		$	12.59		14.1%
Sales volume in tons	2,135			1,246			71.3%
Average selling price per ton⁽²⁾								$	12.12		$	10.90		11.2%
Sales volume in thousand tons								2,498			2,135			17.0%

(1) "NM" is defined as "not meaningful".

(2)

Our calculation of the aggregate products segment average selling price ("ASP") excludes certain other ancillary revenue and Polaris’s freight revenue. We define revenue for our aggregate products ASP calculation as amounts billed to external and internal customers for coarse and fine aggregate products, excluding delivery charges. Our definition and calculation of ASP may differ from other companies in the construction materials industry.

Revenue. ~~Revenue for~~For the three months ended March 31, ~~2018,~~2019, revenue grew ~~9.6%~~1.6%, or ~~$28.7~~$5.3 million, compared to the prior year first ~~quarter. Revenue during the 2018 first~~ quarter, ~~benefited~~primarily driven by contributions from ~~our acquisitions while being negatively impacted by adverse weather conditions.~~acquisitions. We estimate that acquisitions completed since ~~April~~January 1, ~~2017~~ 2018accounted for ~~$30.3~~$8.4 million of revenue growth during the three months ended March 31, ~~2018. While~~2019. As our business is seasonal and subject to adverse weather, ~~during~~our results were negatively impacted by inclement weather in various regions. As a result of the ~~first quarter~~strategic expansion of ~~2017 in New York/New Jersey~~our aggregate products operations and ~~North Texas was unseasonably warm, in 2018~~continued vertical integration, our aggregate products sales grew to 12.9% of the ~~New York/New Jersey area experienced four snowstorms and North Texas experienced record cold temperatures, as well as more rain than~~total reportable segment revenue in the ~~prior year, including the wettest February on record~~three months ended March 31, 2019 from 10.6% in the ~~Dallas/Fort Worth metropolitan area in 2018.~~same period last year.

In the first quarter of ~~2018,~~2019, ready-mixed concrete sales ~~including revenue from recent acquisitions,~~ contributed ~~$13.8~~$1.2 million, or ~~48.1%~~22.6%, of our revenue growth, despite the weather-impacted decrease in volume. The 1.9% increase in the ASP of our ready-mixed concrete segment more than offset the weather-impacted volume decline. The volume decline in our Northern California market, which experienced more inclement weather than the first quarter of 2018, more than offset volume increases in other markets. Aggregate product sales increased $8.7 million, driven by a ~~2.2%~~17.0% increase in volume and a 2.0% increase in our average selling price. Aggregate products sales, including revenue from recent acquisitions, contributed $14.9 million or 51.9%, of our revenue growth driven by a 71.3% increase in volume and a 14.1%an 11.2% increase in the ~~average selling price.~~ASP. Aggregate sales volumes increased primarily for Polaris and in our West Texas market. Other products revenue and eliminations ~~which~~(which currently includes building materials stores, aggregates distribution, hauling operations, ~~lime slurry,~~ brokered product sales, recycled aggregates, ~~aggregates distribution, an industrial waterfront marine terminal and sales yard,~~ and eliminations of our intersegment ~~sales, remained flat at $5.9~~sales) decreased $4.6 million in the first quarter of 2019 as compared to the first quarter of 2018. This decline was primarily a result of the divestiture of the lime business, which provided $2.3 million of revenue in the first quarter of 2018, and ~~2017.~~lower sales of building materials from our stores in Northern California in the first quarter of 2019, which were impacted by inclement weather during the quarter.

Cost of goods sold before depreciation, depletion and amortization ("DD&A"). Cost of goods sold before DD&A increased by ~~$31.4~~$1.2 million, or ~~13.3%~~0.4%, in the first quarter of ~~2018~~2019 compared to the prior year quarter. As a percentage of revenue, cost of goods sold before DD&A ~~increased~~decreased by ~~2.7%~~0.9% in the first quarter of ~~2018~~2019 compared to the first quarter of ~~2017. Our costs increased primarily due to volume growth resulting from acquisitions, resulting in higher material costs,~~2018. While delivery costs decreased in comparison to the same quarter last year, we experienced greater increases in other variable and ~~plant~~fixed costs in comparison to the same quarter last year. Our increased variable costs ~~which includes~~were primarily ~~labor and benefits, utilities, and repairs and maintenance. During the first quarter of 2018,~~driven by our aggregate products operations, consistent with their increased sales volume. Our fixed costs, which primarily consist of leased equipment costs, property taxes, dispatch costs, quality control, and plant management, increased over the comparable prior year period primarily due to higher personnel and equipment costs needed to operate our facilities, as well as higher overall fixed costs to operate more locations and trucks than in the previous year. ~~In addition, we incurred incremental weather-related costs and some material cost increases that we were not able to immediately pass along to our customers.~~

Selling, general and administrative expenses. Selling, general and administrative ("SG&A") expenses ~~increased $6.5~~decreased $0.2 million, or ~~25.0%~~0.6%, for the quarter ended March 31, ~~2018,~~2019 in comparison to the corresponding ~~2017~~2018 quarter. The increase resulted from various factors, including acquisition-related costs, non-cash stock compensation expense and increased personnel-related costs to support our growth initiatives and acquisition strategy as well as the impact of additional SG&A from recent acquisitions. As a percentage of revenue, SG&A expenses ~~increased~~decreased to 9.6% in the 2019 first quarter from 9.8% in the 2018 ~~first quarter from 8.6% in the 2017~~ first quarter.

