($ in millions) Nine Months Ended September 30,
2019
2018
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 11.9

$ 28.2
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization 70.2

68.2
Amortization of debt issuance costs 1.3

1.4
Change in value of contingent consideration 1.6

(0.9 )
Loss (gain) on sale/disposal of assets and business, net 0.8

(14.6 )
Gains from eminent domain matter and property insurance claims (6.0 ) —
Impairment of assets —
1.3
Deferred income taxes 2.0

10.1
Provision for doubtful accounts and customer disputes 2.2

3.4
Stock-based compensation 16.4

8.1
Other, net (1.0 ) (0.8 )
Changes in assets and liabilities, excluding effects of acquisitions:

Accounts receivable (33.9 )
(44.4 )
Inventories (2.7 )
(0.2 )
Prepaid expenses and other current assets 2.9

(4.8 )
Other assets and liabilities (1.3 )
(1.6 )
Accounts payable and accrued liabilities 27.7

36.8
Net cash provided by operating activities 92.1

90.2
CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment (28.6 )
(32.2 )
Payments for acquisitions, net of cash acquired —

(72.3 )
Purchases of environmental credits —
(2.8 )
Proceeds from disposals of businesses and property, plant and equipment 1.2

18.6
Proceeds from eminent domain matter and property insurance claims 6.0
2.1
Net cash used in investing activities (21.4 )
(86.6 )
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from revolver borrowings 273.3

338.2
Repayments of revolver borrowings (277.2 )
(310.7 )
Proceeds from stock option exercises 0.2

0.1
Payments of other long-term obligations (33.4 )
(5.6 )
Payments for other financing (24.2 )
(21.5 )
Treasury share purchases (2.2 )
(1.9 )
Other proceeds —
0.5
Net cash used in financing activities (63.5 )
(0.9 )
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS (0.2 ) (0.1 )
NET INCREASE IN CASH AND CASH EQUIVALENTS 7.0

2.6
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 20.0

22.6
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 27.0

$ 25.2

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in millions)

(Unaudited)


	Six Months Ended June 30,
	2020		2019
Supplemental Disclosure of Cash Flow Information:
Net cash paid for interest	$	22.6	$	22.6
Net cash paid for (refund from) income taxes	$	(0.1)	$	0.6

Supplemental Disclosure of Non-cash Investing and Financing Activities:
Capital expenditures funded by finance leases and promissory notes	$	13.7	$	13.0
Acquisitions funded by deferred consideration	$	1.7	$	—
Transfer of non-controlling interest	$	3.3	$	—

($ in millions) Nine Months Ended September 30,
2019 2018
Supplemental Disclosure of Cash Flow Information:

Net cash paid for interest $ 24.4
$ 24.5
Net cash paid for income taxes $ 2.5
$ 2.9
Capital expenditures funded by finance leases and promissory notes $ 19.4
$ 30.7
Acquisitions funded by contingent consideration $ —
$ 1.1
There were approximately $0.6 million of accounts payable owed by the Company that were effectively settled as part of the Coram Acquisition, as defined in Note 3 to these condensed consolidated financial statements, which were eliminated in consolidation in 2020.

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~~

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, ~~2018~~2019 (the ~~"2018~~"2019 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.~~year due to the impact of the coronavirus ("COVID-19") pandemic, weather patterns, and general economic conditions in our markets. Certain reclassifications have been made to prior year amounts to conform with the current year presentation.

The preparation of financial statements and accompanying notes in conformity with U.S. GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates on the information available at the time, our experiences and various other assumptions believed to be reasonable under the circumstances, including estimates of the impact of the COVID-19 pandemic. Actual results could differ from those ~~estimates.~~estimates, including the impact of the COVID-19 pandemic. Estimates and assumptions that we consider significant in the preparation of our financial statements include those related to our ~~allowance for doubtful accounts,~~ business combinations, goodwill, intangibles, ~~valuation of contingent consideration,~~ accruals for self-insurance, income taxes, valuation of contingent consideration, allowance for doubtful accounts, the valuation of inventory and the valuation and useful lives of property, plant and equipment.


2.	~~RECENT ACCOUNTING PRONOUNCEMENTS AND~~ SIGNIFICANT ACCOUNTING POLICIES

~~Recently Adopted - Lease Accounting.~~

Our significant accounting policies, including a description of our business combination valuation methodologies, are included in Note 1 to the consolidated financial statements in our 2019 10-K. The policies that follow primarily represent updates to certain of our policies or disclosures since January 1, 2020.

Credit Losses. ~~In February 2016, the~~Effective January 1, 2020, we adopted Financial Accounting Standards Board ("FASB") ~~issued~~Accounting Standards Codification 326, "Current Expected Credit Losses" ("ASC 326"). While the prior accounting rules used a new lease accounting standard intended to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new guidance, lessees are required to recognize a right-of-use asset and a lease liability, measured on a discounted basis, at the commencement date for all leases, excluding mineral interest leases, with terms greater than twelve months. Additionally, this guidance requires disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. We adopted the guidance as of January 1, 2019, using the transition approach that permitted application of the new standard at the adoption date instead of the earliest comparative period presented in the financial statements. We implemented processes and information technology tools to assist in our ongoing lease data collection and analysis and in updating internal controls that were impacted by the new guidance.

In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. We also elected the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements on existing agreements. We elected to exclude leases with an initial term of 12 months or less from the balance sheet. We made an accounting policy election to combine lease and non-lease components when calculating the lease liability under the new standard. Non-lease components, which may include taxes, maintenance, insurance and certain other expenses applicable to the leased property, are primarily considered variable costs. We did not elect the hindsight practical expedient to determine the lease term for existing leases.

As a result of adopting the new standard, we recorded additional lease assets and lease liabilities of approximately $76.9 million and $79.2 million, respectively, on the balance sheet as of January 1, 2019. The additional lease assets equal the lease liabilities, excluding the impact of deferred rent, which was previously recorded in accrued liabilities. The standard did not materially impact our consolidated net earnings and had no impact on cash flows.

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Not Yet Adopted - Credit Losses.~~ In June 2016, the FASB issued an update on the measurement of credit losses on financial instruments, which requires entities to use a forward-looking approach based on expected losses rather than the current model of incurred losses to estimate credit losses on certain types of financial instruments, including trade accounts ~~receivable. Application of the new model~~receivable, ASC 326 requires entities to use a forward-looking approach based on expected losses, which may result in the earlier recognition of allowances for losses. ~~The guidance becomes effective~~We applied the new credit loss model on a prospective basis and recorded a cumulative-effect adjustment, net of taxes, of $3.3 million to opening retained earnings for usthe increase to the allowance for doubtful accounts. With the adoption of ASC 326, we amended our accounting policy for accounts receivable, which follows.

Accounts receivable consist primarily of receivables from contracts with customers for the sale of ready-mixed concrete, aggregates and other products. Accounts receivable initially are recorded at the transaction amount. We utilize liens or other legal remedies in our collection efforts of certain accounts receivable. Each reporting period, we evaluate the collectability of the receivables and record an allowance for doubtful accounts and customer disputes for our estimated losses on ~~January 1, 2020, with early adoption permitted.~~ balances that may not be collected in full, which reduces the accounts receivable balance. Additions to the allowance result from a provision for bad debt expense that is recorded to selling, general and administrative expenses. A provision for customer disputes recorded as a reduction to revenue also increases the allowance. Accounts receivable are written off if and when we determine the receivable will not be collected and are reflected as a reduction to the allowance.

We ~~are in~~determine the ~~process~~amount of ~~assessing~~bad debt expense and customer dispute losses each reporting period and the ~~impact~~resulting adequacy of ~~this new standard~~the allowance at the end of each reporting period by using a combination of historical loss experience, customer-by-customer analysis, and subjective assessments of our loss exposure. For accounts receivable balances as of and prior to December 31, 2019, our estimate of allowance for doubtful accounts was based on our ~~consolidated financial statements.~~

~~For our other significant accounting policies, see Note 1 to the consolidated financial statements in our 2018 10-K.~~

~~3. LEASES~~

We are the lessee in a lease contract when we obtain the right to control the asset. We lease certain land, office space, equipment and vehicles. Most leases include 1 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.

estimated probable losses. Beginning

Leases ($ in millions)
Balance Sheet Classification September 30, 2019
Assets:
Operating lease assets Operating lease assets $ 69.3

Finance lease assets Property, plant and equipment, net 98.0
⁽¹⁾
Total lease assets $ 167.3

Liabilities:
Current liabilities:
Operating Current operating lease liabilities $ 13.5

Finance Current maturities of long-term debt 26.6

Long-term liabilities:
Operating Long-term operating lease liabilities 58.6

Finance Long-term debt, net of current maturities 45.5

Total lease liabilities $ 144.2

~~(1) Net of accumulated amortization of $23.6 million.~~

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

January 1, 2020, upon our adoption of ASC 326, our allowance for doubtful accounts is based on our estimated expected losses, and the underlying evaluations include analysis of forward-looking information, including economic conditions.

Lease Cost ($ in millions)
Statement of Operations Classification Three Months Ended
September 30, 2019 Nine Months Ended
September 30, 2019
Operating lease cost Selling, general and administrative expenses $ 6.8
⁽¹⁾
$ 19.8
⁽²⁾
Finance lease cost:
Amortization of leased assets Depreciation, depletion and amortization 3.0
8.6

Interest on lease liabilities Interest expense, net 0.6
1.9

Total finance lease cost 3.6
10.5

Total $ 10.4
$ 30.3

Fair Value Measurements. As of January 1, 2020, we adopted a FASB update to disclosure requirements for fair value measurement, which removed, modified and added certain disclosure requirements related to fair value measurements covered in Topic 820, "Fair Value Measurement." The adoption of this update did not have a material impact on the consolidated financial statements. See Note 10 for additional information.

~~(1) Includes short-term~~

Subsidiary Guarantees. In March 2020, the SEC adopted amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees, in Rule 3-10 of Regulation S-X. The amended rule focuses on providing material, relevant and decision-useful information regarding guarantees and other credit enhancements, while eliminating certain prescriptive requirements. The Company adopted these amendments as of March 31, 2020. Accordingly, combined summarized financial information has been presented only for the issuers and guarantors of our registered securities for the most recent fiscal year and the year-to-date interim period, and the required disclosures have been moved from the notes to these condensed consolidated financial statements to Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Leases. During the quarter ended June 30, 2020, we entered into agreements to defer $6.2 million of finance lease payments to mitigate the cash flow impact from the COVID-19 pandemic. In April 2020, the FASB issued interpretive guidance providing companies with the option to elect to account for lease concessions related to the effects of the COVID-19 pandemic as though the enforceable rights and obligations existed in the original lease. Entities may make the elections as long as the concession does not result in a substantial increase in the rights of the lessor or the obligations of the lessee.

For concessions that provide a deferral of payments with no substantive changes to the consideration in the original contract, we can evaluate whether to account for these concessions (i) as if there were no changes made to the lease agreement and accordingly, continue to recognize expense and increase accounts payable, (ii) as a resolution of a contingency that fixes previously variable lease ~~costs~~payments and remeasure the lease liability without reconsideration of ~~approximately $1.9 million.~~

~~(2) Includes short-term~~the lease ~~and~~classification, or (iii) as negative variable lease ~~costs~~payments and accordingly, negative lease expense. We elected to account for the lease payment deferrals as a resolution of ~~approximately $5.2 million.~~a contingency that fixes previously variable lease payments and remeasure the lease obligations, with no reconsideration of lease classification during the quarter ended June 30, 2020. Given the nature of the lease concessions and our election, there was no material impact to our total finance lease liability other than a $1.5 million reclassification from current to long-term liabilities in the accompanying condensed consolidated balance sheet as of June 30, 2020.

Maturity of Lease Liabilities ($ in millions)
Operating Leases Finance Leases Total
2019 (remainder of year) $ 4.6
$ 10.4
$ 15.0
2020 16.7
24.1
40.8
2021 14.9
19.3
34.2
2022 11.9
13.4
25.3
2023 10.3
7.9
18.2
2024 8.5
1.8
10.3
Thereafter 23.6
—
23.6
Total lease payments 90.5
76.9
167.4
Less interest 18.4
4.8
23.2
Present value of lease liabilities $ 72.1
$ 72.1
$ 144.2



~~Lease Term and Discount Rate~~	~~September 30, 2019~~
~~Weighted-average remaining lease term (years):~~
~~Operating leases~~	~~6.6~~
~~Finance leases~~	~~3.2~~
~~Weighted-average discount rate:~~
~~Operating leases~~	~~6.2~~	%
~~Finance leases~~	~~3.8~~	%

Debt. During the quarter ended June 30, 2020, we entered into agreements to defer $2.2 million of promissory note payments to mitigate the cash flow impact from the COVID-19 pandemic. The promissory note deferrals resulted in changes to the effective interest rates of these agreements.

Other Information ($ in millions)
Nine Months Ended
September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $ 14.0
Operating cash flows for finance leases 1.9
Financing cash flows for finance leases 16.2
Leased assets obtained in exchange for new finance lease liabilities 17.1
Leased assets obtained in exchange for new operating lease liabilities 4.7

3. BUSINESS COMBINATION

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~


4.	~~BUSINESS COMBINATIONS~~

~~We completed 5 acquisitions during 2018 that expanded~~On February 24, 2020, we acquired all of the equity of Coram Materials Corp. and certain of its affiliates (collectively, "Coram Materials"). Coram Materials is a sand and gravel products provider located on Long Island in New York. This acquisition increased the vertical integration of our ~~ready-mixed concrete operations in the Atlantic Region (which we define to include~~ New York ~~New Jersey, Washington, D.C. and Pennsylvania) and expanded our ready-mixed concrete, aggregate products and other non-reportable operations in West Texas.~~ City operations.

The ~~aggregate fair value consideration for these acquisitions, which were~~acquisition of all of the equity of Coram Materials (the "Coram Acquisition") was accounted for as a business ~~combinations, was $70.8 million. The acquisitions included the assets and certain liabilities of the following:~~

~~On Time Ready Mix, Inc. ("On Time") located in Flushing, New York on January 10, 2018;~~

Cutrell Trucking, LLC, Dumas Concrete, LLC, Pampa Concrete Co., Inc., Panhandle Concrete, LLC, and Texas Sand & Gravel Co., Inc. (collectively "Golden Spread") located in Amarillo, Texas on March 2, 2018;

~~Leon River Aggregate Materials, LLC ("Leon River") located in Proctor, Texas on August 29, 2018; and~~

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

The aggregate fair value consideration for these 5 acquisitions included $69.9 million in cash and fair value contingent consideration of $1.1 million and was net of a working capital receivable of $0.2 million.combination. We funded the initial cash ~~portion~~purchase consideration through ~~a combination of cash on hand and~~ borrowings under our Revolving Facility (as defined in Note 7). The combined assets acquired through ~~these acquisitions~~the Coram Acquisition included ~~149 mixer trucks, 20 concrete plant facilities~~an aggregates facility with 330 acres of land, including 180 mining acres containing approximately 41.9 million tons of in-place, proven and 2permitted aggregate ~~facilities.~~reserves and approximately 7.5 million tons of in-place, proven, but unpermitted reserves. To effect ~~these transactions, during the three and nine months ended September 30, 2018,~~this transaction, we incurred ~~$0.3 million and $0.9~~$0.6 million of transaction costs, ~~respectively,~~ which were included in selling and general administrative expenses in our condensed consolidated statements of ~~operations. See~~ ~~Note~~ 6operations for ~~a description of our measurement period adjustments.~~the six months ended June 30, 2020.

Our accounting for the Coram Acquisition is preliminary. We expect to record adjustments as we accumulate information needed to estimate the fair value of assets acquired and liabilities assumed, including working capital and property, plant, and equipment. The fair value of acquired receivables, inventory, machinery and equipment, land and buildings are based on inputs derived principally from, or corroborated by, observable market data (i.e., Level 2 inputs). The fair value of machinery and

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

equipment, land and buildings was based on a market valuation approach or a cost valuation approach when a market valuation approach was unavailable. The estimates used for determining the fair value of the mineral reserves were unobservable and significant to the overall measurement (i.e., Level 3 inputs). The fair value of the mineral reserves was determined using an excess earnings approach, which required management to estimate future cash flows, net of capital investments in the specific operation. Management’s cash flow projections involved the use of significant estimates and assumptions with respect to the expected production of the aggregate facility over the estimated time period, sales prices, shipment volumes, and expected profit margins. The present value of the projected net cash flows represents the preliminary fair value assigned to mineral reserves. The discount rate is a significant assumption used in the valuation model.

