UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended March 31, 2019
 
o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________.

Commission File Number: 001-34530
COVERPAGELOGOA01A01A15.JPG
U.S. CONCRETE, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
76-0586680
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification Number)

Address of principal executive offices, including zip code: 331 N. Main Street, Euless, Texas 76039
Registrant’s telephone number, including area code: (817) 835-4105

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes þ No ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company ¨
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol
Name of each exchange on which registered
Common Stock, par value $.001
USCR
The Nasdaq Stock Market LLC

There were 16,616,234 shares of common stock, par value $.001 per share, of the registrant outstanding as of May 1, 2019 .


INDEX

 
 
Page No.
Part I – Financial Information
 
Item 1.
Financial Statements (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
Part II – Other Information
 
Item 1.
Item 1A.
Item 2.
Item 4.
Item 6.
 
 
 






i

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in millions)
March 31, 2019

December 31, 2018
ASSETS
(Unaudited)

 
Current assets:
 

 
Cash and cash equivalents
$
23.9


$
20.0

Trade accounts receivable, net of allowances of $5.9 as of March 31, 2019 and $6.1 as of December 31, 2018
225.6


226.6

Inventories
50.5


51.2

Other receivables
19.7


18.4

Prepaid expenses and other
10.0


7.9

Total current assets
329.7


324.1

Property, plant and equipment, net of accumulated depreciation, depletion and amortization of $246.7 as of March 31, 2019 and $236.1 as of December 31, 2018
672.6


680.2

Operating lease assets
74.0

 
—

Goodwill
239.5


239.3

Intangible assets, net
110.5


116.6

Other assets
11.1


11.1

Total assets
$
1,437.4


$
1,371.3

LIABILITIES AND EQUITY
 


 

Current liabilities:
 


 

Accounts payable
$
110.3


$
125.8

Accrued liabilities
109.8


96.3

Current maturities of long-term debt
30.2


30.8

Current operating lease liabilities
13.5

 
—

Total current liabilities
263.8


252.9

Long-term debt, net of current maturities
678.8


683.3

Long-term operating lease liabilities
62.8

 
—

Other long-term obligations and deferred credits
51.5


54.8

Deferred income taxes
45.1


43.1

Total liabilities
1,102.0


1,034.1

Commitments and contingencies (Note 11)





Equity:
 


 

Preferred stock
—


—

Common stock
—


—

Additional paid-in capital
331.5


329.6

Retained earnings
13.5


16.2

Treasury stock, at cost
(34.5
)

(33.4
)
Total shareholders' equity
310.5


312.4

Non-controlling interest
24.9

 
24.8

Total equity
335.4

 
337.2

Total liabilities and equity
$
1,437.4


$
1,371.3

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

1

U.S. CONCRETE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 

 
Three Months Ended
March 31,
(in millions except per share)
 
2019

2018
Revenue
 
$
333.1


$
327.8

Cost of goods sold before depreciation, depletion and amortization
 
268.4


267.2

Selling, general and administrative expenses
 
32.1


32.3

Depreciation, depletion and amortization
 
22.8


20.6

Change in value of contingent consideration
 
1.0

 
0.3

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


(0.2
)
Operating income
 
7.9


7.6

Interest expense, net
 
11.6


11.4

Other income, net
 
(0.4
)

(1.6
)
Income (loss) before income taxes
 
(3.3
)

(2.2
)
Income tax expense (benefit)
 
(0.7
)

1.7

Net income (loss)
 
(2.6
)

(3.9
)
Less: Net income attributable to non-controlling interest
 
(0.1
)
 
—

Net income (loss) attributable to U.S. Concrete
 
$
(2.7
)
 
$
(3.9
)

 





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


 

Basic earnings per share
 
$
(0.16
)
 
$
(0.23
)
Diluted earnings per share
 
$
(0.16
)
 
$
(0.23
)
 
 
 
 
 
Weighted average shares outstanding:
 
 


 

Basic
 
16.3


16.4

Diluted
 
16.3

 
16.4


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

2

U.S. CONCRETE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF TOTAL EQUITY
(Unaudited)
 
 
Common Stock
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
# of Shares
Par Value
 
Additional
Paid-In
Capital
 
Retained Earnings (Accumulated
Deficit)
 