Depreciation, depletion and amortization. DD&A expense increased ~~$4.7~~$2.2 million, or ~~29.7%~~10.7%, for the quarter ended March 31, ~~2018, in~~2019, as compared to the corresponding quarter of ~~2017,~~2018. The increase was primarily related to depreciation on additional plants, equipment and mixer trucks purchased to service increased demand or acquired through ~~acquisitions.~~recent acquisitions and depletion on acquired mineral deposits.

Change in value of contingent consideration. ~~These~~For the three months ended March 31, 2019 and 2018, we recorded a non-cash ~~expenses are~~loss on revaluation of contingent consideration of $1.0 million and $0.3 million, respectively. This non-cash expense is related to fair value changes in contingent consideration associated with certain of our ~~acquisitions.~~acquisitions and in both periods was primarily due to the passage of time. The key inputs in determining the fair value of our contingent consideration of ~~$61.0~~$58.3 million at March 31, ~~2018,~~2019 included discount rates ranging from ~~3.70%~~1.67% to 15.75% and management's estimates of future sales volumes, permitted reserves and ~~EBITDA.~~EBITDA, as defined in the respective purchase agreements. Changes in these inputs impact the valuation of our contingent consideration and may result in either a gain or loss in each reporting period. ~~The non-cash expenses from fair value changes in contingent consideration for the first three months of 2018 and 2017 were primarily due to the passage of time.~~

~~Operating income.~~ Operating income decreased $13.8 million to $7.5 million in the first quarter of 2018 from $21.3 million in the corresponding quarter of 2017. As a percentage of revenue, operating margin decreased to 2.3% for the quarter ended March 31, 2018, from 7.1% during the same quarter of 2017, primarily reflecting higher SG&A and DD&A expenses and the negative impact of weather-related delays in some of our major markets.

Interest expense, net. Net interest expense increased by ~~$1.2~~$0.2 million for the quarter ended March 31, ~~2018,~~2019 from the comparable ~~2017 quarter primarily due to borrowings under our revolving credit facility.~~2018 quarter.

~~Derivative income.~~Loss (gain) on sale/disposal of assets, net. ~~For~~The loss for the quarter ended March 31, ~~2017,~~2019 included a $0.6 million loss for a mixer truck fire that occurred during the quarter and a $0.3 million write-off for property no longer in use.

Other income, net. Other income, net, contains non-operating items and was higher in the first quarter of 2018 compared to this year primarily due to gains from insurance proceeds, whereas we ~~recorded non-cash derivative income of $1.9 million related to fair value changes~~did not receive such proceeds in ~~our outstanding warrants that were issued on August 31, 2010 (the "Warrants") and expired on August 31, 2017. Each quarter~~ the ~~Warrants were outstanding, we determined the fair value of our derivative liabilities, and the changes resulted in either income or loss.~~current quarter.

Income taxes. For the ~~quarters~~three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, we recorded income tax ~~expense allocated to continuing operations~~benefit of ~~approximately $1.7~~$0.7 million and ~~$6.7~~income tax expense of $1.7 million, respectively. For the three months ended March 31, 2019, our effective tax rate was 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 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, and (iv) unfavorable discrete items occurring in the first quarter including a net tax shortfall recognized for share-based compensation. These unfavorable items were partially offset by additional state income tax benefits recognized. For the three months ended March 31, 2018, our effective tax rate differed from the federal statutory rate primarily due to ~~the fact that~~losses generated by our Canadian operations ~~had a net pre-tax loss~~ for which no income tax benefit was ~~recorded because of~~recognized due to a related full valuation allowance. Our other entities had net pre-tax income and ~~recorded~~recognized corresponding net income tax expense, which included cumulative adjustments ~~related~~ to deferred income taxes in the amount of $1.3 million. For the quarter ended March 31, 2017, our effective tax rate differed from the federal statutory rate primarily due to adjustments related to certain state net operating loss carryforwards that will not be utilized prior to expiration and other cumulative adjustments to deferred income taxes, which resultedresulting in additional income tax ~~expense. In addition, both periods were impacted by certain state income taxes that were calculated on a basis other than pre-tax income (loss).~~

~~In accordance with U.S. GAAP, we reduce the value~~expense 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 established valuation allowances as of March 31, 2018 and December 31, 2017 for other deferred tax assets because of uncertainty regarding their ultimate realization. Our total net deferred tax liability was approximately $3.1 million as of March 31, 2018 and $4.8 million as of December 31, 2017.

Under U.S. tax law, we treat our Canadian and U.S. Virgin Island subsidiaries as controlled foreign corporations. As such, we consider our undistributed earnings of our Canadian and U.S. Virgin Island subsidiaries, if any, to be indefinitely reinvested and, accordingly, we do not record any incremental U.S. taxes thereon.