The ~~following table presents the~~ total consideration for the ~~2018 acquisitions~~Coram Acquisition and the amounts related to the assets acquired and liabilities assumed based on the estimated fair values as of ~~their respective~~the acquisition ~~dates:~~date were as follows:


($ in millions)	Coram Materials
Accounts receivable	$	2.0
Inventory	10.0
Other current assets	0.3
Property, plant and equipment	130.9
Total assets acquired	143.2
Current liabilities	0.1
Other long-term liabilities	0.2
Total liabilities assumed	0.3
Total consideration (fair value)⁽¹⁾	$	142.9

($ in millions) 2018 Acquisitions
Inventory $ 1.1
Other current assets 0.1
Property, plant and equipment 37.4
Definite-lived intangible assets 19.8
Total assets acquired 58.4
Current liabilities 0.1
Other long-term liabilities 1.1
Total liabilities assumed 1.2
Goodwill 13.6
Total consideration (fair value)⁽¹⁾
$ 70.8

(1) Included ~~$1.1~~$140.2 million in cash, present value deferred consideration of ~~contingent consideration.~~

~~Acquired Intangible Assets and Goodwill~~

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

($ in millions) Weighted Average Amortization Period (In Years) Fair Value At Acquisition Date
Customer relationships 5.5 $ 18.5
Non-compete agreements 5.0 1.3
Total $ 19.8

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~As of September 30, 2019, the estimated future aggregate amortization expense of definite-lived intangible assets from the 2018 acquisitions was as follows (in millions):~~

2019 (remainder of the year) $ 0.9
2020 3.6
2021 2.8
2022 2.6
2023 1.6
Thereafter 1.8
Total $ 13.3

~~During the three and nine months ended September 30, 2019, we recorded $1.1~~$1.7 million, and ~~$3.6~~a trade working capital payable of $1.6 million, less a $0.6 million settlement of ~~amortization expense related~~accounts payable owed by the Company to ~~these intangible assets, respectively. For~~Coram Materials at the three months ended September 30, 2019, there were no measurement period adjustments related to these intangible assets. For the nine months ended September 30, 2019, there were measurement period adjustmentsacquisition date. The total amount of ~~$0.5~~deferred consideration is $2.0 million, related to these intangible assets. During the three and nine months ended September 30, 2018, we recorded $1.1 million and $1.9 million of amortization expense related to these intangible assets, respectively. For the three and nine months ended September 30, 2018, there were measurement period adjustments of $0.2 million and $0.3 million related to these intangible assets, respectively.

which is payable over two years.

The goodwill ascribed to the 2018 acquisitions is related to the synergies we expect to achieve with expansion in the markets in which we already operate as well as entry into new metropolitan areas of our existing geographic markets. The goodwill relates to our ready-mixed concrete and other non-reportable segments in the amounts of $12.8 million and $0.8 million, respectively. We generally expect all $13.6 million of goodwill from the 2018 acquisitions to be deductible for tax purposes. See
~~Note 10~~ ~~for additional information regarding income taxes.~~

Impact of ~~Acquisitions~~Coram Acquisition

During the three months ended ~~September~~June 30, ~~2018, we recorded $12.0~~2020, the Coram Materials business generated revenue of $7.0 million, including intersegment sales of $2.7 million, and generated operating income of $1.3 million. During the period from the acquisition date to June 30, 2020, the Coram Materials business generated revenue of $9.6 million, including intersegment sales of $3.7 million, and ~~$1.4 million~~generated operating income of ~~operating loss~~$1.1 million. The results of this acquired business are included in our condensed consolidated statements of operations related to the 2018 acquisitions following their respective dates of acquisition. During the nine months ended September 30, 2018, we recorded approximately $33.6 million of revenue and $2.3 million of operating income in our condensed consolidated statements of operations related to the 2018 acquisitions following their respective dates of acquisition.aggregate products segment.

The ~~information presented below reflects the~~ unaudited pro forma ~~combined~~consolidated financial results for the 2018 acquisitions, excluding the individually immaterial acquisitions as described above, as historical financial results for these operations were not material and were impractical to obtain from the former owners. All other acquisitions have been included andshown below represent our estimate of the ~~2018~~Company's results of operations as if the ~~2018 acquisitions~~Coram Acquisition had been completed on January 1, ~~2017. The impact to the 2019 results of operations if the 2018 acquisitions had been completed on January 1, 2017 was not materially different from our reported results.~~2019.


	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions except per share)	2020		2019		2020		2019
Revenue	$	322.7	$	372.5	$	659.2	$	709.5
Net income (loss) attributable to U.S. Concrete	$	9.3	$	0.8	$	7.7	$	(1.8)

Net income (loss) per share attributable to U.S. Concrete - basic	$	0.56	$	0.05	$	0.46	$	(0.11)
Net income (loss) per share attributable to U.S. Concrete - diluted	$	0.56	$	0.05	$	0.46	$	(0.11)

($ in millions except per share) Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
Revenue $ 405.5
$ 1,153.1
Net income attributable to U.S. Concrete $ 15.2
$ 27.4

Net income per share attributable to U.S. Concrete - basic $ 0.92
$ 1.67
Net income per share attributable to U.S. Concrete - diluted $ 0.92
$ 1.66

The above pro forma results are unaudited and were prepared based on the historical U.S. GAAP results of the Company and the historical results of ~~the acquired companies for which financial information was available,~~Coram Materials, 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~~Coram Acquisition occurred on January 1, ~~2017.~~

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~The unaudited pro forma amounts above reflect the following adjustments:~~

($ in millions) Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
Decrease (increase) in intangible amortization expense $ 0.2
$ (0.7 )
Exclusion of buyer transaction costs —
0.7
Decrease in income tax expense 0.2
0.2

~~The unaudited pro forma results~~2019 and do not reflect any operational efficiencies or potential cost savings that may occur as a result of the consolidation of ~~the~~these operations.


5.	~~INVENTORIES~~

($ in millions) September 30, 2019 December 31, 2018
Raw materials $ 48.5
$ 46.4
Building materials for resale 3.6
2.8
Other 1.8
2.0
Total $ 53.9
$ 51.2
8

6.~~GOODWILL ANDOTHER INTANGIBLE ASSETS~~

~~Goodwill~~

~~The accumulated impairment was as follows:~~

($ in millions) September 30, 2019 December 31, 2018
Goodwill, gross $ 245.3
$ 245.1
Accumulated impairment (5.8 ) (5.8 )
Goodwill, net $ 239.5
$ 239.3

~~The changes in goodwill by reportable segment were as follows:~~

($ in millions) Ready-Mixed Concrete Segment Aggregate Products Segment Other Non-Reportable Segments Total
Goodwill, net at December 31, 2018 $ 147.7
$ 86.2
$ 5.4
$ 239.3
Measurement period adjustments for prior year business combinations⁽¹⁾
0.2
—
—
0.2
Goodwill, net at September 30, 2019 $ 147.9
$ 86.2
$ 5.4
$ 239.5


~~(1)~~	~~Property, plant and equipment acquired in 2018 was reduced by $0.2 million.~~

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Other Intangible Assets~~

~~Our purchased intangible assets were as follows:~~

September 30, 2019
($ in millions) Gross Accumulated Amortization Net Weighted Average Remaining Life (In Years)
Definite-lived intangible assets
Customer relationships $ 108.5
$ (55.7 ) $ 52.8
4.1
Trade names 44.5
(13.1 ) 31.4
19.3
Non-competes 18.3
(14.6 ) 3.7
2.4
Leasehold interests 12.5
(6.3 ) 6.2
5.5
Favorable contracts 4.0
(3.9 ) 0.1
1.2
Environmental credits 2.8
(0.2 ) 2.6
16.3
Total definite-lived intangible assets 190.6

(93.8 )
96.8
9.3
Indefinite-lived intangible assets
Land rights⁽¹⁾
1.2
—
1.2

Total purchased intangible assets $ 191.8
$ (93.8 ) $ 98.0

The unaudited pro forma amounts above reflect the following adjustments:


	Three Months Ended June 30,						Six Months Ended June 30,
($ in millions)	2020		2019		2020		2019
Decrease (increase) in cost of goods sold related to fair value increase in inventory	$	2.6	$	(1.3)	$	4.2	$	(2.1)
Decrease (increase) in depreciation, depletion and amortization expense	—		(1.5)		(0.9)		(2.5)
Exclusion of buyer transaction costs	0.1		—		0.6		—
Exclusion of seller transaction costs	—		—		0.3		—
Increase in interest expense	—		(1.7)		(0.8)		(2.7)
Increase in income tax expense	—		(0.4)		(1.1)		(0.6)

4. ALLOWANCE FOR DOUBTFUL ACCOUNTS AND CUSTOMER DISPUTES


~~(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.~~millions)

December 31, 2018
($ in millions) Gross Accumulated Amortization Net Weighted Average Remaining Life (In Years)
Definite-lived intangible assets
Customer relationships $ 108.5
$ (43.1 ) $ 65.4
4.7
Trade names 44.5
(11.1 ) 33.4
19.6
Non-competes 18.3
(12.1 ) 6.2
2.6
Leasehold interests 12.5
(5.1 ) 7.4
5.9
Favorable contracts 4.0
(3.8 ) 0.2
1.9
Environmental credits 2.8
—
2.8
17.0
Total definite-lived intangible assets 190.6
(75.2 ) 115.4
9.8
Indefinite-lived intangible assets
Land rights⁽¹⁾
1.2
—
1.2

Total purchased intangible assets $ 191.8
$ (75.2 ) $ 116.6


~~(1)~~Balance, December 31, 2019	~~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~~	$	4.0
Cumulative effect of the ~~associated deferred payment.~~adoption of ASC 326		4.5
Balance, January 1, 2020		8.5
Provision for doubtful accounts and customer disputes		1.0
Uncollectible receivables written off, net of recoveries		(1.9)
Other adjustments		(0.5)
Balance, June 30, 2020		$	7.1

5. INVENTORIES


($ in millions)	June 30, 2020			December 31, 2019
Raw materials	$	59.7	⁽¹⁾	$	53.4
Building materials for resale	3.6			3.6
Other	1.9			2.0
Total	$	65.2		$	59.0

(1) Excludes $2.1 million of inventory that was classified as long-term because it was not expected to be sold in the next 12 months.

6.GOODWILL ANDOTHER INTANGIBLE ASSETS

Goodwill

We perform our annual goodwill impairment testing in the fourth quarter of each year. In addition to the annual impairment test, we are required to regularly assess whether a triggering event has occurred that would require interim impairment testing. We determined that the significant decline in the overall financial markets, including U.S. Concrete's market capitalization, as a result of the COVID-19 pandemic, qualified as a triggering event that warranted further analysis to determine if there was an impairment loss as of March 31, 2020. As allowed, we elected to perform a qualitative assessment for our reporting units to assess whether it was more likely than not that the goodwill was impaired as of March 31, 2020. Considering the existing excess fair value identified in our 2019 impairment assessment, our qualitative assessment included a review of our previous forecasts, assumptions and analyses in light of more current information such as: (1) projected revenues, expenses and cash flows, including the expected duration and extent of impact to our business and our customers from the

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COVID-19 pandemic; (2) current discount rates; (3) the reduction in our market capitalization; and (4) changes to the regulatory environment. Based on the qualitative assessment, we determined that it was more likely than not that the goodwill was not impaired. As a result, no quantitative assessment was necessary. Based on an improvement of financial market conditions and the Company's market capitalization, we determined that no further interim asset impairment testing was needed as of June 30, 2020.

The goodwill balance was as follows:


($ in millions)	June 30, 2020		December 31, 2019
Goodwill, gross	$	245.3	$	245.3
Accumulated impairment	(5.8)		(5.8)
Goodwill, net	$	239.5	$	239.5

Goodwill by reportable segment was as follows:


($ in millions)	June 30, 2020		December 31, 2019
Ready-mixed concrete	$	150.0	$	150.0
Aggregate products	86.2		86.2
Other non-reportable segments	3.3		3.3
Goodwill, net	$	239.5	$	239.5

Other Intangible Assets


	June 30, 2020
($ in millions)	Gross		Accumulated Amortization		Net		Weighted Average Remaining Life (In Years)
Definite-lived intangible assets
Customer relationships	$	108.5	$	(67.4)	$	41.1	3.5
Trade names	44.5		(14.5)		30.0		18.7
Non-competes	18.3		(16.1)		2.2		2.2
Leasehold interests	12.5		(7.6)		4.9		5.2
Environmental credits	2.8		(0.3)		2.5		15.5
Total definite-lived intangible assets	186.6		(105.9)		80.7		9.6
Indefinite-lived intangible assets
Land rights⁽¹⁾	1.2		—		1.2
Total purchased intangible assets	$	187.8	$	(105.9)	$	81.9

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	December 31, 2019
($ in millions)	Gross		Accumulated Amortization		Net		Weighted Average Remaining Life (In Years)
Definite-lived intangible assets
Customer relationships	$	108.5	$	(59.7)	$	48.8	3.9
Trade names	44.5		(13.6)		30.9		19.1
Non-competes	18.3		(15.3)		3.0		2.4
Leasehold interests	12.5		(6.7)		5.8		5.4
Favorable contracts	4.0		(3.9)		0.1		0.9
Environmental credits	2.8		(0.2)		2.6		16.0
Total definite-lived intangible assets	190.6		(99.4)		91.2		9.4
Indefinite-lived intangible assets
Land rights⁽¹⁾	1.2		—		1.2
Total purchased intangible assets	$	191.8	$	(99.4)	$	92.4

(1) Land rights will be reclassified to property, plant, and equipment upon the division of certain shared properties and settlement of the associated deferred payment.

As of ~~September~~June 30, ~~2019,~~2020, the estimated remaining amortization of our definite-lived intangible assets was as follows (in millions):


2020 (remainder of the year)	$	10.4
2021	18.6
2022	12.7
2023	6.3
2024	6.0
Thereafter	26.7
Total	$	80.7

2019 (remainder of the year) $ 5.5
2020 20.9
2021 18.6
2022 12.7
2023 6.3
Thereafter 32.8
Total $ 96.8

~~Also~~Unfavorable lease intangibles with a gross carrying amount of $1.5 million as of both June 30, 2020 and December 31, 2019, and a net carrying amount of $0.4 million and $0.5 million as of June 30, 2020 and December 31, 2019, respectively, were included in other long-term obligations and deferred credits in the accompanying condensed consolidated balance sheets were unfavorable lease intangibles with a gross carrying amount of $1.5 million as of both September 30, 2019 and December 31, 2018, and a net carrying amount of $0.6 million and $0.8 million as of September 30, 2019 and December 31, 2018, respectively.sheets. These unfavorable lease intangibles had a weighted average remaining life of ~~4.1~~4.3 years as of ~~September~~June 30, ~~2019.~~2020.

We recorded ~~$5.8 million and $6.4 million of~~net amortization expense onfor our definite-lived intangible assets and unfavorable lease intangibles of $5.1 million and $6.6 million for the three months ended ~~September~~June 30, 2020 and 2019, ~~and 2018, respectively.~~respectively, in our condensed consolidated statements of operations. We recorded ~~$18.4 million and $17.9 million of~~net amortization expense onfor our definite-lived intangible assets and unfavorable lease intangibles of $10.4 million and $12.6 million for the ~~nine~~six months ended ~~September~~June 30, 2020 and 2019, ~~and 2018, respectively.~~respectively, in our condensed consolidated statements of operations.


7.	~~DEBT~~

($ in millions) September 30, 2019 December 31, 2018
Senior unsecured notes due 2024 and unamortized premium⁽¹⁾
$ 607.2
$ 608.4
Asset based revolving credit facility 11.1
15.0
Finance leases 72.1
71.2
Other financing 23.0
28.5
Debt issuance costs (7.7 ) (9.0 )
Total debt 705.7

714.1
Less: current maturities (35.6 ) (30.8 )
Long-term debt, net of current maturities $ 670.1
$ 683.3


~~(1)~~	~~The effective interest rate for these notes was 6.56% as of both September 30, 2019 and December 31, 2018.~~

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. DEBT


($ in millions)	June 30, 2020		December 31, 2019
Senior unsecured notes due 2024 and unamortized premium⁽¹⁾	$	606.1	$	606.8
Asset based revolving credit facility	56.5		—
Delayed draw term loan facility	—		—
Finance leases	84.9		67.3
Promissory notes	20.2		20.4
Debt issuance costs	(8.8)		(7.2)
Total debt	758.9		687.3
Less: current maturities	(34.1)		(32.5)
Long-term debt, net of current maturities	$	724.8	$	654.8

(1) The effective interest rate for these notes was 6.56% as of both June 30, 2020 and December 31, 2019.

Asset Based Revolving Credit Facility

As of ~~September~~June 30, ~~2019,~~2020, we had ~~$17.5~~$19.7 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~~London Interbank Offered Rate ("LIBOR") loans denominated in U.S. dollars. The interest rate for loans under the ~~facility~~Revolving Facility was ~~5.25%~~3.50% as of ~~September~~June 30, ~~2019.~~2020.