Segment ~~information~~Information

Our chief operating decision maker reviews operating results based on our two reportable segments, which are ready-mixed concrete and aggregate products, and evaluates segment performance and allocates resources based on Adjusted EBITDA. We define Adjusted EBITDA as our net income, ~~(loss) from continuing operations~~ excluding the impact of income tax expense (benefit), depreciation, depletion and amortization, net interest expense ~~loss on extinguishment of debt, derivative income (loss), the~~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 ~~goodwill and other~~ assets, ~~hurricane-related losses,~~acquisition-related costs, officer transition expenses, quarry dredge costs for a specific event, ~~purchase accounting adjustments~~hurricane-related losses, net of recoveries and derivative loss (income). Acquisition-related costs consist of fees and expenses for ~~inventory~~accountants, lawyers and ~~foreign currency losses resulting from~~other professionals incurred during the ~~Polaris acquisition. Other impacts excluded from our Adjusted EBITDA are non-cash stock compensation expense, acquisition-related~~negotiation and closing of strategic acquisitions and certain acquired entities' management severance costs. Acquisition-related costs ~~and officer transition expenses.~~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 ~~for use~~ in calculating our compliance with our debt covenants.

Adjusted EBITDA should not be construed as an alternative to, or a better indicator of, operating income or loss, is not based on accounting principles generally accepted in the United States of America ("U.S. ~~GAAP,~~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 agreements that govern our debt.

See Note 12, "Segment Information," to our condensed consolidated financial statements in this report for additional information regarding our segments and the reconciliation of Adjusted EBITDA to income ~~(loss) from continuing operations~~ before income taxes.

Ready-mixed Concrete

~~The following table sets forth key financial information for our ready-mixed concrete segment:~~


	(amounts in thousands, except selling prices and percentages)							Three Months Ended March 31,						Increase/ (Decrease)
	Three Months Ended March 31,						Increase/ (Decrease)
	2018			2017			%

($ in millions except selling prices)								2019			2018			%
Ready-mixed Concrete Segment:
Revenue	$	289,240		$	275,456		5.0%	$	290.4		$	289.2		0.4%
Segment revenue as a percentage of total revenue	88.2		%	92.1		%		87.2		%	88.2		%

Adjusted EBITDA	$	40,967		$	41,504		(1.3)%	$	34.5		$	41.0		(15.9)%
Adjusted EBITDA as a percentage of segment revenue	14.2		%	15.1		%		11.9		%	14.2		%

Ready-mixed Concrete Data:
Average selling price per cubic yard⁽¹⁾	$	136.99		$	134.28		2.0%	$	139.60		$	136.99		1.9%
Sales volume in cubic yards	2,095			2,049			2.2%
Sales volume in thousand cubic yards								2,077			2,095			(0.9)%

(1) Calculation excludes certain ancillary revenue that is reported within the segment.

Revenue. Our ready-mixed concrete sales provided ~~88.2%~~87.2% and ~~92.1%~~88.2% of our total revenue in the first quarter of ~~2018~~2019 and ~~2017,~~2018, respectively. Segment revenue for the first quarter of ~~2018~~2019 increased ~~$13.8~~$1.2 million, or ~~5.0%~~0.4%, from the comparable ~~2017 period. Revenue during the first quarter of~~ 2018 ~~benefited~~period, primarily driven by contributions from our ~~acquisitions, while being negatively impacted by adverse weather conditions in our Atlantic Region and North Texas market.~~acquisitions. We estimate that acquisitions completed since ~~April~~January 1, ~~2017~~2018 contributed ~~$13.3~~$8.2 million ofin revenue growth to our 2019 first quarter ~~of 2018~~ ready-mixed concrete segment.

~~The~~In the first quarter of ~~2018~~2019, our revenue ~~reflected a 2.2% increase in sales volume~~growth as compared to the first quarter of ~~2017, or 46 thousand cubic yards, providing $6.2 million, or approximately 44.9%,~~2018 was driven by the 1.9% ASP increase partially offset by a weather-impacted sales volume decline of ~~our ready-mixed concrete revenue growth and~~0.9%. Our Northern California market's sales volume decreased as a ~~2.0% increase~~result of inclement weather in ~~average selling price, providing $7.6 million, or approximately 55.1%,~~the first quarter of ~~our ready-mixed concrete revenue growth.~~2019 as compared to the same quarter in 2018, which was partially offset by increases in certain other markets.

Adjusted EBITDA. Adjusted EBITDA for ~~our ready-mixed concrete segment declined slightly to $41.0~~the first quarter of 2019 decreased $6.5 million, or 15.9% from the comparable 2018 period. Our variable costs were higher in the first quarter of 2018 from $41.5 million in the first quarter of 2017, a decrease of $0.5 million, or 1.3%. Although sales volumes increased 2.2% and the average sales price increased 2.0%, the revenue increase was more than offset by increased cost of goods sold. Our variable costs, which include primarily material costs, labor and benefits costs, utilities, and delivery costs, were all higher due primarily2019 compared to the ~~increased volume and recent acquisitions. During the~~prior year first quarter of 2018, we also experienced certain raw materials price increases from our vendors, which increased our cost of goods sold. While we are generally able to pass these price increases along to our customers, due to the timing of certain of the increases, we were unable to immediately recoup the full impact.quarter. Our fixed costs ~~which consist primarily of equipment rental, plant management, property taxes, quality control, and dispatch costs, increased~~were higher in the ~~2018~~2019 first quarter compared to the prior year first quarter due to higher personnel and equipment costs needed to operate our facilities, as well as higher overall fixed costs to operate more locations and mixer trucks compared to the previous year. Segment Adjusted EBITDA as a percentage of segment revenue was 11.9% and 14.2% in the first quarter of 2019 and 2018, ~~versus 15.1% in 2017,~~respectively, primarily reflecting ~~the geographic and project mix of our revenue and~~increased raw material costs and the negative impact of weather-related delays in some of our major markets.

Aggregate Products

~~The following table sets forth key financial information for our aggregate products segment:~~

(amounts in thousands, except selling prices and percentages)
Three Months Ended
March 31, Increase/ (Decrease)
2018 2017 %
Aggregate Products Segment:
Sales to external customers $ 19,455
$ 9,297

Intersegment sales 13,223
8,527

Total Aggregates products revenue $ 32,678
$ 17,824
83.3%
Segment revenue, excluding intersegment sales, as a percentage of total revenue 5.9 % 3.1 %

Adjusted EBITDA $ 5,030
$ 3,997
25.8%
Adjusted EBITDA as a percentage of total segment revenue 15.4 % 22.4 %

Aggregate Products Data:

Average selling price per ton⁽¹⁾
$ 14.36
$ 12.59
14.1%
Sales volume in tons 2,135
1,246
71.3%



	Three Months Ended March 31,							Increase/ (Decrease)
($ in millions except selling prices)	2019			2018				%
Aggregate Products Segment:
Sales to external customers	$	31.8		$	24.7		⁽¹⁾
Intersegment sales⁽²⁾	$	11.1		$	9.5		⁽¹⁾
Total aggregate products revenue	$	42.9		$	34.2		⁽¹⁾	25.4%
Segment revenue, excluding intersegment sales, as a percentage of total company revenue	9.5		%	7.5		%	⁽¹⁾

Adjusted EBITDA	$	10.4		$	4.7			121.3%
Adjusted EBITDA as a percentage of total aggregate products revenue	24.2		%	13.7		%	⁽¹⁾

Aggregate Products Data:
Average selling price per ton⁽³⁾	$	12.12		$	10.90		⁽¹⁾	11.2%
Sales volume in thousand tons	2,498			2,135				17.0%

(1)

During the quarter ended June 30, 2018, we re-characterized certain results of our Polaris distribution operations, which include shipping and terminal operations, to the aggregate products segment from other products and eliminations. This change was made to better reflect how the Polaris business is viewed and operated by management and more closely aligns our reporting with how we manage and report our other aggregate products operations. As a result of this change, certain amounts were reclassified from those reported in our 2018 first quarter 10-Q.


(2)	We sell aggregate products to our ready-mixed concrete segment businesses at market price.

~~(1) Calculation~~(3) Our calculation of the aggregate products segment ASP excludes certain other ancillary revenue ~~reported within~~and Polaris’s freight revenue. We define revenue for our aggregate products ASP calculation as amounts billed to external and internal customers for coarse and fine aggregate products, excluding delivery charges. Our definition and calculation of ASP may differ from other companies in the ~~segment.~~construction materials industry.

Revenue. Sales for our aggregate products segment provided ~~5.9%~~9.5% and ~~3.1%~~7.5% of our total revenue for the first quarter of ~~2018~~2019 and ~~2017, respectively, excluding intersegment sales of $13.2 million and $8.5 million,~~2018, respectively. Segment revenue increased ~~$14.9~~$8.7 million, or ~~83.3%~~25.4%, compared to prior year levels, primarily ~~due~~driven by increases in Polaris and our West Texas quarries. Both the higher volume and higher ASP contributed to ~~acquisitions in 2017 offset by adverse weather conditions in our Atlantic Region and North Texas market.~~the revenue increase. We estimate that acquisitions completed since ~~April~~January 1, ~~2017~~2018 contributed ~~$17.6~~$0.9 million ofto this revenue ~~to our first quarter of 2018 aggregate products revenue.~~

~~We sell our aggregate products to external customers and also sell them internally to our ready-mixed concrete segment at market price. Our average selling price increased 14.1%~~growth in the first quarter of ~~2018 as compared to the first quarter of 2017.~~2019.

Adjusted EBITDA. Adjusted EBITDA for our aggregate products segment increased ~~by $1.0 million to $5.0~~$5.7 million in the first quarter of ~~2018 from $4.0 million in~~2019 as compared to the first quarter of ~~2017. Although sales volumes increased 71.3% and~~2018 primarily reflecting the ~~average sales price increased 14.1%, which resulted in~~ higher revenue, ~~the revenue increase was~~ partially offset by ~~increased~~the related higher cost of goods sold associated with the ~~volume growth, as well as~~ increased ~~SG&A~~volume. Our variable costs associated with cost of goods sold, which include quarry labor and ~~DD&A expenses related~~benefits, utilities, repairs and maintenance, and pit costs to ~~our acquisitions and~~mine the ~~negative impact of adverse weather conditions in our Atlantic Region and North Texas market.~~aggregates, all rose due to the higher sales volume. Overall, our segment Adjusted EBITDA as a percentage of segment revenue ~~decreased~~increased to ~~15.4%~~24.2% in the first quarter of 2019 from 13.7% in the first quarter of 2018, ~~from 22.4% in~~including the ~~first quarter~~impact of ~~2017.~~increased zero-margin, customer-paid pass-through freight costs.

Liquidity and Capital Resources

Overview

Our primary sources of liquidity are cash generated from operations, available cash and cash equivalents, and access to our asset-based revolving credit facility (the "Revolving Facility"), which provides for aggregate borrowings of up to $350.0 million, subject to a borrowing base.