Our actual maximum credit availability under the Revolving Facility varies from time to time and is determined by calculating the value of our eligible accounts receivable, inventory, mixer trucks and machinery, minus reserves imposed by the lenders and certain other adjustments. Our availability under the Revolving Facility at ~~September~~June 30, ~~2019~~2020 was ~~$236.1~~$137.3 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. The Revolving Facility is secured by a first priority lien and security interest on substantially all of our and our guarantor subsidiaries’ personal property (the "Revolving Facility Collateral").The agreement governing the Revolving Facility contains customary representations, warranties, covenants and events of default. As of ~~September~~June 30, ~~2019,~~2020, we were in compliance with all covenants under the loan agreement that governs the Revolving Facility. On July 30, 2020, we elected to reduce the commitment amount of the Revolving Facility from $350.0 million to $300.0 million effective August 4, 2020. The reduction does not result in any change in our total available liquidity.

Delayed Draw Term Loan Facility

On April 17, 2020, we entered into a secured delayed draw term loan agreement (the "Agreement") with certain subsidiaries as guarantors thereto, Bank of America, N.A. as administrative agent and collateral agent, and the lenders and other parties named therein. The Agreement provides for a $180.0 million delayed draw term loan facility (the "Credit Facility"). The Agreement permits borrowings until December 15, 2021, and any such borrowings will mature May 1, 2025 (subject to a springing maturity on March 1, 2024 to the extent any of our 6.375% senior unsecured notes due 2024 ("2024 Notes") remain outstanding on such date). In connection with entering into the Agreement, we incurred $2.2 million of debt issuance costs. We entered into the Agreement to enhance our liquidity and financial flexibility.

Borrowings under the Agreement bear interest at our option of either: (1) LIBOR (subject to a floor of 0.75%) plus a margin ranging from 2.75% to 3.75% or (2) a base rate (which is equal to the greatest of the prime rate, the Federal Funds effective rate plus 0.50% and LIBOR plus 1.00%, and is subject to a floor of 1.75%) plus a margin ranging from 1.75% to 2.75%. The applicable margin depends on the aggregate amount borrowed. Additionally, each draw on the Credit Facility will be issued at a price of 99.0% of the amount drawn. The Agreement is secured by a first priority lien and security interest on certain real property of the subsidiary guarantors and personal property of the Company and its guarantor subsidiaries that is not secured by a first priority security interest under our Revolving Facility (the "Revolving Facility Collateral") and a second priority security interest on the Revolving Facility Collateral. The Agreement contains customary representations, warranties, covenants and events of default, but does not contain any financial maintenance covenants.

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


8.	~~FAIR VALUE DISCLOSURES~~

8. LEASES

~~Fair value is defined~~

Supplemental balance sheet information related to leases was 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~~follows:


($ in millions)	Balance Sheet Classification	June 30, 2020			December 31, 2019
Assets:
Operating	Operating lease assets	$	70.3		$	69.8
Finance	Property, plant and equipment, net	109.6		⁽¹⁾	91.5		⁽²⁾
Total lease assets		$	179.9		$	161.3
Liabilities:
Current liabilities:
Operating	Current operating lease liabilities	$	13.7		$	12.9
Finance	Current maturities of long-term debt	24.3			24.2
Long-term liabilities
Operating	Long-term operating lease liabilities	59.8			59.7
Finance	Long-term debt, net of current maturities	60.6			43.1
Total lease liabilities		$	158.4		$	139.9

(1) Net of ~~the measurement date. Accounting guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use~~$36.5 million of ~~observable inputs and minimizes the use~~accumulated amortization.

(2) Net 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$29.4 million of ~~inputs that may be used to measure fair value:~~accumulated amortization.

~~Level 1—Quoted prices in active markets for identical assets or liabilities.~~

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

~~Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.~~

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. We review the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain assets and liabilities within the fair value hierarchy. There were no transfers of assets or liabilities between the fair value measurement levels for the three and nine months ended September 30, 2019 or the year ended December 31, 2018.

We estimate the fair value of acquisition-related contingent consideration arrangements using a Monte Carlo simulation model, an income approach or a discounted cash flow technique, as appropriate. The fair value of the contingent consideration arrangements is sensitive to changes in the forecasts of earnings and/or the relevant operating metrics and changes in discount rates. The fair value of the contingent consideration is reassessed quarterly based on assumptions used in our latest projections and input provided by practice leaders and management. Any change in the fair value estimate is recorded in our consolidatedSupplemental statement of operations ~~for that period. The current portion~~information related to leases was as follows:


	Three Months Ended June 30,									Six Months Ended June 30,
($ in millions)	2020			2019			2020			2019
Operating lease cost
Cost of goods sold before depreciation, depletion and amortization	$	4.8		$	6.1		$	10.3		$	12.0
Selling, general and administrative expenses	0.7			0.5			1.4			1.0
Total operating lease cost	5.5		⁽¹⁾	6.6		⁽²⁾	11.7		⁽³⁾	13.0		⁽⁴⁾

Finance lease cost
Depreciation, depletion and amortization	3.9			2.9			7.6			5.6
Interest expense, net	0.7			0.7			1.5			1.3
Total finance lease cost	4.6			3.6			9.1			6.9
Total lease cost	$	10.1		$	10.2		$	20.8		$	19.9

(1) Included short-term lease and variable lease costs of ~~contingent consideration is included in accrued liabilities while the long-term portion is included in other long-term obligations~~$1.0 million.

(2) Included short-term lease and ~~deferred credits, both~~variable lease costs of ~~which are in our condensed consolidated balance sheets. The use~~$1.8 million.

(3) Included short-term lease and variable lease costs of ~~different estimates~~$2.7 million.

(4) Included short-term lease and ~~assumptions could increase or decrease the estimated fair value~~variable lease costs of our contingent consideration liability, which would result in different impacts to our consolidated balance sheets and consolidated statements of operations. These fair value measurements are based on significant inputs not observable in the market, and thus represent Level 3 inputs. Our recurring Level 3 fair value liability, contingent consideration, including the current portion, was $26.0 million as of September 30, 2019 and $60.7 million as of December 31, 2018.$3.3 million.

~~The following tables present the inputs for the models used to value our acquisition-related contingent consideration:~~

September 30, 2019
Valuation Inputs Monte Carlo Simulation Income Approach
Fair value (in millions) $ 23.6
$ 2.4
Discount rate 11.00 % 3.70% - 10.75%
Payment cap (in millions) $ 26.3
$ 2.5
Expected payment period remaining (in years) 2.6
0 - 4
Management projections of the payout criteria EBITDA Volumes

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Maturities of lease liabilities were as follows:


($ in millions)	Operating Leases		Finance Leases
2020 (remainder of year)	$	8.6	$	12.9
2021	16.8		26.4
2022	13.7		21.5
2023	12.1		15.7
2024	11.2		8.9
2025	8.6		4.4
Thereafter	18.9		1.4
Total lease payments	89.9		91.2
Less interest	16.4		6.3
Present value of lease liabilities	$	73.5	$	84.9

December 31, 2018
Valuation Inputs Monte Carlo Simulation Income Approach Discounted Cash Flow Technique
Fair value (in millions) $ 33.2
$ 26.5
$ 1.0
Discount rate 10.75% - 12.25%
3.70% - 5.00%
6.03% - 15.75%
Payment cap (in millions) $ 37.3
$ 27.3
$ 1.1
Expected payment period remaining (in years) 1-3
1
1-4
Management projections of the payout criteria EBITDA/Volumes Permitted reserves/Volumes Volumes

Lease term and discount rate were as follows:


	June 30, 2020		December 31, 2019
Weighted-average remaining lease term:
Operating leases	6.5 years		6.6 years
Finance leases	3.8 years		3.4 years
Weighted-average discount rate:
Operating leases	5.7	%	6.2	%
Finance leases	3.6	%	3.8	%

Supplemental cash flow information related to leases was as follows:


	Six Months Ended June 30,
($ in millions)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	8.6	$	9.4
Operating cash flows for finance leases	1.5		1.3
Financing cash flows for finance leases	8.3		10.4
Net assets obtained in exchange for finance lease liabilities	13.7		7.7
Net right-of-use assets obtained in exchange for operating lease liabilities	7.4		3.9

9.NON-CONTROLLING INTEREST

Through our ownership of Polaris Materials Corp., we previously held a 70% interest in Eagle Rock Materials Ltd. ("Eagle Rock"), which was originally formed to develop the Eagle Rock quarry project in British Columbia, Canada. During the six months ended June 30, 2020, all ownership interest in Eagle Rock reverted back to the Company, such that Eagle Rock is now a wholly owned subsidiary. This resulted in the elimination of the previously recorded $3.3 million Eagle Rock non-controlling interest.

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10. FAIR VALUE MEASUREMENTS

The methodologies and the fair value measurement levels used to determine the fair value of our financial assets and liabilities at June 30, 2020 were the same as those used at December 31, 2019.

The following table provides a reconciliation of the changes in Level 3 fair value ~~measurements from December 31, 2018 to September 30, 2019:~~measurements:


($ in millions)	Contingent Consideration
Balance at December 31, 2019	$	27.2
Change in valuation	(5.5)		⁽¹⁾
Payments	(10.7)
Balance at June 30, 2020	$	11.0	⁽²⁾

($ in millions) Contingent Consideration
Balance at December 31, 2018 $ 60.7
Change in valuation 1.6
Payments of contingent consideration (36.3 )
Balance at September 30, 2019 $ 26.0

Three Months Ended
September 30,
Nine Months Ended
September 30,
($ in millions)
2019
2018
2019
2018
Revenue by Segment:

Ready-mixed concrete

Sales to external customers
$ 354.1

$ 346.3

$ 958.5

$ 985.5
Aggregate products

Sales to external customers
37.9

41.1

105.8

100.9
Intersegment sales
15.0

12.4

39.5

35.3
Total aggregate products 52.9
53.5
145.3
136.2
Total reportable segment revenue
407.0
399.8
1,103.8
1,121.7
Other products and eliminations
1.9

4.5

5.7

14.6
Total revenue
$ 408.9

$ 404.3
$ 1,109.5
$ 1,136.3

Reportable Segment Adjusted EBITDA:

Ready-mixed concrete
$ 51.5

$ 47.5

$ 124.1

$ 140.3
Aggregate products
16.3

12.2

38.9

29.1
Total reportable segment Adjusted EBITDA
$ 67.8
$ 59.7
$ 163.0
$ 169.4

Reconciliation of Total Reportable Segment Adjusted EBITDA to Net Income:

Total reportable segment Adjusted EBITDA $ 67.8
$ 59.7
$ 163.0
$ 169.4
Other products and eliminations from operations 1.3
16.6
2.8
21.0
Corporate overhead (14.3 ) (15.7 ) (51.2 ) (45.8 )
Depreciation, depletion and amortization for reportable segments (20.7 ) (23.7 ) (64.8 ) (63.8 )
Acquisition-related costs —
—
—
(1.0 )
Impairment of assets —
—
—
(1.3 )
Hurricane-related loss recoveries, net —
—
2.1
0.2
Quarry dredge costs for specific event —
(0.2 ) —
(0.8 )
Purchase accounting adjustments for inventory —
—
—
(0.7 )
Interest expense, net (11.6 ) (11.7 ) (34.8 ) (34.6 )
Change in value of contingent consideration for reportable segments (0.3 ) (0.4 ) (1.6 ) 0.9
Eminent domain matter —
(0.6 ) 5.3
(0.6 )
Loss on mixer truck fire —
—
(0.7 ) —
Corporate, other products and eliminations other income (loss), net (0.3 ) 0.4
0.1
(0.2 )
Income from operations before income taxes 21.9
24.4
20.2
42.7
Income tax expense 8.3
8.6
8.3
14.5
Net income $ 13.6
$ 15.8
$ 11.9
$ 28.2

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Revenue by Segment:
Ready-mixed concrete
Sales to external customers	$	272.4	$	314.0	$	564.6	$	604.4
Aggregate products
Sales to external customers	38.2		36.2		69.3		67.9
Intersegment sales	16.3		13.3		28.8		24.5
Total aggregate products	54.5		49.5		98.1		92.4
Total reportable segment revenue	326.9		363.5		662.7		696.8
Other products and eliminations	(4.2)		4.0		(5.6)		3.8
Total revenue	$	322.7	$	367.5	$	657.1	$	700.6

Reportable Segment Adjusted EBITDA:
Ready-mixed concrete	$	38.1	$	38.1	$	69.8	$	72.6
Aggregate products	21.6		12.2		32.9		22.6
Total reportable segment Adjusted EBITDA	$	59.7	$	50.3	$	102.7	$	95.2

Reconciliation of Total Reportable Segment Adjusted EBITDA to Net Income:
Total reportable segment Adjusted EBITDA	$	59.7	$	50.3	$	102.7	$	95.2
Other products and eliminations from operations	0.3		1.6		0.4		1.5
Corporate overhead	(16.3)		(22.3)		(31.9)		(36.9)
Depreciation, depletion and amortization for reportable segments	(23.7)		(23.4)		(45.5)		(44.1)
Interest expense, net	(11.4)		(11.6)		(22.8)		(23.2)
Change in value of contingent consideration for reportable segments	5.8		(0.3)		5.5		(1.3)


Hurricane-related loss recoveries, net	—		2.1		—		2.1
Eminent domain matter	—		5.3		—		5.3
Purchase accounting adjustments for inventory	(2.6)		—		(4.2)		—
Loss on mixer truck fire	—		(0.1)		—		(0.7)
Realignment initiative costs	(0.8)		—		(0.8)		—
Corporate, other products and eliminations other income (loss), net	(0.2)		—		(0.3)		0.4
Income (loss) from operations before income taxes	10.8		1.6		3.1		(1.7)
Income tax benefit (expense)	(4.3)		(0.7)		0.6		—
Net income (loss)	$	6.5	$	0.9	$	3.7	$	(1.7)

Three Months Ended
September 30, Nine Months Ended
September 30,
($ in millions) 2019 2018 2019 2018
Capital Expenditures:
Ready-mixed concrete $ 4.1
$ 4.3
$ 15.7
$ 17.7
Aggregate products 6.3
6.9
11.9
13.0
Other products and corporate 0.1
0.2
1.0
1.5
Total capital expenditures $ 10.5
$ 11.4
$ 28.6
$ 32.2

Three Months Ended
September 30, Nine Months Ended
September 30,
($ in millions) 2019 2018 2019 2018
Revenue by Product:
Ready-mixed concrete $ 354.1
$ 346.3
$ 958.5
$ 985.5
Aggregate products 37.9
41.1
105.8
100.9
Building materials 8.6
7.0
21.5
20.2
Aggregates distribution 6.5
6.1
18.2
16.5
Hauling 1.2
1.2
3.5
3.9
Lime —
1.9
—
7.4
Other 0.6
0.7
2.0
1.9
Total revenue $ 408.9
$ 404.3
$ 1,109.5
$ 1,136.3

($ in millions) September 30, 2019 December 31, 2018
Identifiable Property, Plant and Equipment Assets:
Ready-mixed concrete $ 293.6
$ 295.5
Aggregate products 356.4
355.0
Other products and corporate 26.3
29.7
Total identifiable assets $ 676.3
$ 680.2

U.S. CONCRETE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


~~14.~~	~~SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION~~

Our 2024 Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by each direct and indirect wholly owned domestic subsidiary of the Company, each a guarantor subsidiary. Each guarantor subsidiary is directly or indirectly 100% owned by the Company. Neither the net book value nor the purchase price of any of our recently acquired guarantor subsidiaries were 20% or more of the aggregate principal amount of our 2024 Notes. The 2024 Notes are not guaranteed by any direct or indirect foreign subsidiaries of the Company or domestic subsidiaries that are not wholly owned, each a non-guarantor subsidiary. Consequently, we are required to provide condensed consolidating financial information in accordance with Rule 3-10 of Regulation S-X.

The following condensed consolidating financial statements present, in separate columns, financial information for (1) the Company, as Parent on a parent-only basis, (2) the guarantor subsidiaries on a combined basis, (3) the non-guarantor subsidiaries on a combined basis, (4) the eliminations and reclassifications necessary to arrive at the information for the Company on a consolidated basis, and (5) the Company on a consolidated basis.