As of March 31, ~~2018,~~2019, we had ~~$36.6~~$23.9 million of cash and cash equivalents ~~an increase of $14.0 million from December 31, 2017. At March 31, 2018, based on our borrowing base, we had $137.7~~and $201.0 million of available borrowing capacity under the Revolving Facility, providing total available liquidity of ~~$174.3~~$224.9 million. ~~The decrease in our~~Our unused availability under the Revolving Facility at March 31, ~~2018 compared to~~2019 decreased from December 31, ~~2017 was~~2018, primarily due to ~~higher outstanding borrowings under the Revolving Facility used to fund acquisitions~~decreases in eligible accounts receivable, trucks and ~~operations.~~machinery balances.

The following key financial ~~metrics~~measurements reflect our financial ~~position and capital resources~~condition as of March 31, ~~2018~~2019 and December 31, ~~2017 (dollars in thousands):~~2018:


	March 31, 2018		December 31, 2017
($ in millions)					March 31, 2019		December 31, 2018
Cash and cash equivalents	$	36,616	$	22,581	$	23.9	$	20.0
Working capital	$	98,654	$	103,244	65.9		71.2
Total debt ⁽¹⁾	$	755,728	$	693,336	709.0		714.1
Equity	299,168		302,142
Total capital	$	1,054,896	$	995,478

Available capacity under the Revolving Facility	$	137,700	$	206,400


(1)	Total debt includes long-term debt, net of unamortized debt issuance costs, including current maturities, ~~capital~~finance leases, notes payable and borrowings under the Revolving Facility.

Our primary liquidity needs over the next 12 months consist of (1) financing working capital requirements; (2) servicing our indebtedness; (3) purchasing property, plant and equipment; and (4) payments related to strategic acquisitions, including $39.0 million to $40.0 million of contingent and deferred consideration for past acquisitions. Our primary portfolio strategy includes acquisitions in various regions and markets. We may seek financing for acquisitions, including additional debt or equity capital.

Our working capital needs are typically at their lowest level in the first quarter, increase in the second and third quarters to fund increases in accounts receivable and inventories during those periods, and then decrease in the fourth quarter. Availability under the Revolving Facility is governed by a borrowing base primarily determined by our eligible accounts receivable, inventory, mixer trucks and machinery. Our borrowing base also typically declines during the first quarter due to lower accounts receivable balances as a result of normal seasonality of our business caused by weather.

The projection of our cash needs is based upon many factors, including without limitation, our expected volume, pricing, cost of materials and capital expenditures. We anticipate that our federal and state income tax payments will decline in 2018 as compared to prior years following the impact of recent tax reform legislation that reduced the corporate statutory rate from 35% to 21%. Based on our projected cash needs, we believe that cash on hand, availability under the Revolving Facility and cash generated from operations will provide us with sufficient liquidity in the ordinary course of business, ~~for the next twelve months,~~ not including potential acquisitions. If, however, availability under the Revolving Facility, cash on hand and our operating cash flows are not adequate to fund our operations, we would need to obtain other equity or debt financing or sell assets to provide additional liquidity.

The principal factors that could adversely affect the amount of our internally generated funds include:

deterioration of revenue, due to lower volume and/or pricing, because of weakness in the markets in which we operate;

declines in gross margins due to shifts in our product mix or increases in the cost of our raw materials and fuel;

any deterioration in our ability to collect our accounts receivable from customers as a result of weakening in construction demand or payment difficulties experienced by our customers; and

inclement weather beyond normal patterns that could reduce our sales volumes.

The discussion that follows provides a description of our arrangements relating to our outstanding indebtedness.

~~Senior Secured~~Asset Based Revolving Credit Facility

~~Our Revolving Facility~~We have a senior secured asset-based credit facility with certain financial institutions named therein as lenders (the "Lenders") and Bank of America, N.A., as agent for the Lenders that provides for up to $350.0 million of revolving borrowings. ~~Under~~The Revolving Facility also permits the ~~terms~~incurrence of ~~the agreement governing the facility, we can incur~~ other secured indebtedness not to exceed certain amounts as specified ~~in the agreement. Our actual maximum credit availability under the~~therein. The Revolving Facility varies from time to time and is subject to a borrowing base determined based upon the value of our eligible accounts receivable, inventory, mixer trucks and machinery, minus reserves imposed by the lenders and other adjustments, all as specified in the agreement. There are also provisionsprovides for swingline loans up to a $15.0 million sublimit and letters of credit up to a $50.0 million sublimit. Loans under the Revolving Facility are in the form of either base rate loans or “LIBOR loans” denominated in U.S. dollars.

~~Under~~Our actual maximum credit availability under the Revolving Facility ~~agreement, we are subject~~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 other adjustments, as specified in the Third Loan Agreement, which matures August 31, 2022.

The Third Loan Agreement contains usual and customary ~~negative~~ covenants including, but not limited to, restrictions on our ability to consolidate or merge; substantially change the nature of our business; sell, lease or otherwise transfer any of our assets; create or incur indebtedness; create liens; pay dividends or make other distributions; make loans; prepay certain indebtedness; and make investments or acquisitions. The ~~negative~~ covenants are subject to certain ~~exceptions. Under our loan agreement and~~exceptions as specified in ~~accordance with~~ the ~~agreement,~~Third Loan Agreement. The Third Loan Agreement also requires that we, upon the occurrence of certain events, ~~are required to~~ maintain a fixed charge coverage ratio of at least 1.0 to 1.0 for each period of 12 calendar months. As of March 31, ~~2018,~~2019, we were in compliance with all ~~debt~~ covenants ~~to which we are subject.~~under the Third Loan Agreement.