The following condensed consolidating financial statements of U.S. Concrete and its subsidiaries present investments in consolidated subsidiaries using the equity method of accounting. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~CONDENSED CONSOLIDATING BALANCE SHEET~~



	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Capital Expenditures:
Ready-mixed concrete	$	4.3	$	5.8	$	8.7	$	11.6
Aggregate products	2.5		4.4		5.3		5.6
Other products and corporate	0.1		0.7		0.2		0.9
Total capital expenditures	$	6.9	$	10.9	$	14.2	$	18.1

~~SEPTEMBER 30, 2019~~

~~(in millions)~~


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Revenue by Product:
Ready-mixed concrete	$	272.4	$	314.0	$	564.6	$	604.4
Aggregate products	38.2		36.2		69.3		67.9
Building materials	5.8		8.3		12.1		12.9
Aggregates distribution	5.0		6.4		8.7		11.7
Hauling	0.8		1.4		1.3		2.3
Other	0.5		1.2		1.1		1.4
Total revenue	$	322.7	$	367.5	$	657.1	$	700.6

Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations U.S. Concrete Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ —
$ 17.8
$ 9.2
$ —
$ 27.0
Trade accounts receivable, net —
239.9
19.4
—
259.3
Inventories —
43.2
10.7
—
53.9
Other receivables, net 10.9
9.0
0.5
(7.1 ) 13.3
Prepaid expenses and other —
8.4
0.6
—
9.0
Intercompany receivables 9.7
—
0.3
(10.0 ) —
Total current assets 20.6
318.3
40.7
(17.1 ) 362.5
Property, plant and equipment, net —
470.0
206.3
—
676.3
Operating lease assets —
56.0
13.3
—
69.3
Goodwill —
155.7
83.8
—
239.5
Intangible assets, net —
93.7
4.3
—
98.0
Investment in subsidiaries 633.2
—
—
(633.2 ) —
Long-term intercompany receivables 309.8
—
1.1
(310.9 ) —
Other assets —
9.0
1.7
—
10.7
Total assets $ 963.6
$ 1,102.7
$ 351.2
$ (961.2 ) $ 1,456.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ —
$ 131.7
$ 4.1
$ —
$ 135.8
Accrued liabilities 13.9
75.7
7.8
(7.1 ) 90.3
Current maturities of long-term debt 0.3
34.7
0.6
—
35.6
Current operating lease liabilities —
11.7
1.8
—
13.5
Intercompany payables —
—
10.0
(10.0 ) —
Total current liabilities 14.2
253.8
24.3
(17.1 ) 275.2
Long-term debt, net of current maturities 611.6
56.9
1.6
—
670.1
Long-term operating lease liabilities —
46.8
11.8
—
58.6
Other long-term obligations and deferred credits —
39.0
5.0
—
44.0
Deferred income taxes —
22.4
22.5
—
44.9
Long-term intercompany payables —
192.8
118.1
(310.9 ) —
Total liabilities 625.8
611.7
183.3
(328.0 ) 1,092.8
Total shareholders' equity 337.8
491.0
142.2
(633.2 ) 337.8
Non-controlling interest —
—
25.7
—
25.7
Total equity 337.8
491.0
167.9
(633.2 ) 363.5
Total liabilities and equity $ 963.6
$ 1,102.7
$ 351.2
$ (961.2 ) $ 1,456.3


	June 30, 2020		December 31, 2019
Identifiable Property, Plant and Equipment Assets:
Ready-mixed concrete	$	288.9	$	286.4
Aggregate products	480.3		359.6
Other products and corporate	24.9		27.5
Total identifiable assets	$	794.1	$	673.5

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~CONDENSED CONSOLIDATING BALANCE SHEET~~

~~DECEMBER 31, 2018~~

~~(in millions)~~

Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations U.S. Concrete Consolidated
ASSETS
Current assets:
Cash and cash equivalents $ —
$ 10.8
$ 9.2
$ —
$ 20.0
Trade accounts receivable, net —
219.7
6.9
—
226.6
Inventories —
42.4
8.8
—
51.2
Other receivables 11.1
7.0
0.3
—
18.4
Prepaid expenses and other —
7.1
0.8
—
7.9
Intercompany receivables 9.7
—
0.3
(10.0 ) —
Total current assets 20.8
287.0
26.3
(10.0 ) 324.1
Property, plant and equipment, net —
468.3
211.9
—
680.2
Goodwill —
155.5
83.8
—
239.3
Intangible assets, net —
111.8
4.8
—
116.6
Investment in subsidiaries 604.1
—
—
(604.1 ) —
Long-term intercompany receivables 308.9
—
1.1
(310.0 ) —
Other assets —
10.8
0.3
—
11.1
Total assets $ 933.8
$ 1,033.4
$ 328.2
$ (924.1 ) $ 1,371.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ —
$ 122.4
$ 3.4
$ —
$ 125.8
Accrued liabilities 4.7
83.2
8.4
—
96.3
Current maturities of long-term debt 0.3
29.9
0.6
—
30.8
Intercompany payables —
—
10.0
(10.0 ) —
Total current liabilities 5.0
235.5
22.4
(10.0 ) 252.9
Long-term debt, net of current maturities 615.5
67.6
0.2
—
683.3
Other long-term obligations and deferred credits 0.9
51.0
2.9
—
54.8
Deferred income taxes —
22.4
20.7
—
43.1
Long-term intercompany payables —
188.7
121.3
(310.0 ) —
Total liabilities 621.4
565.2
167.5
(320.0 ) 1,034.1
Total shareholders' equity 312.4
468.2
135.9
(604.1 ) 312.4
Non-controlling interest —
—
24.8
—
24.8
Total equity 312.4
468.2
160.7
(604.1 ) 337.2
Total liabilities and equity $ 933.8
$ 1,033.4
$ 328.2
$ (924.1 ) $ 1,371.3

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS~~

~~THREE MONTHS ENDED SEPTEMBER 30, 2019~~

~~(in millions)~~

Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations U.S. Concrete Consolidated
Revenue $ —
$ 378.5
$ 30.4
$ —
$ 408.9
Cost of goods sold before depreciation, depletion and amortization —
300.0
21.2
—
321.2
Selling, general and administrative expenses —
30.0
2.0
—
32.0
Depreciation, depletion and amortization —
19.1
3.2
—
22.3
Change in value of contingent consideration —
0.3
—
—
0.3
Loss (gain) on sale/disposal of assets and business, net —
(0.2 ) —
—
(0.2 )
Operating income —
29.3
4.0
—
33.3
Interest expense, net 10.1
0.9
0.6
—
11.6
Other expense (income), net 0.2
(0.3 ) (0.1 ) —
(0.2 )
Income (loss) before income taxes, equity in earnings of subsidiaries and non-controlling interest (10.3 ) 28.7
3.5
—
21.9
Income tax expense/(benefit) (3.8 ) 11.0
1.1
—
8.3
Net income (loss) before equity in earnings of subsidiaries and non-controlling interest (6.5 ) 17.7
2.4
—
13.6
Equity in earnings of subsidiaries 19.5
—
—
(19.5 ) —
Net income (loss) 13.0
17.7
2.4
(19.5 ) 13.6
Less: Net income attributable to non-controlling interest —
—
(0.6 ) —
(0.6 )
Net income (loss) attributable to U.S. Concrete $ 13.0
$ 17.7
$ 1.8
$ (19.5 ) $ 13.0

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS~~

~~THREE MONTHS ENDED SEPTEMBER 30, 2018~~

~~(in millions)~~

Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations U.S. Concrete Consolidated
Revenue $ —
$ 370.2
$ 34.1
$ —
$ 404.3
Cost of goods sold before depreciation, depletion and amortization —
300.0
25.3
—
325.3
Selling, general and administrative expenses —
30.5
1.7
—
32.2
Depreciation, depletion and amortization —
21.3
4.2
—
25.5
Change in value of contingent consideration —
0.4
—
—
0.4
Loss (gain) on sale/disposal of assets and business, net —
(14.1 ) —
—
(14.1 )
Operating income —
32.1
2.9
—
35.0
Interest expense, net 9.7
0.9
1.1
—
11.7
Other expense (income), net —
(1.4 ) 0.3
—
(1.1 )
Income (loss) before income taxes and equity in earnings of subsidiaries (9.7 ) 32.6
1.5
—
24.4
Income tax expense (benefit) (3.1 ) 10.7
1.0
—
8.6
Net income (loss) before equity in earnings of subsidiaries (6.6 ) 21.9
0.5
—
15.8
Equity in earnings of subsidiaries 22.1
—
—
(22.1 ) —
Net income (loss) 15.5
21.9
0.5
(22.1 ) 15.8
Less: Net income attributable to non-controlling interest —
—
(0.2 ) —
(0.2 )
Net income (loss) attributable to U.S. Concrete $ 15.5
$ 21.9
$ 0.3
$ (22.1 ) $ 15.6

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS~~

~~NINE MONTHS ENDED SEPTEMBER 30, 2019~~

~~(in millions)~~

Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations U.S. Concrete Consolidated
Revenue $ —
$ 1,019.8
$ 89.7
$ —
$ 1,109.5
Cost of goods sold before depreciation, depletion and amortization —
823.2
63.2
—
886.4
Selling, general and administrative expenses —
97.9
5.4
—
103.3
Depreciation, depletion and amortization —
58.8
11.4
—
70.2
Change in value of contingent consideration —
1.6
—
—
1.6
Loss (gain) on sale/disposal of assets and business, net —
0.8
—
—
0.8
Operating income —
37.5
9.7
—
47.2
Interest expense, net 29.8
2.9
2.1
—
34.8
Other expense (income), net 0.2
(6.0 ) (2.0 ) —
(7.8 )
Income (loss) before income taxes, equity in earnings of subsidiaries and non-controlling interest (30.0 ) 40.6
9.6
—
20.2
Income tax expense (benefit) (10.9 ) 17.6
1.6
—
8.3
Net income (loss) before equity in earnings of subsidiaries and non-controlling interest (19.1 ) 23.0
8.0
—
11.9
Equity in earnings of subsidiaries 30.1
—
—
(30.1 ) —
Net income (loss) 11.0
23.0
8.0
(30.1 ) 11.9
Less: Net income attributable to non-controlling interest —
—
(0.9 ) —
(0.9 )
Net income (loss) attributable to U.S. Concrete $ 11.0
$ 23.0
$ 7.1
$ (30.1 ) $ 11.0

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS~~

~~NINE MONTHS ENDED SEPTEMBER 30, 2018~~

~~(in millions)~~

Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations U.S. Concrete Consolidated
Revenue $ —
$ 1,054.3
$ 82.0
$ —
$ 1,136.3
Cost of goods sold before depreciation, depletion and amortization —
849.2
63.5
—
912.7
Selling, general and administrative expenses —
90.6
5.8
—
96.4
Depreciation, depletion and amortization —
57.0
11.2
—
68.2
Change in value of contingent consideration —
(0.9 ) —
—
(0.9 )
Impairment of assets —
1.3
—
—
1.3
Loss (gain) on sale/disposal of assets and business, net —
(14.6 ) —
—
(14.6 )
Operating income —
71.7
1.5
—
73.2
Interest expense, net 29.6
2.7
2.3
—
34.6
Other expense (income), net 0.8
(3.9 ) (1.0 ) —
(4.1 )
Income (loss) before income taxes and equity in earnings of subsidiaries (30.4 ) 72.9
0.2
—
42.7
Income tax expense (benefit) (8.9 ) 22.3
1.1
—
14.5
Net income (loss) before equity in earnings of subsidiaries (21.5 ) 50.6
(0.9 ) —
28.2
Equity in earnings of subsidiaries 49.5
—
—
(49.5 ) —
Net income (loss) 28.0
50.6
(0.9 ) (49.5 ) 28.2
Less: Net income attributable to non-controlling interest —
—
(0.2 ) —
(0.2 )
Net income (loss) attributable to U.S. Concrete $ 28.0
$ 50.6
$ (1.1 ) $ (49.5 ) $ 28.0

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~

~~NINE MONTHS ENDEDSEPTEMBER 30, 2019~~

~~(in millions)~~

Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations U.S. Concrete Consolidated
Net cash provided by (used in) operating activities $ (24.0 ) $ 103.6
$ 7.3
$ 5.2
$ 92.1
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment —
(25.4 ) (3.2 ) —
(28.6 )
Proceeds from disposals of businesses and property, plant and equipment —
1.2
—
—
1.2
Proceeds from eminent domain matter and property insurance claims —
5.3
0.7
—
6.0
Investment in subsidiaries 1.0
—
—
(1.0 ) —
Net cash provided by (used in) investing activities 1.0
(18.9 ) (2.5 ) (1.0 ) (21.4 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolver borrowings 273.3
—
—
—
273.3
Repayments of revolver borrowings (277.2 ) —
—
—
(277.2 )
Proceeds from exercise of stock options 0.2
—
—
—
0.2
Payments of other long-term obligations (0.8 ) (32.6 ) —
—
(33.4 )
Payments for other financing (0.2 ) (23.6 ) (0.4 ) —
(24.2 )
Treasury share purchases (2.2 ) —
—
—
(2.2 )
Intercompany funding 29.9
(21.5 ) (4.2 ) (4.2 ) —
Net cash provided by (used in) financing activities 23.0
(77.7 ) (4.6 ) (4.2 ) (63.5 )
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS —
—
(0.2 ) —
(0.2 )
NET INCREASE IN CASH AND CASH EQUIVALENTS —
7.0
—
—
7.0
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD —
10.8
9.2
—
20.0
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ —
$ 17.8
$ 9.2
$ —
$ 27.0

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

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~

~~NINE MONTHS ENDED SEPTEMBER 30, 2018~~

~~(in millions)~~

Parent Guarantor Subsidiaries Non-Guarantor Subsidiaries Eliminations U.S. Concrete Consolidated
Net cash provided by (used in) operating activities $ (20.8 ) $ 108.5
$ 2.8
$ (0.3 ) $ 90.2
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment —
(29.3 ) (2.9 ) —
(32.2 )
Payments for acquisitions, net of cash acquired —
(72.3 ) —
—
(72.3 )
Proceeds from disposals of businesses and property, plant and equipment —
18.6
—
—
18.6
Purchases of environmental credits —
—
(2.8 ) —
(2.8 )
Proceeds from eminent domain matter and property insurance claims —
1.6
0.5
—
2.1
Net cash provided by (used in) investing activities —
(81.4 ) (5.2 ) —
(86.6 )
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from revolver borrowings 338.2
—
—
—
338.2
Repayments of revolver borrowings (310.7 ) —
—
—
(310.7 )
Proceeds from stock option exercises 0.1
—
—
—
0.1
Payments of other long-term obligations (2.2 ) (3.4 ) —
—
(5.6 )
Payments for other financing —
(20.6 ) (0.9 ) —
(21.5 )
Treasury share purchases (1.9 ) —
—
—
(1.9 )
Other proceeds —
0.5
—
—
0.5
Intercompany funding (2.7 ) 4.3
(1.9 ) 0.3
—
Net cash provided by (used in) financing activities 20.8
(19.2 ) (2.8 ) 0.3
(0.9 )
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS —
—
(0.1 ) —
(0.1 )
NET INCREASE IN CASH AND CASH EQUIVALENTS —
7.9
(5.3 ) —
2.6
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD —
7.0
15.6
—
22.6
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ —
$ 14.9
$ 10.3
$ —
$ 25.2

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

The following discussion should be read in conjunction with the accompanying quarterly unaudited condensed consolidated financial statements and the updated risk factor(s) in Part II, Item 1A as well as our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 (“~~2018~~2019 10-K”). Our ~~2018~~2019 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. Unless noted otherwise, discussions referring to the quarter reflect results for three months ended June 30, 2020 compared to results for the three months ended June 30, 2019, and discussions referring to the first half of the year reflect results for the six months ended June 30, 2020 compared to the results for the six months ended June 30, 2019.

Overview

~~Our principal business is producing~~We are a leading heavy building materials supplier of aggregates and ready-mixed concrete ~~and supplying aggregates~~ in select geographic markets ~~from our operations~~ in the United States, the U.S. Virgin Islands and Canada. The geographic markets for our products are generally local, except for our Canadian aggregate products operation, Polaris Materials Corp. ("Polaris"), ~~that~~which 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~~conditions. In addition, our business is impacted by seasonal variations in ~~seasonal and inclement~~ weather conditions, ~~particularly rainy weather that can impede the installation of ready-mixed concrete.~~which vary by regional market. 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 conduct our business primarily through two reportable segments: ready-mixed concrete and aggregate products.

Ready-Mixed Concrete. Our ready-mixed concrete segment (which represented ~~86.4%~~85.9% of our revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2019)~~2020) engages principally in the formulation, preparation and delivery of ready-mixed concrete to our customers’ job sites. We provide ready-mixed concrete from our operations in Texas, Northern California, New York City, New Jersey, Washington, D.C., ~~Pennsylvania,~~Philadelphia, 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.

Aggregate Products. Our aggregate products segment (which represented ~~9.5%~~10.5% of our revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, excluding ~~$39.5~~$28.8 million of intersegment sales) produces crushed stone, sand and gravel from our aggregates facilities located in British Columbia, Canada; Texas; Oklahoma; New Jersey; New York; and the U.S. Virgin 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. We produced approximately ~~8.5~~6.6 million tons of aggregates during the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, with Canada representing ~~42%~~43%, Texas/Oklahoma representing 32%, New ~~Jersey~~Jersey/New York representing ~~22%~~23%, and the U.S. Virgin Islands representing 4%2% of the total production. We believe our aggregate reserves provide us with additional raw materials sourcing flexibility and supply availability.

~~Acquisitions~~Coronavirus Impact

On January 30, 2020, the World Health Organization declared a global emergency with respect to the outbreak of coronavirus ("COVID-19"). On March 13, 2020, President Trump declared the COVID-19 pandemic a national emergency. Residents throughout the U.S. have spent varying periods under "stay-at-home" or "shelter-in-place" orders. The full, long-term impacts of the pandemic are unknown and ~~Divestitures~~rapidly evolving. Construction has generally been considered an "essential" service and thus excluded from many stay-at-home orders. While we generally remained operational during the quarter in the regions we serve with the implementation of new, enhanced safety and health protocols, certain of our operations were more negatively impacted, particularly in April and May, in states with stringent restrictions. As restrictions gradually lifted, construction levels began improving in many of those areas. We continue to monitor the impact on our customers and our ongoing projects and pipeline. The business contingency plans and cost-cutting measures that we have implemented, and continue to implement, across our operations, which are continually reviewed and updated in response to the evolving pandemic, helped to mitigate the impact from the decrease in ready-mixed concrete sales volumes on our operating income in

the second quarter of 2020. Given the unprecedented uncertainty surrounding COVID-19, we are currently unable to estimate the impact the pandemic will have on our results of operations for the full year of 2020 and beyond.

Acquisition of Aggregates Company

We ~~completed five acquisitions during 2018 that~~acquired all of the equity of Coram Materials Corp. and certain of its affiliates (collectively, "Coram Materials"), a sand and gravel producer, on February 24, 2020 (the "Coram Acquisition"). The Coram Acquisition 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. During 2018, we divested the following operations that no longer fit into~~ our ~~operating plans: our Dallas/Fort Worth area lime operations and a Michigan aggregates property in the third quarter and a New Jersey aggregates operation in the fourth quarter.~~

East Region. For additional information, ~~on our acquisitions,~~ see Note 4,3, "Business ~~Combinations"~~Combination" to our condensed consolidated financial statements included in Part I of this report.

Results of Operations

The discussions that follow reflect results for the three and six months ended June 30, 2020 (quarter and first half of the year, respectively) compared to the three and six months ended June 30, 2019, respectively, unless otherwise noted.


	Three Months Ended September 30,						%	Nine Months Ended September 30,						%		Three Months Ended June 30,					%		Six Months Ended June 30,			%
($ in millions except selling prices)	2019			2018			Change⁽¹⁾	2019			2018			Change⁽¹⁾	($ in millions except selling prices)	2020		2019		Change⁽¹⁾	2020		2019		Change⁽¹⁾
Revenue	$	408.9		$	404.3		1.1%	$	1,109.5		$	1,136.3		(2.4)%	Revenue	$	322.7	$	367.5	(12.2)%	$	657.1	$	700.6	(6.2)%
Cost of goods sold before depreciation, depletion and amortization	321.2			325.3			(1.3)	886.4			912.7			(2.9)	Cost of goods sold before depreciation, depletion and amortization	250.1		296.8		(15.7)	524.0		565.2		(7.3)
Selling, general and administrative expenses	32.0			32.2			(0.6)	103.3			96.4			7.2	Selling, general and administrative expenses	31.7		39.2		(19.1)	65.4		71.3		(8.3)
Depreciation, depletion and amortization	22.3			25.5			(12.5)	70.2			68.2			2.9	Depreciation, depletion and amortization	25.2		25.1		0.4	48.6		47.9		1.5
Change in value of contingent consideration	0.3			0.4			(25.0)	1.6			(0.9		)	NM	Change in value of contingent consideration	(5.8)		0.3		NM	(5.5)		1.3		NM
Impairment of assets	—			—			—	—			1.3			NM
Loss (gain) on sale/disposal of assets and business, net	(0.2		)	(14.1		)	(98.6)	0.8			(14.6		)	NM
Loss (gain) on sale/disposal of assets, net															Loss (gain) on sale/disposal of assets, net	(0.1)		0.1		(200.0)	(0.1)		1.0		(110.0)
Operating income	33.3			35.0			(4.9)	47.2			73.2			(35.5)	Operating income	21.6		6.0		260.0	24.7		13.9		77.7
Interest expense, net	11.6			11.7			(0.9)	34.8			34.6			0.6	Interest expense, net	11.4		11.6		(1.7)	22.8		23.2		(1.7)
Other income, net	(0.2		)	(1.1		)	(81.8)	(7.8		)	(4.1		)	90.2	Other income, net	(0.6)		(7.2)		(91.7)	(1.2)		(7.6)		84.2
Income before income taxes	21.9			24.4			(10.2)	20.2			42.7			(52.7)
Income tax expense	8.3			8.6			(3.5)	8.3			14.5			(42.8)
Net income	13.6			15.8			(13.9)	11.9			28.2			(57.8)
Less: Net income attributable to non-controlling interest	(0.6		)	(0.2		)	200.0	(0.9		)	(0.2		)	350.0
Net income attributable to U.S. Concrete	$	13.0		$	15.6		(16.7)	$	11.0		$	28.0		(60.7)
Income (loss) before income taxes															Income (loss) before income taxes	10.8		1.6		575.0	3.1		(1.7)		282.4
Income tax expense (benefit)															Income tax expense (benefit)	4.3		0.7		514.3	(0.6)		—		NM
Net income (loss)															Net income (loss)	6.5		0.9		622.2	3.7		(1.7)		317.6
Less: Net income (loss) attributable to non-controlling interest															Less: Net income (loss) attributable to non-controlling interest	(0.1)		0.2		(150.0)	0.2		0.3		(33.3)
Net income (loss) attributable to U.S. Concrete															Net income (loss) attributable to U.S. Concrete	$	6.6	$	0.7	842.9%	$	3.5	$	(2.0)	275.0

Ready-Mixed Concrete Data:															Ready-Mixed Concrete Data:
Average selling price ("ASP") per cubic yard	$	138.54		$	138.10		0.3%	$	138.81		$	135.94		2.1%	Average selling price ("ASP") per cubic yard	$	137.18	$	138.40	(0.9)%	$	140.77	$	138.97	1.3%
Sales volume in thousand cubic yards	2,551			2,503			1.9%	6,892			7,222			(4.6)%	Sales volume in thousand cubic yards	1,982		2,264		(12.5)%	4,003		4,342		(7.8)%

Aggregate Products Data:															Aggregate Products Data:
Average selling price per ton⁽²⁾	$	11.86		$	11.63		2.0%	$	11.93		$	11.26		6.0%
ASP per ton⁽²⁾															ASP per ton⁽²⁾	$	12.83	$	11.83	8.5%	$	12.56	$	11.96	5.0%
Sales volume in thousand tons	3,116			3,211			(3.0)%	8,492			8,402			1.1%	Sales volume in thousand tons	3,188		2,878		10.8%	5,820		5,376		8.3%

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

~~(2)~~

Our calculation of the aggregate products segment 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.

meaningful."

(2) Our calculation of the aggregate products segment ASP excludes certain other ancillary revenue and certain 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 calculation of ASP may differ from other companies in the construction materials industry.

Revenue. For the three months ended September 30, 2019, revenue increased 1.1%, or $4.6 million, compared to the prior year third quarter, primarily driven by higher ready-mixed concrete sales volumes in our Texas markets as a result of improved weather conditions along with increased pricing in 2019. In the third quarter of 2019, ready-mixed concrete sales increased $7.8 million, driven by a 1.9% increase in volume and a 0.3% increase in ASP. The net increase in our ready-mixed concrete segment ASP resulted primarily from price increases in our California and Washington, D.C. markets, while pricing in certain other markets, such as Dallas/Fort Worth and the New York metropolitan area was impacted by product mix and competitive pressures. Aggregate product sales decreased $0.6 million, resulting from 3.0% lower volume partially offset by a 2.0% increase in ASP. The aggregate products sales volume was negatively impacted by certain Polaris shipments being delayed into the fourth quarter due to one of the transportation carrier's ships being temporarily taken out of service, partially offset by increased sales volume in our West Texas market and Atlantic Region. Other products revenue and eliminations (which currently includes building materials stores, aggregates distribution, hauling operations, brokered product sales, recycled aggregates, and eliminations of our intersegment sales) decreased $2.6 million in the third quarter of 2019 compared to the third quarter of 2018. This decline was primarily a result of the September 2018 divestiture of our lime business, which provided $1.9 million of revenue in the third quarter of 2018.

Revenue for the ~~nine months ended September 30, 2019 declined 2.4%~~quarter decreased 12.2%, or ~~$26.8~~$44.8 million, ~~compared to the nine months ended September 30, 2018, driven by~~primarily resulting from lower sales of ready-mixed concrete and other products, ~~sales,~~ partially offset by ~~an increase in~~record sales of aggregate products. Impacted by ~~inclement weather~~regional COVID-19

restrictions, ready-mixed concrete sales decreased $41.6 million as a result of lower volume, and sales of other products and eliminations decreased $8.2 million. Our ready-mixed concrete operations in New York and California, both states that had more stringent restrictions related to COVID-19, accounted for the majority of the declines, while sales in our West Texas market increased. Although we saw increased pricing in each of our ready-mixed concrete operating regions, our overall ASP declined due to changes in the product and geographical mix of our revenue. Aggregate product sales for the quarter of $54.5 million, including $7.0 million from our newly acquired Coram Materials business, represented our highest level ever in a single quarter. Our quarterly aggregate products sales were impacted by market variations as higher sales in the Northeast and Texas, including a new greenfield operation, were partially offset by declines in our other markets.

Revenue for the first half of 2020 decreased 6.2% due primarily to declines in sales of our ready-mixed concrete and other products and eliminations, partially offset by increases in sales of our aggregate products. Ready-mixed concrete sales decreased $39.8 million in the first half of ~~2019,~~2020, with the decline occurring predominantly in New York and California due primarily to more stringent restrictions related to COVID-19 and our ~~ready-mixed concrete~~Dallas/Fort Worth market, which experienced volume ~~was 4.6% lower than~~declines in the ~~prior year, partially offset by a 2.1% increase in ASP. All of our major markets except North Texas generated higher ASP for ready-mixed concrete for the~~ first ~~nine~~three months of ~~2019 as compared~~2020 due to ~~the same period of 2018.~~inclement weather. Aggregate products sales ~~grew $9.1~~increased $5.7 million in the first ~~nine months~~half of ~~2019 compared to the same period in 2018, driven by a 6.0% increase in ASP and a 1.1% increase in volume. All of our markets, except those served by Polaris delivered~~2020, with increases in ~~aggregate~~our operations in the Northeast and Texas partially offset by declines in our other markets. Aggregate products ~~ASP for the first nine months of 2019 compared to 2018. The overall aggregate products volume increase~~sales occurring in the first ~~nine months~~half of 2019 compared to the prior year was primarily from our operations in West Texas and the U.S. Virgin Islands, partially offset by weather-impacted declines in North Texas and Oklahoma and transportation delays in our Polaris operations. Other products revenue and eliminations, as described above, decreased $8.9 million for the first nine months of 2019 compared to the same period in 2018, primarily due to the divested lime business, which provided $7.42020 included $9.6 million of ~~revenue in~~sales generated by our Coram Materials business following the ~~first nine months of 2018.~~acquisition date.

Cost of goods sold before depreciation, depletion and amortization ("DD&A"). Cost of goods sold before DD&A decreased ~~by $4.1~~$46.7 million, or ~~1.3%~~15.7%, infor the ~~third~~ quarter and $41.2 million, or 7.3%, for the first half of ~~2019 compared~~2020, with the majority from lower variable costs (which include primarily raw material costs, labor and benefits costs, utilities and delivery costs) due to lower sales volumes of ready-mixed concrete. In addition to the ~~prior year quarter.~~impact of lower sales volume during the quarter, delivery fuel costs also benefited from lower diesel costs and less congested traffic patterns. As a percentage of revenue, cost of goods sold before DD&A decreased by ~~1.9%~~330 basis points in the ~~third~~ quarter ~~of 2019 compared to the third quarter of 2018. Because of the increase in ready-mixed concrete volume during the third quarter of 2019, our raw material costs were higher than~~and 100 basis points in the ~~third quarter~~first half of ~~2018; however, we were able~~2020, primarily due to ~~minimize the impact on margins by operating our plants more efficiently~~product mixes and ~~leveraging our fixed costs. Our ready-mixed concrete delivery expense for the third quarter of 2019 was consistent with that of the 2018 third quarter despite the higher volume, partially due to~~ lower fuel costs, ~~in 2019. In addition, the lower volume of aggregate products segment sales resulted in a decrease in our variable costs, particularly freight, associated with the segment.~~

For the first nine months of 2019, cost of goods sold before DD&A decreased by $26.2 million, or 2.9%, compared to the same period in the prior year. This decline was primarily in raw materials and delivery costs related to lower ready-mixed concrete sales volume, partially offset by ~~increases~~higher insurance costs. In addition, with aggregate product demand shifts in variable and fixed costs. Our plant variable costs increased primarily related to our increased aggregate production over the comparable prior year period. Our fixed costs were higher than in the comparable prior year period primarilycertain markets due to ~~higher~~changing order patterns, we have experienced incremental costs to ~~operate~~manage our ~~facilities. As a percentage~~aggregate inventories. We expect these incremental costs to be short term in nature and not occur throughout the entirety of ~~revenue, cost of goods sold before DD&A decreased by 0.3% in the first nine months of 2019 compared to the first nine months of 2018.~~2020.

Selling, general and administrative expenses. Selling, general and administrative ("SG&A") expenses decreased ~~$0.2~~$7.5 million, or ~~0.6%~~19.1%, for the quarter ended September 30, 2019 in comparison to the corresponding 2018 quarter primarily as a result of lower acquisition-related costs partially offset by higher stock-based compensation expense. As a percentage of revenue, SG&A expenses decreased to 7.8% in the 2019 third quarter from 8.0% in the 2018 third quarter. The increase in stock-based compensation expense was primarily due the increase in our stock price from the time the annual award was approved by our Board of Directors at the beginning of March 2019 to when our stockholders approved the equity plan amendment (and the award was deemed granted for accounting purposes) at our annual stockholders' meeting in May 2019. If the award issuance date and ~~the accounting grant date were the same, our stock-based compensation expense would have been more comparable to the prior year amount.~~

~~For the first nine months of 2019, SG&A expenses increased $6.9~~$5.9 million, or 7.2%, compared to the first nine months of 2018, primarily as a result of higher stock-based compensation expense. As a percentage of revenue, SG&A expenses were 9.4% in the first nine months of 2019 compared to 8.5% in the first nine months of 2018.

~~Depreciation, depletion and amortization.~~ DD&A expense decreased $3.2 million, or 12.5%, for the quarter ended September 30, 2019, in comparison to the prior year period. The third quarter of 2018 contained additional depreciation related to measurement period adjustments of certain of our acquisitions. DD&A expense increased $2.0 million, or 2.9%8.3%, for the first ~~nine months~~half of ~~2019 compared~~2020. Stock-based compensation expense, which was $6.9 million lower for the quarter and $4.9 million lower for the first half of 2020, accounted for the majority of the reduction in SG&A expenses. In addition, management implemented additional cost-saving measures in response to the ~~corresponding period~~COVID-19 pandemic, particularly impacting travel, entertainment and labor. The reduction in ~~2018, primarily related to depreciation on additional plants, equipment and mixer trucks purchased or leased,~~labor expenses was partially offset by ~~additional depreciation related to measurement period adjustments of~~ certain ~~of our acquisitions.~~severance costs resulting from these cost-saving initiatives.

Change in value of contingent consideration. ~~For~~The non-cash gain on the ~~three and nine months ended September 30, 2019, we recorded non-cash losses on~~ revaluation of contingent consideration recorded during the quarter and first half of ~~$0.3 million and $1.6 million, respectively, due~~2020 resulted primarily from changes to ~~the passage~~management's expectations of time. For the three months ended September 30, 2018, we recorded a non-cash loss on revaluation of contingent consideration of $0.4 million primarily due to the passage of time. For the nine months ended September 30, 2018, we recorded a non-cash gain on revaluation of contingent consideration of $0.9 million primarily due to updated financial performance expectationsEBITDA for ~~certain previously acquired businesses.~~2020.