Senior Unsecured Notes due 2024

~~During 2016 and 2017, we~~We have issued $600.0 million aggregate principal amount of 6.375% senior unsecured notes due 2024 (the "2024 Notes"). The 2024 Notes are governed by an indenture (the “Indenture”) dated as of June 7, 2016, by and among U.S. Concrete, Inc., as issuer, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee. The 2024 Notes accrue interest at a rate of 6.375% per ~~annum. We pay interest on the 2024 Notes~~annum, which is payable on June 1 and December 1 of each year. The 2024 Notes mature on June 1, 2024, and are redeemable at our option prior to maturity at prices specified in the Indenture. The Indenture contains negative covenants that restrict our ability and our restricted subsidiaries' ability to engage in certain transactions, as described below, and also contains customary events of default.

The 2024 Notes ~~are~~were issued by U.S. Concrete, Inc., the parent company, and are guaranteed on a full and unconditional basis by each of our restricted subsidiaries that guarantees any obligations under the Revolving Facility or that guarantees certain of our other indebtedness or certain indebtedness of our restricted subsidiaries (other than foreign restricted subsidiaries that guarantee only indebtedness incurred by another foreign subsidiary). The guarantees are joint and several. U.S. Concrete, Inc. does not have any independent assets or operations, and none of its foreign subsidiaries guarantee the 2024 Notes.

The 2024 Notes and the guarantees thereof are effectively subordinated to all of our and our guarantors' existing and future secured obligations, including obligations under the Revolving Facility, to the extent of the value of the collateral securing such obligations; senior in right of payment to any of our and our guarantors' future subordinated indebtedness; pari passu in right of payment with any of our and our guarantors' existing and future senior indebtedness, including our and our guarantors' obligations under the Revolving Facility; and structurally subordinated to all existing and future indebtedness and other liabilities, including preferred stock, of any non-guarantor subsidiaries.

For additional information regarding our guarantor and non-guarantor subsidiaries, see the information set forth in Note 13,, “Supplemental Condensed Consolidating Financial Information,” to our condensed financial statements included in Part I of this report.

Other Debt

We have financing agreements with various lenders for the purchase of mixer trucks and other machinery and equipment with ~~$81.3~~$92.9 million of remaining principal as of March 31, ~~2018.~~2019.

For additional information regarding our arrangements relating to outstanding indebtedness, see the information set forth in Note 7, "Debt," to our consolidated financial statements included in this report.

Cash Flows

Our net cash provided by operating activities generally reflects the cash effects of transactions and other events used in the determination of net income or loss. Net cash provided by operating activities was $21.9 million for the three months ended March 31, 2019, compared to $25.9 million for the three months ended March 31, ~~2018, compared to $29.5 million for the three months ended March 31, 2017.~~2018.

We used ~~$66.7~~$6.8 million to fund investing activities during the three months ended March 31, ~~2018~~2019 and ~~$12.7~~$66.7 million for the three months ended March 31, ~~2017. We~~2018. During the three months ended March 31, 2018, we paid $60.3 million ~~and $2.7 million~~ to fund ~~acquisitions during the first three months of 2018 and 2017, respectively.~~acquisitions. In addition, we used ~~$8.4~~$7.2 million and ~~$10.7~~$8.4 million in the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively, to fund purchases of machinery and equipment as well as mixer trucks and other vehicles to service our business. Investing activities also included proceeds from the sale of property, plant and equipment of $0.4 million during the first three months of 2019 and proceeds from the sale of businesses and property, plant and equipment of $0.4 million during the first three months of 2018.

Our net cash ~~provided by~~used in financing activities was ~~$54.8~~$11.2 million for the three months ended March 31, ~~2018 and $199.2~~2019, as compared to net cash provided by financing activities of $54.9 million for the comparable period of ~~2017.~~2018. Financing activities during the first three months of 2019 included $1.5 million of net borrowings under our Revolving Facility to operate our business. In addition, we repaid $8.1 million of finance leases and notes used to fund capital expenditures and paid $3.7 million for contingent and deferred consideration obligations. Financing activities during the first three months of 2018 included $66.0 million of net borrowings under our Revolving Facility to operate our business and fund acquisitions. In addition, we ~~repaid~~made payments of $6.4 million ~~of capital~~related to our finance leases and ~~notes used to fund capital expenditures~~other financings and paid $3.5 million for contingent and deferred consideration obligations. Financing activities during the first three months of 2017 included proceeds from our 2024 Notes offering, including the premium on the issue price and net of related debt issuance costs. In addition, during the first three months of 2017, we made payments of $4.2 million related to our capital leases and other financings and paid $4.5 million for contingent and deferred consideration obligations.

~~Off-Balance Sheet Arrangements~~

We do not currently have any off-balance sheet arrangements that have had or are reasonably likely to have a material current or future effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources. From time to time, we enter into non-cancelable operating leases that are not reflected on our balance sheet. At March 31, 2018, we had $17.5 million of undrawn letters of credit outstanding. We are also contingently liable for performance under $34.5 million in performance bonds relating to our operations.