The key inputs in determining the fair value of our contingent consideration of $26.0 million at September 30, 2019 included discount rates ranging from 3.70% to 11.00% and management's estimates of future sales volumes, permitted reserves and 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.

Loss ~~(gain)~~ on sale/disposal of assets, ~~and business,~~ net. The ~~loss for the nine months ended September 30,~~first half of 2019 included $0.7 million ~~related to~~for the impact of a mixer truck fire ~~that occurred during the first quarter~~and a $0.3 million write-off of ~~2019. The gain on the sale of business~~property no longer in ~~2018 was primarily a result of the divestiture of our lime operations in the third quarter of 2018.~~use.

Other income, net. ~~Other income, net, for~~The second quarter of 2019 and the ~~nine months ended September 30,~~first half of 2019 included a gain from an eminent domain proceeding in Washington, D.C. and insurance proceeds from the 2017 hurricane losses in our ~~operations in the~~ U.S. Virgin ~~Islands.~~Island operations, neither of which were repeated in 2020.

Income taxes. We recorded income tax expense of ~~$8.3~~$4.3 million and an income tax benefit of $0.6 million for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, respectively. For ~~both periods ended September 30, 2019,~~the first half of 2020, our effective tax rate ~~was negatively impacted by (i) losses generated by certain~~differed substantially from the statutory tax rate primarily due to additional tax benefits recognized related to the Coronavirus Aid, Relief and Economic Security Act ("CARES Act") enacted on March 27, 2020. The CARES Act, among other things, modified the business interest deduction limitation for tax years beginning in 2019 and 2020 from 30% of adjusted taxable income ("ATI") to 50% of ATI. As a result, we recorded an additional tax benefit of $3.2 million during the first half of 2020 to reflect the CARES Act change to our ~~Canadian subsidiaries~~estimated interest limitation for ~~which no income~~the year ended December 31, 2019. This tax benefit was ~~recognized due~~partially offset by a net tax shortfall for share-based compensation.

In addition to the interest limitation change, the CARES Act includes modifications for net operating loss carryforwards and carrybacks, immediate refund of alternative minimum tax credit carryforwards and a ~~related full valuation allowance, (ii) our estimated annual interest expense limitation in accordance with~~technical correction to the Tax Cuts and Jobs Act of 2017 (the ~~"Tax~~"2017 Act") ~~and related proposed regulations~~for qualified improvement property. The CARES Act also includes non-income tax relief for which ~~a full valuation allowance is anticipated, (iii) our estimated global intangible low-taxed income ("GILTI") inclusion~~we will benefit, including the deferral of certain payroll tax payments and payroll tax credits for U.S. tax purposes, (iv) anticipated Section 162(m) limitations on executive compensation and (v) net unfavorable discrete items including a net tax shortfall recognized for share-based compensation. These unfavorable discrete items were partially offset by certain additional federal and state income tax benefits.

retaining employees. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2020, we recognized $2.0 million for these credits, which are intended to be a reimbursement for certain wage and benefit costs we would have otherwise not incurred.

On July 28, 2020, the U.S. Treasury released final and proposed regulations regarding the provision of the 2017 Act that limits the deduction for business interest expense. The guidance is not effective until 60 days after being published in the Federal Register. We will continue to monitor the expected impacts on the Company's filing positions and financial statements and will recognize such amounts as a one-time discrete income tax benefit in the period the guidance is finalized. It is estimated we will recognize a tax benefit of approximately $8 million to $10 million related to the change in interpretation of the applicable statute contained in the final regulations concerning depreciation and depletion capitalized to inventory. This amount includes the benefit of certain net operating loss carrybacks as modified by the CARES Act. We also anticipate the final regulations will have a favorable impact on our effective tax rate for the remainder of 2020 and for 2021.

We recorded income tax expense of ~~$8.6~~$0.7 million and ~~$14.5~~an income tax benefit of less than $0.1 million for the three and six months ended June 30, 2019, respectively. For ~~both periods ended September 30, 2018,~~the first half of 2019, our effective tax rate differed from the federal statutory rate primarily due to (i) losses generated by certain of our Canadian subsidiaries for which no income tax benefit was recognized due to a related full valuation allowance, (ii) adjustments related to the tax rate change enacted as part of the ~~Tax~~2017 Act and (iii) state income taxes.

Segment ~~Information~~Operating Results

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), excluding the impact of income taxes (benefit), depreciation, depletion and amortization, net interest expense and certain other non-cash, non-recurring and/or unusual, non-operating items including, but not limited to: non-cash stock compensation expense, non-cash change in value of contingent consideration, impairment of assets, acquisition-related costs, officer transition expenses, ~~quarry dredge costs~~purchase accounting adjustments for ~~specific event,~~inventory, and ~~hurricane-related losses, net of recoveries.~~realignment initiative costs. Acquisition-related costs consist of fees and expenses for accountants, lawyers and other professionals incurred during the negotiation and closing of strategic acquisitions and certain acquired entities' management severance costs. Acquisition-related costs do not include fees or expenses associated with post-closing integration of strategic acquisitions. Many of the impacts excluded to derive Adjusted EBITDA are similar to those excluded in calculating our compliance with our debt covenants.

We consider Adjusted EBITDA to be an indicator of the operational strength and performance of our business. We have included Adjusted EBITDA because it is a key financial measure used by our management to (1) internally measure our operating performance and (2) assess our ability to service our debt, incur additional debt and meet our capital expenditure requirements.

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

See the prior discussion of revenue within this Item 2 as well as Note ~~13,~~15, "Segment Information" to our condensed consolidated financial statements in this report for additional information regarding our segments and the reconciliation of Adjusted EBITDA to net income ~~before income taxes.~~(loss).

Ready-Mixed Concrete


	Three Months Ended June 30,							Increase/ (Decrease)			Six Months Ended June 30,				Increase/ (Decrease)
($ in millions except selling prices)	2020			2019			%	2020			2019			%
Ready-Mixed Concrete Segment:
Revenue	$	272.4		$	314.0		(13.2)%	$	564.6		$	604.4		(6.6)%
Segment revenue as a percentage of total revenue	84.4		%	85.4		%		85.9		%	86.3		%
Adjusted EBITDA	$	38.1		$	38.1		—%	$	69.8		$	72.6		(3.9)%
Adjusted EBITDA as a percentage of segment revenue	14.0		%	12.1		%		12.4		%	12.0		%

Ready-Mixed Concrete Data:
ASP per cubic yard⁽¹⁾	$	137.18		$	138.40		(0.9)%	$	140.77		$	138.97		1.3%
Sales volume in thousand cubic yards	1,982			2,264			(12.5)%	4,003			4,342			(7.8)%

Three Months Ended
September 30, Increase/ (Decrease) Nine Months Ended
September 30, Increase/ (Decrease)
($ in millions except selling prices) 2019 2018 % 2019 2018 %
Ready-Mixed Concrete Segment:
Revenue $ 354.1
$ 346.3
2.3% $ 958.5
$ 985.5
(2.7)%
Segment revenue as a
percentage of total revenue
86.6 % 85.6 % 86.4 % 86.7 %

Adjusted EBITDA $ 51.5
$ 47.5
8.4% $ 124.1
$ 140.3
(11.5)%
Adjusted EBITDA as a
percentage of segment revenue
14.5 % 13.7 % 12.9 % 14.2 %

Ready-Mixed Concrete Data:
Average selling price per cubic yard⁽¹⁾
$ 138.54
$ 138.10
0.3% $ 138.81
$ 135.94
2.1%
Sales volume in thousand cubic yards 2,551
2,503
1.9% 6,892
7,222
(4.6)%

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

Adjusted EBITDA. ~~Adjusted EBITDA for~~Despite the ~~third quarter~~decline in revenue, actions taken from our business contingency plans in the form of ~~2019 increased $4.0 million, or 8.4%, from the comparable 2018 period. This improvement was primarily the result of~~labor management, concrete mix optimization, higher ~~sales volumes coupled with operating~~asset utilization and delivery efficiencies, ~~that drove higher margins. In addition, our margins benefited from~~which included lower fuel costs, ~~in the 2019 third quarter compared to the same period in 2018 despite using more fuel to deliver a higher volume of ready-mixed concrete in the third quarter of 2019.~~

~~For the nine months ended September 30, 2019, Adjusted EBITDA for our ready-mixed concrete segment decreased $16.2 million, or 11.5%, from the comparable 2018 period. The change~~resulted in Adjusted EBITDA for the ~~nine months ended September 30,~~quarter being equal to the second quarter of 2019. For the first half of the year, Adjusted EBITDA was lower than the first half of 2019, ~~was~~ primarily ~~because our fixed costs (which include, primarily, property taxes, equipment rental, quality control, dispatch and plant management costs) were not fully leveraged. This included~~from the impact of ~~a full nine months~~the first quarter of ~~fixed costs from our acquisitions that occurred throughout 2018,~~2020, which was down primarily due to ~~inclement weather in 2019 were not yet able to fully benefit~~higher delivery expense as well as repair and maintenance costs for certain of our ~~Adjusted EBITDA.~~vehicle fleet.

Aggregate Products


	Three Months Ended June 30,							Increase/ (Decrease)			Six Months Ended June 30,				Increase/ (Decrease)
($ in millions except selling prices)	2020			2019			%	2020			2019			%
Aggregate Products Segment:
Sales to external customers	$	38.2		$	36.2			$	69.3		$	67.9
Intersegment sales⁽¹⁾	16.3			13.3				28.8			24.5
Total aggregate products revenue	$	54.5		$	49.5		10.1%	$	98.1		$	92.4		6.2%
Segment revenue, excluding intersegment sales, as a percentage of total company revenue	11.8		%	9.8		%		10.5		%	9.7		%
Adjusted EBITDA	$	21.6		$	12.2		77.0%	$	32.9		$	22.6		45.6%
Adjusted EBITDA as a percentage of total aggregate products revenue	39.6		%	24.6		%		33.5		%	24.5		%

Aggregate Products Data:
ASP per ton⁽²⁾	$	12.83		$	11.83		8.5%	$	12.56		$	11.96		5.0%
Sales volume in thousand tons	3,188			2,878			10.8%	5,820			5,376			8.3%

Three Months Ended
September 30, Increase/ (Decrease) Nine Months Ended
September 30, Increase/ (Decrease)
($ in millions except selling prices) 2019 2018 % 2019 2018 %
Aggregate Products Segment:
Sales to external customers $ 37.9
$ 41.1
$ 105.8
$ 100.9

Intersegment sales⁽¹⁾
$ 15.0
$ 12.4
$ 39.5
$ 35.3

Total aggregate products revenue $ 52.9
$ 53.5
(1.1)% $ 145.3
$ 136.2
6.7%
Segment revenue, excluding intersegment sales, as a percentage
of total company revenue
9.3 % 10.2 % 9.5 % 8.9 %

Adjusted EBITDA $ 16.3
$ 12.2
33.6% $ 38.9
$ 29.1
33.7%
Adjusted EBITDA as a percentage
of total aggregate products revenue
30.8 % 22.7 % 26.8 % 21.3 %

Aggregate Products Data:

Average selling price per ton⁽²⁾
$ 11.86
$ 11.63
2.0% $ 11.93
$ 11.26
6.0%
Sales volume in thousand tons 3,116
3,211
(3.0)% 8,492
8,402
1.1%
(1) We sell aggregate products to our ready-mixed concrete segment at market price.


~~(1)~~	~~We sell aggregate products to our ready-mixed concrete segment businesses at market price.~~

(2) Our calculation of the aggregate products segment ASP excludes certain other ancillary revenue and ~~Polaris’s~~certain freight revenue. We define revenue for our aggregate products ASP calculation as amounts billed to 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.

Adjusted EBITDA. For both the quarter and the first half of 2020, Adjusted EBITDA for our aggregate products segment benefited from the Coram Acquisition and increased volume in Texas, including the benefit of the new Texas greenfield operation, operating efficiencies at our aggregate facilities and leverage from the record sales volume. Adjusted EBITDA in the ~~third~~second quarter of 2019 increased $4.1 million, or 33.6%, in the third quarter of 2019 compared to the third quarter of 2018 despite a 1.1% decline in segment revenue. Margins benefited in the third quarter of 2019 compared to the third quarter of 2018 from lower freight costswas hampered by inclement weather in our ~~Polaris operations due to transportation delays that deferred certain shipments into the fourth quarter,~~North Texas and our margins benefited from our ability to leverage fixed costs on higher volumes in other markets, particularly our West Texas market and Atlantic Region. Overall, our segment Adjusted EBITDA as a percentage of segment revenue increased to 30.8% in the third quarter of 2019 from 22.7% in the third quarter of 2018. The third quarter of 2018 had a higher impact of zero-margin, customer-paid pass-through freight costs.Oklahoma markets.

~~For the nine months ended September 30, 2019, Adjusted~~EBITDA for our aggregate products segment increased $9.8 million, or 33.7%, compared to the nine months ended September 30, 2018. Our segment Adjusted EBITDA as a percentage of segment revenue increased to 26.8% in the first nine months of 2019 from 21.3% in the comparable period of 2018. Adjusted EBITDA for the first nine months of 2019 benefited from lower freight costs and our ability to leverage fixed costs on higher volumes compared to the same period in 2018. Both periods had a comparable level of 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 credit facilities, including our (1) asset-based revolving credit facility (the "Revolving Facility"), which provides for borrowings of up to ~~$350.0~~$300.0 million, subject to a borrowing ~~base.~~base, and (2) delayed draw term loan facility (the "Credit Facility"), which provides for borrowings of up to $180.0 million. As of ~~September~~June 30, ~~2019,~~2020, we had ~~$27.0~~$17.5 million of cash and cash equivalents, ~~and $236.1~~$137.3 million of available borrowing capacity under the Revolving Facility and $180.0 million of availability under the Credit Facility, providing total available liquidity of ~~$263.1~~$334.8 million. On February 24, 2020, we borrowed $140.0 million under the Revolving Facility to finance the Coram Acquisition. Proceeds from the Credit Facility, if drawn, will be used for working capital and general corporate purposes, including to repay outstanding borrowings under our Revolving Facility. On July 30, 2020, we elected to reduce the commitment amount of the Revolving Facility from $350.0 million to $300.0 million effective August 4, 2020. The reduction does not result in any change in our total available liquidity.

The following key financial measurements reflect our financial condition as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:


($ in millions)	June 30, 2020		December 31, 2019
Cash and cash equivalents	$	17.5	$	40.6
Working capital	$	56.9	$	103.7
Total debt ⁽¹⁾	$	758.9	$	687.3

($ in millions) September 30, 2019 December 31, 2018
Cash and cash equivalents $ 27.0

$ 20.0
Working capital 87.3
71.2
Total debt ⁽¹⁾
705.7

714.1
(1) Total debt includes long-term debt, net of unamortized debt issuance costs, including current maturities, finance leases, notes payable and any borrowings under the Revolving Facility and Credit Facility.


~~(1)~~	~~Total debt includes long-term debt, net of unamortized debt issuance costs, including current maturities, 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;~~debt service obligations; (3) ~~purchasing property, plant and equipment;~~capital expenditures; and (4) payments related to strategic acquisitions, including approximately ~~$12.0 million to $14.0~~$10.0 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 winter 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. Based on our projected cash needs, we believe that cash on hand, availability under the Revolving Facility and the Credit Facility, and cash generated from operations will provide us with sufficient liquidity in the ordinary course of business, not including potential acquisitions. We initiated business contingency planning and will continue to adjust those plans as needed to mitigate the impact of the COVID-19 pandemic on our cash needs. If, however, availability under the Revolving Facility, the Credit 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;~~operate or COVID-19 operating restrictions;

•declines in gross margins due to shifts in our product mix, or increases in fixed or variable ~~costs;~~costs or the impact of COVID-19;

•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;~~customers, including from COVID-19;

•any further COVID-19 impacts to our business; and

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

Cash Flows


	Six Months Ended June 30,
($ in millions)	2020		2019
Net cash provided by (used in):
Operating activities	$	84.1	$	40.6
Investing activities	(154.1)		(11.4)
Financing activities	46.9		(24.3)
Effect of exchange rates on cash and cash equivalents	—		(0.1)
Net increase (decrease) in cash	$	(23.1)	$	4.8

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, including non-controlling interest. Overall, the improvement in cash generated from operations was driven primarily by higher accounts receivable collections, management's cost control initiatives, and our ongoing initiatives to optimize our working capital.

Investing activities in 2020 included the payment of $140.2 million for the acquisition of Coram Materials. In addition, we incurred $14.2 million and $18.1 million during the six months ended June 30, 2020 and 2019, respectively, primarily to fund purchases of machinery and equipment as well as mixer trucks and other vehicles to service our business. During the first half of 2019, we also received $6.0 million of proceeds from an eminent domain matter and insurance proceeds relating to property damage suffered in 2017.