Inflation

We experienced minimal increases in operating costs during the first three months of ~~2018~~2019 related to inflation. However, in non-recessionary conditions, cement prices and certain other raw material prices, including aggregates, have generally risen faster than regional inflationary rates. When these price increases have occurred, we have generally been able to mitigate our cost increases with price increases we ~~obtained~~obtain for our products.

Critical Accounting Policies

We prepared the preceding discussion based on the accompanying interim unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. Such preparation of financial statements 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. Estimates are based on historical experience, currently available information and various other assumptions that we believe to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results could differ from those estimates. We outlined our critical accounting policies in Item 7 of Part II of ~~the 2017 Form~~our 2018 10-K. Our critical accounting policies involve the use of estimates in the recording of business combinations, goodwill and intangible assets and any related impairment, accruals for self-insurance, accruals for income taxes, assessing impairment of long-lived assets, and accounting for contingent consideration. See Note 1, "Organization and Summary of Significant Accounting Policies," to our consolidated financial statements included in Item 8 of Part II of the ~~2017 Form~~2018 10-K for a discussion of our critical and significant accounting ~~policies.~~policies and Note 2, "Recent Accounting Pronouncements" to our interim unaudited condensed consolidated financial statements for a discussion of the impact of the new lease accounting standard that we adopted as of January 1, 2019.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements and information in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements concerning plans, objectives, goals, projections, strategies, future events or performance, and underlying assumptions and other statements, which are not statements of historical facts. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “intends,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” "outlook," “predict,” “potential,” or “continue,” the negative of such terms or other comparable terminology. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections.

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

general economic and business conditions, which will, among other things, affect demand for new residential and commercial construction;

our ability to successfully identify, manage, and integrate acquisitions;

the cyclical nature of, and changes in, the real estate and construction markets, including pricing changes by our competitors;

governmental requirements and initiatives, including those related to mortgage lending, financing or deductions, funding for public or infrastructure construction, land usage, and environmental, health, and safety matters;

disruptions, uncertainties or volatility in the credit markets that may limit our, our suppliers' and our customers' access to capital;

our ability to successfully implement our operating strategy;

weather conditions;

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

the effects of currency fluctuations on our results of operations and financial condition;

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

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

product liability, property damage, results of litigation, and other claims and insurance coverage issues.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see “Risk Factors” in Item 1A of Part I of our ~~Annual Report on Form~~2018 10-K ~~for the year ended December 31, 2017.~~and "Risk Factors" in Item 1A of Part II of this report.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except as required by federal securities laws.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the information previously reported under Part II, Item 7A of our ~~Annual Report on Form 10-K for the fiscal year ended December 31, 2017.~~2018 10-K.

~~Item 4. Controls and Procedures~~


Item 4.	Controls and Procedures

Acquisitions

We completed the ~~following acquisitions during 2017~~acquisition of Leon River Aggregate Materials, LLC on August 29, 2018 and ~~2018 that we~~ are ~~still~~ in the process of ~~integrating:~~

~~Harbor Ready-Mix on September 29, 2017;~~

~~A-1 Materials, Inc. and L.C. Frey Company, Inc. on September 29, 2017;~~

~~Action Supply Co., Inc. on September 29, 2017;~~

~~Polaris Materials Corporation on November 17, 2017;~~

~~On Time Ready Mix, Inc. on January 10, 2018;~~

~~Cutrell Trucking, LLC., Dumas Concrete, LLC., Pampa Concrete Co.,Inc., Panhandle Concrete, LLC., Texas Sand & Gravel Co., Inc. on March 2, 2018; and~~

~~Four individually immaterial operations acquired during December 2017 and March 2018.~~

integrating it. Management’s assessment and conclusion on the effectiveness of the Company’s disclosure controls and procedures as of March 31, ~~2018,~~2019, excludes an assessment of the internal control over financial reporting related to ~~each of the above acquisitions. The above acquisitions~~this acquisition, which represented ~~28.4%~~0.4% of our consolidated total assets and ~~9.4%~~less than 0.1% of our consolidated revenue included in our unaudited condensed consolidated financial statements as of and for the three months ended March 31, ~~2018.~~2019.

Disclosure Controls and Procedures

Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this Quarterly Report on Form 10-Q, our principal executive officer and principal financial officer concluded our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission’s~~SEC’s rules and forms and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Changes in Internal Control over Financial Reporting

We have completed a number of acquisitions in the past 12 months. As part of our ongoing integration activities, we continue to implement our controls and procedures at the businesses we acquire and to augment our company-wide controls to reflect the risks inherent in our acquisitions. Throughout the integration process, we monitor these efforts and take corrective action as needed to reinforce the application of our controls and procedures. In addition, we launched a new lease administration and accounting system to support our implementation of the new lease accounting rules. Other than the foregoing and except as described above, during the quarter ended March 31, ~~2018,~~2019, there were no other changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth under the heading “Legal Proceedings” in Note 11, “Commitments and Contingencies,” to our condensed consolidated financial statements included in Part I of this report is incorporated by reference into this Item 1.