At the beginning of 2020, we expected to invest (excluding any acquisitions) between $65.0 million and $75.0 million in capital, including expenditures financed through finance leases, during the year; however, due to the COVID-19 pandemic, we have reduced the amount of such expenditures for maintenance and expansion, land purchases and new plants, as well as plant improvements, plant equipment, drum mixer trucks and other rolling stock. We continue to monitor the COVID-19 pandemic and related economic repercussions, and will re-evaluate our capital investments accordingly.

Financing activities during the first six months of 2020 included $56.5 million of net borrowings under our Revolving Facility and $14.5 million of proceeds from finance lease transactions primarily for our Texas greenfield aggregates operation. During the first six months of 2020, we made payments of $10.8 million primarily related to our finance leases and promissory notes and paid $9.9 million for contingent and deferred consideration obligations. Cash provided by financing activities in the first half of 2020 benefited from the deferral of $8.4 million of promissory note and finance lease payments that were deferred to mitigate the cash flow impact from the COVID-19 pandemic. Financing activities during the first six months of 2019 included $5.5 million of net borrowings under our Revolving Facility to operate our business and fund acquisitions. In addition, during the first six months of 2019, we made payments of $16.2 million primarily related to our finance leases and promissory notes and paid $11.6 million for contingent and deferred consideration obligations.

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

Asset Based Revolving Credit Facility

We have a ~~senior secured asset-based credit facility~~Revolving 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~~$300.0 million of revolving borrowings. The Revolving Facility also permits the incurrence of other secured indebtedness not to exceed certain amounts as specified therein. The Revolving Facility provides 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”~~the London Interbank Offered Rate “LIBOR" loans denominated in U.S. dollars.

The Third Loan Agreement contains usual and customary covenants including, but not limited to, restrictions on our and our guarantor subsidiaries' 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 covenants are subject to certain exceptions as specified in the Third Loan Agreement. The Third Loan Agreement also requires that we, upon the occurrence of certain events, maintain a fixed charge coverage ratio of at least 1.0 to 1.0 for each period of 12 calendar months. As of ~~September~~June 30, ~~2019,~~2020, we had $56.5 million outstanding under the Revolving Facility, and we were in compliance with all covenants under the Third Loan Agreement.

Delayed Draw Term Loan Facility

On April 17, 2020, we entered into a secured delayed draw term loan agreement (the “Agreement”) with certain subsidiaries as guarantors thereto, Bank of America, N.A. as administrative agent and collateral agent, and the lenders and other parties named therein. The Agreement provides for a $180.0 million delayed draw term loan facility (the "Credit Facility"). The Agreement permits borrowings until December 15, 2021, which beginning September 30, 2020 are reduced by approximately $0.5 million each quarter through September 30, 2021. Any such borrowings outstanding will mature May 1, 2025 (subject to a springing maturity on March 1, 2024 to the extent any of our 6.375% Senior Notes due 2024 (the "2024 Notes") remain outstanding on such date). We entered into the Agreement to enhance our liquidity and financial flexibility. Proceeds of the Credit Facility, if drawn, will be used for working capital and general corporate purposes, including to repay outstanding borrowings under our Revolving Facility.

Borrowings under the Agreement bear interest at our option of either: (1) LIBOR (subject to a floor of 0.75%) plus a margin ranging from 2.75% to 3.75% or (2) a base rate (which is equal to the greatest of the prime rate, the Federal Funds effective rate plus 0.50% and LIBOR plus 1.00% and is subject to a floor of 1.75%) plus a margin ranging from 1.75% to 2.75%. The applicable margin depends on the aggregate amount of the loans borrowed. Additionally, each draw on the Credit Facility will be issued at a price of 99.0% of the amount drawn. The Agreement is secured by a first priority lien and security interest on certain real property of the subsidiary guarantors and substantially all of the personal property of the Company and its subsidiary guarantors that is not secured by a first priority security interest under the Revolving Facility (the "Revolving Facility Collateral") and a second priority security interest on the Revolving Facility Collateral. The Agreement contains usual and customary covenants including, but not limited to, restrictions on our and our guarantor subsidiaries’ 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, but it does not contain any financial maintenance covenants.

Senior Unsecured Notes due 2024

We have issued $600.0 million aggregate principal amount of ~~6.375% senior unsecured notes due~~the 2024 ~~(the "2024 Notes").~~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 "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, 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 ~~were issued by U.S. Concrete, Inc., the parent company, and~~ are guaranteed on a full and unconditional senior unsecured basis by each of ~~our~~the Issuer's restricted subsidiaries (each, a "Guarantor Subsidiary," and collectively, the "Guarantor Subsidiaries") that ~~guarantees~~guarantee any obligations under the Revolving Facility ~~or that guarantees~~and certain of ~~our~~the Issuer's other indebtedness or certain indebtedness of ~~our~~the Issuer's restricted subsidiaries (other than foreign restricted subsidiaries that guarantee only indebtedness incurred by another foreign subsidiary). Each Guarantor Subsidiary is directly or indirectly 100% owned by the Issuer. The guarantees are joint and several. ~~U.S. Concrete, Inc.~~The Issuer does not have any independent assets or ~~operations, and none~~operations. There are no significant restrictions in the Indenture on the ability of ~~its~~the Guarantor Subsidiaries to make distributions to the Issuer. The 2024 Notes are not guaranteed by any of the Issuer's direct or indirect foreign subsidiaries ~~guarantee~~(or any domestic subsidiaries of any such foreign subsidiaries), U.S. Virgin Islands subsidiaries or domestic subsidiaries that are not wholly owned (collectively, the ~~2024 Notes.~~"Non-Guarantor Subsidiaries").

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

Non-Guarantor Subsidiaries.

~~For additional~~

Supplemental Guarantor Financial Information

In March 2020, the Securities and Exchange Commission adopted amendments to the financial disclosure requirements applicable to registered debt offerings that include credit enhancements, such as subsidiary guarantees, in Rule 3-10 of Regulation S-X. The amended rules focus on providing material, relevant and decision-useful information regarding ~~our guarantor~~guarantees and ~~non-guarantor subsidiaries, see~~other credit enhancements, while eliminating certain prescriptive requirements. The Company adopted these amendments as of March 31, 2020. Accordingly, combined summarized financial information has been presented only for the ~~information set forth in~~ ~~Note 14, “Supplemental Condensed Consolidating Financial Information”~~Issuers and Guarantor Subsidiaries for the most recent fiscal year and the year-to-date interim period, and the required disclosures have been removed from the notes to ~~our~~these condensed consolidated financial statements ~~included~~and are instead provided below.

The following tables present summarized financial information for the Issuer and the Guarantor Subsidiaries on a combined basis after intercompany transactions have been eliminated, including adjustments to eliminate intercompany transactions between the Issuer and the Guarantor Subsidiaries. All assets and liabilities have been allocated to the Issuer and the Guarantor Subsidiaries generally based on legal entity ownership. Issuer investments in, ~~Part I~~and earnings of, ~~this report.~~Non-Guarantor Subsidiaries are excluded from the summarized financial information presented below.


Balance Sheets ($ in millions)	June 30, 2020		December 31, 2019
Current Assets:
Amounts due from Non-Guarantor Subsidiaries, current	$	3.6	$	8.9
Other current assets	267.4		320.2
Long-term Assets:
Property, plant and equipment, net	598.0		470.3
Amounts due from Non-Guarantor Subsidiaries, long-term	121.0		111.4
Other long-term assets	301.0		307.7
Current Liabilities:
Total current liabilities	$	239.9	$	245.9
Long-term Liabilities:
Long-term debt	723.5		653.3
Other long-term liabilities	113.9		120.2


Income Statements ($ in millions)	Six Months Ended June 30, 2020		Year Ended December 31, 2019
Revenue	$	605.5	$	1,361.2
Cost of goods sold before depreciation, depletion and amortization	489.4		1,107.6
Operating income	20.9		50.1
Net income	1.3		5.5

Other Debt

We have financing agreements with various lenders primarily for the purchase of mixer trucks and other machinery and equipment with ~~$94.9~~$105.1 million of remaining principal as of ~~September~~June 30, ~~2019.~~2020. During the quarter ended June 30, 2020, due to uncertainty associated with the COVID-19 pandemic, we negotiated with certain of our lenders for a 90-day deferral of monthly payments for a total short-term liquidity benefit of $8.4 million.

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 $92.1 million for the nine months ended September 30, 2019, compared to $90.2 million for the nine months ended September 30, 2018.

We used $21.4 million to fund investing activities during the nine months ended September 30, 2019 and $86.6 million for the nine months ended September 30, 2018. We used $28.6 million and $32.2 million in the nine months ended September 30, 2019 and 2018, respectively, to fund purchases of machinery and equipment as well as mixer trucks and other vehicles to service our business. During the first nine months of 2019, we received $6.0 million of proceeds from an eminent domain matter and insurance proceeds relating to property damage suffered due to the 2017 hurricanes in the U.S. Virgin Islands. Investing activities also included proceeds from the sale of property, plant and equipment of $1.2 million during the first nine months of 2019 and $18.6 million of proceeds from the sale of businesses and property, plant and equipment during the first nine months of 2018. In addition, during the nine months ended September 30, 2018, we paid $72.3 million to fund acquisitions.

Our net cash used in financing activities was $63.5 million for the nine months ended September 30, 2019, as compared to net cash used in financing activities of $0.9 million for the comparable period of 2018. Financing activities during the first nine months of 2019 included $3.9 million of net repayments under our Revolving Facility. In addition, we repaid $24.2 million of finance leases used to fund capital expenditures and other financings and paid $33.4 million for contingent and deferred consideration obligations. Financing activities during the first nine months of 2018 included $27.5 million of net borrowings under our Revolving Facility to operate our business and fund acquisitions. In addition, during the first nine months of 2018, we made payments of $21.5 million related to our finance leases and other financings and paid $5.6 million for contingent and deferred consideration obligations.

Inflation

We experienced minimal increases in operating costs during the first ~~nine~~six months of ~~2019~~2020 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 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 described our critical accounting policies in Item 7 of Part II of our ~~2018~~2019 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 ~~2018~~2019 10-K for a discussion of our critical and significant

accounting policies and Note 2, ~~"Recent~~"Significant Accounting ~~Pronouncements and Significant Accounting~~ Policies" to our interim unaudited condensed consolidated financial statements included in this report for a discussion of the impact of the new ~~lease accounting~~credit loss standard that we adopted as of January 1, ~~2019.~~2020.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements and information in this ~~Quarterly Report on Form 10-Q~~report 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,~~“intend,” “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~~commercial and residential ~~and commercial~~ construction;

•our ability to successfully implement our operating strategy;

•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;

•seasonal and inclement weather conditions, which impede the installation of ready-mixed concrete;

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

•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;

•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;~~•product liability, property damage, results of litigation, and other claims and insurance coverage issues;

~~seasonal and inclement weather conditions, which impede the installation of ready-mixed concrete;~~

•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;

•the length and severity of the COVID-19 pandemic;

•the pace of recovery following the COVID-19 pandemic;

•our ability to ~~maintain favorable relationships with third parties who supply us with equipment~~implement cost containment strategies; and ~~essential supplies;~~

•the adverse effects of COVID-19 on our ~~ability to retain key personnel~~business, the economy and ~~maintain satisfactory labor relations; and~~the markets we serve.

~~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 ~~2018~~2019 10-K and "Risk Factors" in Item 1A of Part II of ~~this report.~~our subsequent quarterly reports on Form 10-Q.

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~~With the exception of the impact of COVID-19 and increased interest rate risk associated with our borrowing under the Revolving Facility and our entry into the Agreement, which are each discussed elsewhere in the report, there have been no material changes from the information previously reported under Part II, Item 7A of our ~~2018~~2019 10-K.


~~Item 4.~~	~~Controls and Procedures~~

Item 4. Controls and Procedures

Acquisition

We are in the process of integrating Coram Materials, which we acquired on February 24, 2020. Management’s assessment and conclusion on the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2020, excludes an assessment of the internal control over financial reporting related to the Coram Acquisition. Coram Materials represented 9.1% of our consolidated total assets and 1.5% of our consolidated revenue included in our condensed consolidated financial statements as of and for the three months ended June 30, 2020.

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,~~report, 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 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

~~During~~We have completed one acquisition in the past 12 months. As part of our ongoing integration activities, we continue to implement our controls and procedures at the business we acquired and to augment our company-wide controls to reflect the risks inherent in our acquisition. Throughout the integration process, we monitor these efforts and take corrective action as needed to reinforce the application of our controls and procedures. Other than the foregoing, during the quarter ended ~~September~~June 30, ~~2019,~~2020, there were no 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 ~~12,~~14, “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 Factors” in Item 1A of Part I of the ~~2018 10-K.~~2019 10-K and in "Risk Factors" in Item 1A of Part II of the Quarterly Report on Form 10-Q for the period ended March 31, 2020 other than shown below and the potential impact of the COVID-19 pandemic on all of our existing risks. Readers should carefully consider the new risk factor, as well as the factors discussed in “Risk Factors” in Item 1A of Part 1 of the ~~2018~~2019 10-K and in "Risk Factors" in Item 1A of Part II of the Quarterly Report on Form 10-Q for the period ended March 31, 2020, which could materially affect our business, financial condition or future results. The risks described in the ~~2018~~2019 10-K are not the only risks 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 operating results.

Our business could be materially and adversely disrupted by an epidemic or pandemic, or similar public threat, or fear of such an event, and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it.

An epidemic, pandemic or similar serious public health issue, and the measures undertaken by governmental authorities to address it, could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period, and thereby, and/or along with any associated economic and/or social instability or distress, have a material adverse impact on our consolidated financial statements.

On March 11, 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic and recommended containment and mitigation measures. On March 13, 2020, the United States declared a national emergency concerning the outbreak, and several states and municipalities have declared public health emergencies. Along with these declarations, there have been extraordinary and wide-ranging actions taken by international, federal, state and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions across the United States and the world, including quarantines, and “stay-at-home” orders and similar mandates for many individuals to substantially restrict daily activities and for many businesses to curtail or cease normal operations.

The limiting of construction operations largely to authorized activities and a reduction in the availability, capacity and efficiency of municipal and private services necessary in the construction industry, which in each case has varied by market depending on the scope of the restrictions local authorities have established, have reduced our sales and delayed certain construction projects since mid-March 2020. While we have generally remained operational in the regions in which we serve with the implementation of new enhanced safety and health protocols certain of our operations were more negatively impacted particularly in April and May of 2020 in states with more stringent restrictions. For example, our ready-mixed concrete sales decreased $39.8 million during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily resulting from a decline in ready-mixed concrete operations in New York and California, both of which had more stringent restrictions relating to COVID-19.

If a significant portion of our workforce becomes unable to work or travel to our operations due to illness or state or federal government restrictions (including travel restrictions and “shelter-in-place” and similar orders restricting certain activities that may be issued or extended by authorities), we may be forced to reduce or suspend operations at one or more of our facilities, which could reduce production and negatively impact liquidity and financial results. We continue to monitor legislative initiatives in the U.S. and Canada to provide relief to businesses impacted by COVID-19, such as the CARES Act, to determine their potential impacts or benefits (if any) to our business.

We are uncertain of the potential full magnitude or duration of the business and economic impacts from the unprecedented public health effort to contain and combat the spread of COVID-19, which include, among other things, significant volatility in financial markets and a sharp decrease in the value of equity securities, including our common stock. In addition, we can

provide no assurance as to whether the COVID-19 public health effort will be intensified to such an extent that we will not be able to conduct any business operations in certain of our markets or at all for an indefinite period.

We expect our business to continue to be negatively impacted during the COVID-19 disruptions. The inherent uncertainty surrounding COVID-19, due in part to rapidly changing governmental directives, public health challenges and progress and market reactions thereto, also makes it more challenging for our management to estimate the future performance of our business and develop strategies to generate growth or achieve our initial or any revised objectives for 2020.

Should the adverse impacts described above (or others that are currently unknown) continue to occur, whether individually or collectively, we would expect to continue to experience, among other things, decreases in revenues and profitability. In addition, should the COVID-19 public health effort intensify to such an extent that we cannot operate in most or all of our markets, we could generate less or no revenue, which could be prolonged. Along with a potential increase in cancellations of projects, if there are prolonged government restrictions on our business and our customers, and/or an extended economic recession, we could be unable to produce revenues and cash flows sufficient to conduct our business; meet the terms of our covenants and other requirements under the Revolving Facility, the Credit Facility, or the 2024 Notes and the related Indenture; or service our outstanding debt. Such a circumstance could, among other things, exhaust our available liquidity (and ability to access liquidity sources) and/or trigger an acceleration to pay a significant portion or all of our then-outstanding debt obligations, which we may be unable to do.