Item 1A. Risk Factors

There have been no material changes in our risk factors as previously disclosed in ~~“Risk~~"Risk Factors” in Item 1A of Part I of ~~the 2017 Form~~our 2018 10-K. Readers should carefully consider the factors discussed in “Risk Factors” in Item 1A of Part I1 of the ~~2017 Form~~2018 10-K, which could materially affect our business, financial condition or future results. ~~Those~~The risks described in our 2018 10-K are not the only risks ~~we face.~~facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or ~~future~~operating results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to purchases by the Company of shares of our common stock during the three month period ended March 31, ~~2018:~~2019:

Calendar Month
Total Number
of Shares
Acquired ⁽¹⁾

Average Price
Paid Per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs ⁽²⁾

Approximate Dollar Value of Shares That May Yet Be
Purchased Under Plans or Programs ⁽²⁾
January 1 - January 31, 2018 —
$ —
—
$ 50,000,000
February 1 - February 28, 2018 —
—
—
50,000,000
March 1 - March 31, 2018 17,762
69.44
—
50,000,000
Total 17,762
$ 69.44
—
$ 50,000,000



Calendar Month	Total Number of Shares Acquired ⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	Approximate Dollar Value of Shares That May Yet Be Purchased Under Plans or Programs (in millions) ⁽²⁾
January 1 - January 31, 2019	—	$	—	—	$	43.3
February 1 - February 28, 2019	—	—		—	43.3
March 1 - March 31, 2019	27,729	40.63		—	43.3
Total	27,729	$	40.63	—	$	43.3


(1)	The total number of shares purchased includes shares of our common stock acquired from employees who elected for us to make their required tax payments upon vesting of certain restricted shares by withholding a number of those vested shares having a value on the date of vesting equal to their tax obligations.


(2)	On March 1, 2017, our Board approved a share repurchase program that allows us to repurchase up to $50.0 million of our common stock until the earlier of March 31, 2020, or a determination by the Board to discontinue the program. The program does not obligate us to acquire any specific number of shares.

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 is included in Exhibit 95.1 to this Quarterly Report on Form 10-Q.

Item 6. Exhibits



3.1*	—Amended and Restated Certificate of Incorporation of U.S. Concrete, Inc. (incorporated by reference to Exhibit 1 to the Company's Registration Statement on Form 8-A/A filed on August 31, 2010 (File No. 000-26025)).
3.2*	—Third Amended and Restated By-Laws of U.S. Concrete, Inc. (incorporated by reference to Exhibit 2 to the Company's Registration Statement on Form 8-A/A filed on August 31, 2010 (File No. 000-26025)).
3.3*	—Amendment No. 1 to Third Amended and Restated Bylaws of U.S. Concrete, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 20, 2015 (File No. 001-34530)).
~~12.1~~10.1†	—~~Ratio~~Form of ~~Earnings to Fixed Charges.~~Executive Severance Agreement
31.1	—Certification of Periodic Report pursuant to Rule 13a-14(a) and Rule 15d-14(a).
31.2	—Certification of Periodic Report pursuant to Rule 13a-14(a) and Rule 15d-14(a).
32.1	—Certification pursuant to 18 U.S.C. Section 1350.
32.2	—Certification pursuant to 18 U.S.C. Section 1350.
95.1	—Mine Safety Disclosures.
101.INS	—XBRL Instance Document
101.SCH	—XBRL Taxonomy Extension Schema Document
101.CAL	—XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	—XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	—XBRL Taxonomy Extension Label Linkbase Document
101.PRE	—XBRL Taxonomy Extension Presentation Linkbase Document

* Incorporated by reference to the filing indicated.

† Management contract or compensatory plan or arrangement.

SIGNATURE

Pursuant to the requirements 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.



		U.S. CONCRETE, INC.

Date:	May ~~7, 2018~~9, 2019	By:	/s/ ~~John E. Kunz~~Gibson T. Dawson
			~~John E. Kunz~~Gibson T. Dawson
			~~Senior~~ Vice President, Corporate Controller and Chief ~~Financial~~Accounting Officer
			(Principal Accounting ~~and Financial~~ Officer)

4842



	Polaris		2017 Acquisitions (Excluding Polaris)
Cash	$	20,678	$	—
Accounts receivable⁽¹⁾	4,661		1,110
Inventory	6,022		695
Other current assets	1,522		48
Property, plant and equipment	198,703		63,145
Other long-term assets	896		—
Definite-lived intangible assets	—		8,378
Total assets acquired	232,482		73,376
Current liabilities⁽²⁾	26,465		1,057
Other long-term liabilities	2,999		62
Total liabilities assumed	29,464		1,119
Non-controlling interest	21,442		—
Goodwill	61,192		12,842
Total consideration (fair value)⁽³⁾	$	242,768	$	85,099



	March 31, 2018
	Total		Level 1		Level 2		Level 3
Contingent consideration, including current portion ⁽¹⁾	$	60,997	$	—	$	—	$	60,997
	$	60,997	$	—	$	—	$	60,997



	Contingent Consideration
Balance at December 31, 2017	$	61,817
Acquisitions ⁽¹⁾	893
Increases in contingent consideration valuation	368
Payments of contingent consideration	(2,081		)
Balance at March 31, 2018	$	60,997



	Three Months Ended March 31,
	2018 ⁽¹⁾			2017
Numerator for basic and diluted earnings per share:
Income (loss) from continuing operations attributable to U.S. Concrete	$	(3,858	)	$	7,002
Loss from discontinued operations, net of taxes	—			(122		)
Net income (loss) attributable to U.S. Concrete	$	(3,858	)	$	6,880

Denominator for diluted earnings per share:
Basic weighted average common shares outstanding	16,423			15,498
Restricted stock and restricted stock units	—			117
Warrants	—			851
Stock options	—			17
Diluted weighted average common shares outstanding	16,423			16,483