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

The following table provides information with respect to our purchases ~~by the Company~~ of shares of our common stock during the ~~three months~~three-month period ended ~~September~~June 30, ~~2019:~~2020:


Calendar Month	Total Number of Shares Purchased ⁽¹⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under Plans or Programs (in millions)
April 1 - April 30, 2020	11,861	$	14.16	—	$	—
May 1 - May 31, 2020	—	—		—	—
June 1 - June 30, 2020	—	—		—	—
Total	11,861	$	14.16	—	$	—

(1)Represents 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.

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⁾
July 1 - July 31, 2019 —
$ —
—
$ 43.3
August 1 - August 31, 2019 480
41.36
—
43.3
September 1 - September 30, 2019 —
—
—
43.3
Total 480
$ 41.36
—
$ 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.~~report.

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)).
~~31.1~~22.1		—List of Guarantor Subsidiaries
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.
~~32.2~~95.1		~~—Certification pursuant to 18 U.S.C. Section 1350.~~
~~95.1~~	—Mine Safety Disclosures.
101.INS		—XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		—Inline XBRL Taxonomy Extension Schema Document.
101.CAL		—Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		—Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		—Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		—Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		—Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Incorporated by reference to the filing indicated.

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:

August 4, 2020

By:

/s/ Gibson T. Dawson

Gibson T. Dawson

Vice President, Corporate Controller and Chief Accounting Officer

(Principal Accounting Officer)

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

~~Date:~~

~~November 8, 2019~~

~~By:~~

~~/s/ Gibson T. Dawson~~

~~Gibson T. Dawson~~

~~Vice President, Corporate Controller and Chief Accounting Officer~~

~~(Principal Accounting Officer)~~



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



Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, par value ~~$.001~~$0.001	USCR	The Nasdaq Stock Market LLC


					Page No.
Part I – Financial Information
Item 1.			Financial Statements (Unaudited)
			Condensed Consolidated Balance Sheets		1
			Condensed Consolidated Statements of Operations		2
			Condensed Consolidated Statements of Total Equity		3
			Condensed Consolidated Statements of Cash Flows		4
			Notes to Condensed Consolidated Financial Statements		6
			1. Basis of Presentation		6
			2. Significant Accounting Policies		6
			3. Business Combination		7
			4. Allowance for Doubtful Accounts and Customer Disputes		9
			5. Inventories		9
			6. Goodwill and Other Intangible Assets		9
			7. Debt		12
			8. Leases		13
			9. Non-controlling Interest		14
			10. Fair Value Measurements		15
			11. Stock-Based Compensation		15
			12. Income Taxes		16
			13. Earnings Per Share		16
			14. Commitments and Contingencies		17
			15. Segment Information		18

				~~Page No.~~
~~Part I – Financial Information~~
Item 1.	~~Financial Statements (Unaudited)~~
2.	~~Condensed Consolidated Balance Sheets~~			1
	~~Condensed Consolidated Statements of Operations~~	2
	~~Condensed Consolidated Statements of Total Equity~~	3
	~~Condensed Consolidated Statements of Cash Flows~~	5
	~~Notes to Condensed Consolidated Financial Statements~~	7
	~~1. Basis of Presentation~~	7
	~~2. Recent Accounting Pronouncements and Significant Accounting Policies~~	7
	~~3. Leases~~	8
	~~4. Business Combinations~~	10
	~~5. Inventories~~	12
	~~6. Goodwill and Other Intangible Assets~~	12
	~~7. Debt~~	14
	~~8. Fair Value Disclosures~~	15
	~~9. Stock-Based Compensation~~	16
	~~10. Income Taxes~~	17
	~~11. Earnings Per Share~~	18
	~~12. Commitments and Contingencies~~	18
	~~13. Segment Information~~	20
	~~14. Supplemental Condensed Consolidating Financial Information~~	23
~~Item 2.~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3222
Item 3.			Quantitative and Qualitative Disclosures About Market Risk		4234
Item 4.			Controls and Procedures		4234

Part II – Other Information
Item 1.			Legal Proceedings		4335
Item 1A.			Risk Factors		4335
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		4336
Item 4.			Mine Safety Disclosures		4336
Item 6.			Exhibits		4437

Signature						4538



	Three Months Ended September 30,						Nine Months Ended September 30,
(in millions except per share)	2019			2018			2019			2018
Revenue	$	408.9		$	404.3		$	1,109.5		$	1,136.3
Cost of goods sold before depreciation, depletion and amortization	321.2			325.3			886.4			912.7
Selling, general and administrative expenses	32.0			32.2			103.3			96.4
Depreciation, depletion and amortization	22.3			25.5			70.2			68.2
Change in value of contingent consideration	0.3			0.4			1.6			(0.9		)
Impairment of assets	—			—			—			1.3
Loss (gain) on sale/disposal of assets and business, net	(0.2		)	(14.1		)	0.8			(14.6		)
Operating income	33.3			35.0			47.2			73.2
Interest expense, net	11.6			11.7			34.8			34.6
Other income, net	(0.2		)	(1.1		)	(7.8		)	(4.1		)
Income before income taxes	21.9			24.4			20.2			42.7
Income tax expense	8.3			8.6			8.3			14.5
Net income	13.6			15.8			11.9			28.2
Less: Net income attributable to non-controlling interest	(0.6		)	(0.2		)	(0.9		)	(0.2		)
Net income attributable to U.S. Concrete	$	13.0		$	15.6		$	11.0		$	28.0

Earnings per share attributable to U.S. Concrete:
Basic earnings per share	$	0.79		$	0.95		$	0.67		$	1.70
Diluted earnings per share	$	0.79		$	0.94		$	0.67		$	1.70

Weighted average shares outstanding:
Basic	16.5			16.5			16.4			16.5
Diluted	16.5			16.5			16.4			16.5



	Common Stock
(in millions)	# of Shares	Par Value		Additional Paid-In Capital		Retained Earnings			Treasury Stock			Total Shareholders' Equity			Non-controlling Interest		Total Equity
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
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
Stock-based compensation	—	—		9.4		—			—			9.4			—		9.4
Restricted stock vesting	0.1	—		—		—			—			—			—		—
Treasury share purchases	—	—		—		—			(1.1		)	(1.1		)	—		(1.1		)
Net income	—	—		—		0.7			—			0.7			0.2		0.9
BALANCE, June 30, 2019	16.7	—		340.9		14.2			(35.6		)	319.5			25.1		344.6
Stock-based compensation	—	—		5.3		—			—			5.3			—		5.3
Net income	—	—		—		13.0			—			13.0			0.6		13.6
BALANCE, September 30, 2019	16.7	$	—	$	346.2	$	27.2		$	(35.6	)	$	337.8		$	25.7	$	363.5


	# of Common Shares	Additional Paid-In Capital		Retained Earnings		Treasury Stock		Total Shareholders' Equity		Non-controlling Interest		Total Equity
December 31, 2018	16.6	$	329.6	$	16.2	$	(33.4)	$	312.4	$	24.8	$	337.2
Stock-based compensation	—	1.7		—		(1.1)		0.6		—		0.6
Stock options exercised	—	0.2		—		—		0.2		—		0.2
Net income (loss)	—	—		(2.7)		—		(2.7)		0.1		(2.6)
March 31, 2019	16.6	331.5		13.5		(34.5)		310.5		24.9		335.4
Stock-based compensation	—	9.4		—		(1.1)		8.3		—		8.3
Restricted stock vesting	0.1	—		—		—		—		—		—
Net income	—	—		0.7		—		0.7		0.2		0.9
June 30, 2019	16.7	$	340.9	$	14.2	$	(35.6)	$	319.5	$	25.1	$	344.6




December 31, 2019	16.7	$	348.9	$	31.1	$	(36.6)	$	343.4	$	26.2	$	369.6
Cumulative-effect adjustment upon adoption of ASC 326, net of taxes (Note 2)	—	—		(3.3)		—		(3.3)		—		(3.3)
Transfer of non-controlling interest (Note 9)	—	3.3		—		—		3.3		(3.3)		—
Stock-based compensation	—	3.7		—		(1.1)		2.6		—		2.6
Net income (loss)	—	—		(3.1)		—		(3.1)		0.3		(2.8)
March 31, 2020	16.7	355.9		24.7		(37.7)		342.9		23.2		366.1
Stock-based compensation	—	2.5		—		(0.2)		2.3		—		2.3
Net income (loss)	—	—		6.6		—		6.6		(0.1)		6.5
June 30, 2020	16.7	$	358.4	$	31.3	$	(37.9)	$	351.8	$	23.1	$	374.9



($ in millions)	Nine Months Ended September 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	11.9		$	28.2
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	70.2			68.2
Amortization of debt issuance costs	1.3			1.4
Change in value of contingent consideration	1.6			(0.9		)
Loss (gain) on sale/disposal of assets and business, net	0.8			(14.6		)
Gains from eminent domain matter and property insurance claims	(6.0		)	—
Impairment of assets	—			1.3
Deferred income taxes	2.0			10.1
Provision for doubtful accounts and customer disputes	2.2			3.4
Stock-based compensation	16.4			8.1
Other, net	(1.0		)	(0.8		)
Changes in assets and liabilities, excluding effects of acquisitions:
Accounts receivable	(33.9		)	(44.4		)
Inventories	(2.7		)	(0.2		)
Prepaid expenses and other current assets	2.9			(4.8		)
Other assets and liabilities	(1.3		)	(1.6		)
Accounts payable and accrued liabilities	27.7			36.8
Net cash provided by operating activities	92.1			90.2
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(28.6		)	(32.2		)
Payments for acquisitions, net of cash acquired	—			(72.3		)
Purchases of environmental credits	—			(2.8		)
Proceeds from disposals of businesses and property, plant and equipment	1.2			18.6
Proceeds from eminent domain matter and property insurance claims	6.0			2.1
Net cash used in investing activities	(21.4		)	(86.6		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolver borrowings	273.3			338.2
Repayments of revolver borrowings	(277.2		)	(310.7		)
Proceeds from stock option exercises	0.2			0.1
Payments of other long-term obligations	(33.4		)	(5.6		)
Payments for other financing	(24.2		)	(21.5		)
Treasury share purchases	(2.2		)	(1.9		)
Other proceeds	—			0.5
Net cash used in financing activities	(63.5		)	(0.9		)
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS	(0.2		)	(0.1		)
NET INCREASE IN CASH AND CASH EQUIVALENTS	7.0			2.6
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	20.0			22.6
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	27.0		$	25.2



Leases ($ in millions)	Balance Sheet Classification	September 30, 2019
Assets:
Operating lease assets	Operating lease assets	$	69.3
Finance lease assets	Property, plant and equipment, net	98.0		⁽¹⁾
Total lease assets		$	167.3
Liabilities:
Current liabilities:
Operating	Current operating lease liabilities	$	13.5
Finance	Current maturities of long-term debt	26.6
Long-term liabilities:
Operating	Long-term operating lease liabilities	58.6
Finance	Long-term debt, net of current maturities	45.5
Total lease liabilities		$	144.2



Lease Cost ($ in millions)	Statement of Operations Classification	Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019
Operating lease cost	Selling, general and administrative expenses	$	6.8	⁽¹⁾	$	19.8	⁽²⁾
Finance lease cost:
Amortization of leased assets	Depreciation, depletion and amortization	3.0			8.6
Interest on lease liabilities	Interest expense, net	0.6			1.9
Total finance lease cost		3.6			10.5
Total		$	10.4		$	30.3



Other Information ($ in millions)	Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	14.0
Operating cash flows for finance leases	1.9
Financing cash flows for finance leases	16.2
Leased assets obtained in exchange for new finance lease liabilities	17.1
Leased assets obtained in exchange for new operating lease liabilities	4.7



($ in millions)	2018 Acquisitions
Inventory	$	1.1
Other current assets	0.1
Property, plant and equipment	37.4
Definite-lived intangible assets	19.8
Total assets acquired	58.4
Current liabilities	0.1
Other long-term liabilities	1.1
Total liabilities assumed	1.2
Goodwill	13.6
Total consideration (fair value)⁽¹⁾	$	70.8



($ in millions)	Weighted Average Amortization Period (In Years)	Fair Value At Acquisition Date
Customer relationships	5.5	$	18.5
Non-compete agreements	5.0	1.3
Total		$	19.8




2019 (remainder of the year)	$	0.9
2020	3.6
2021	2.8
2022	2.6
2023	1.6
Thereafter	1.8
Total	$	13.3



($ in millions except per share)	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Revenue	$	405.5	$	1,153.1
Net income attributable to U.S. Concrete	$	15.2	$	27.4

Net income per share attributable to U.S. Concrete - basic	$	0.92	$	1.67
Net income per share attributable to U.S. Concrete - diluted	$	0.92	$	1.66



($ in millions)	Ready-Mixed Concrete Segment		Aggregate Products Segment		Other Non-Reportable Segments		Total
Goodwill, net at December 31, 2018	$	147.7	$	86.2	$	5.4	$	239.3
Measurement period adjustments for prior year business combinations⁽¹⁾	0.2		—		—		0.2
Goodwill, net at September 30, 2019	$	147.9	$	86.2	$	5.4	$	239.5



	September 30, 2019
Valuation Inputs	Monte Carlo Simulation			Income Approach
Fair value (in millions)	$	23.6		$	2.4
Discount rate	11.00		%	3.70% - 10.75%
Payment cap (in millions)	$	26.3		$	2.5
Expected payment period remaining (in years)	2.6			0 - 4
Management projections of the payout criteria	EBITDA			Volumes



($ in millions)	Contingent Consideration
Balance at December 31, 2018	$	60.7
Change in valuation	1.6
Payments of contingent consideration	(36.3		)
Balance at September 30, 2019	$	26.0


						2020
Expected term (years)						01.1 to ~~0.5~~1.6
Expected volatility						~~41.1%~~43.8%
Risk-free interest rate						~~2.1%~~0.9%
Vesting price⁽¹⁾						$~~45.90~~43.23 - ~~$58.60~~$55.21
Grant date fair value per share						$~~39.60~~11.49 - ~~$48.75~~$16.24


~~(1)~~	The vesting price is the average of the daily volume-weighted average share price of U.S. Concrete's common stock over any period of 20 consecutive trading days within the three-year period beginning on the date of grant. These hurdles were established on March 1, 2019.



	Parent		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			U.S. Concrete Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	17.8	$	9.2	$	—		$	27.0
Trade accounts receivable, net	—		239.9		19.4		—			259.3
Inventories	—		43.2		10.7		—			53.9
Other receivables, net	10.9		9.0		0.5		(7.1		)	13.3
Prepaid expenses and other	—		8.4		0.6		—			9.0
Intercompany receivables	9.7		—		0.3		(10.0		)	—
Total current assets	20.6		318.3		40.7		(17.1		)	362.5
Property, plant and equipment, net	—		470.0		206.3		—			676.3
Operating lease assets	—		56.0		13.3		—			69.3
Goodwill	—		155.7		83.8		—			239.5
Intangible assets, net	—		93.7		4.3		—			98.0
Investment in subsidiaries	633.2		—		—		(633.2		)	—
Long-term intercompany receivables	309.8		—		1.1		(310.9		)	—
Other assets	—		9.0		1.7		—			10.7
Total assets	$	963.6	$	1,102.7	$	351.2	$	(961.2	)	$	1,456.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—	$	131.7	$	4.1	$	—		$	135.8
Accrued liabilities	13.9		75.7		7.8		(7.1		)	90.3
Current maturities of long-term debt	0.3		34.7		0.6		—			35.6
Current operating lease liabilities	—		11.7		1.8		—			13.5
Intercompany payables	—		—		10.0		(10.0		)	—
Total current liabilities	14.2		253.8		24.3		(17.1		)	275.2
Long-term debt, net of current maturities	611.6		56.9		1.6		—			670.1
Long-term operating lease liabilities	—		46.8		11.8		—			58.6
Other long-term obligations and deferred credits	—		39.0		5.0		—			44.0
Deferred income taxes	—		22.4		22.5		—			44.9
Long-term intercompany payables	—		192.8		118.1		(310.9		)	—
Total liabilities	625.8		611.7		183.3		(328.0		)	1,092.8
Total shareholders' equity	337.8		491.0		142.2		(633.2		)	337.8
Non-controlling interest	—		—		25.7		—			25.7
Total equity	337.8		491.0		167.9		(633.2		)	363.5
Total liabilities and equity	$	963.6	$	1,102.7	$	351.2	$	(961.2	)	$	1,456.3



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⁾
July 1 - July 31, 2019	—	$	—	—	$	43.3
August 1 - August 31, 2019	480	41.36		—	43.3
September 1 - September 30, 2019	—	—		—	43.3
Total	480	$	41.36	—	$	43.3