Treasury
Stock
 
Total
Shareholders'
Equity
 
Non-controlling Interest
 
Total Equity
BALANCE, December 31, 2017
16.7

$
—

 
$
319.0

 
$
(13.8
)
 
$
(24.8
)
 
$
280.4

 
$
21.7

 
$
302.1

Stock-based compensation
—

—

 
2.2

 
—

 
—

 
2.2

 
—

 
2.2

Restricted stock grants, net of cancellations
0.1

—

 
—

 
—

 
—

 
—

 
—

 
—

Other treasury share purchases
—

—

 
—

 
—

 
(1.2
)
 
(1.2
)
 
—

 
(1.2
)
Measurement period adjustments for prior year business combinations
—

—

 
—

 
—

 
—

 
—

 
(0.1
)
 
(0.1
)
Net income (loss)
—

—

 
—

 
(3.9
)
 
—

 
(3.9
)
 
—

 
(3.9
)
BALANCE, March 31, 2018
16.8

$
—

 
$
321.2

 
$
(17.7
)
 
$
(26.0
)
 
$
277.5

 
$
21.6

 
$
299.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE, December 31, 2018
16.6

$
—

 
$
329.6

 
$
16.2

 
$
(33.4
)
 
$
312.4

 
$
24.8

 
$
337.2

Stock-based compensation
—

—

 
1.7

 
—

 
—

 
1.7

 
—

 
1.7

Stock options exercised
—

—

 
0.2

 
—

 
—

 
0.2

 
—

 
0.2

Other treasury share purchases
—

—

 
—

 
—

 
(1.1
)
 
(1.1
)
 
—

 
(1.1
)
Net income (loss)
—

—

 
—

 
(2.7
)
 
—

 
(2.7
)
 
0.1

 
(2.6
)
BALANCE, March 31, 2019
16.6

$
—

 
$
331.5

 
$
13.5

 
$
(34.5
)
 
$
310.5

 
$
24.9

 
$
335.4


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



3

U.S. CONCRETE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($ in millions)
Three Months Ended
March 31,
 
2019

2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
Net income (loss)
$
(2.6
)

$
(3.9
)
Adjustments to reconcile net income to net cash provided by operating activities:
 


 

Depreciation, depletion and amortization
22.8


20.6

Amortization of debt issuance costs
0.4


0.5

Change in value of contingent consideration
1.0


0.3

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


(0.2
)
Deferred income taxes
2.2


(0.5
)
Provision for doubtful accounts and customer disputes
0.4


1.0

Stock-based compensation
1.7


2.2

Other, net
(0.5
)
 
(0.2
)
Changes in assets and liabilities, excluding effects of acquisitions:
 


 

Accounts receivable
0.6


(0.1
)
Inventories
0.7


1.4

Prepaid expenses and other current assets
(3.5
)

(1.8
)
Other assets and liabilities
(1.0
)

(1.3
)
Accounts payable and accrued liabilities
(1.2
)

7.9

Net cash provided by operating activities
21.9


25.9

CASH FLOWS FROM INVESTING ACTIVITIES:
 


 

Purchases of property, plant and equipment
(7.2
)

(8.4
)
Payments for acquisitions, net of cash acquired
—


(60.3
)
Proceeds from disposals of businesses and property, plant and equipment
0.4


0.4

Insurance proceeds from property loss claims
—

 
1.6

Net cash used in investing activities
(6.8
)

(66.7
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 


 

Proceeds from revolver borrowings
76.3


135.7

Repayments of revolver borrowings
(74.8
)

(69.7
)
Proceeds from stock option exercises
0.2


—

Payments of other long-term obligations
(3.7
)

(3.5
)
Payments for other financing
(8.1
)

(6.4
)
Other treasury share purchases
(1.1
)

(1.2
)
Net cash provided by (used in) financing activities
(11.2
)

54.9

EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
—

 
(0.1
)
NET INCREASE IN CASH AND CASH EQUIVALENTS
3.9


14.0

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
20.0


22.6

CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
23.9


$
36.6


4

U.S. CONCRETE, INC. AND SUBSIDARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
(in millions)

 
Three Months Ended
March 31,
 
2019
 
2018
Supplemental Disclosure of Cash Flow Information:
 

 
 

Net cash paid for interest
$
1.7

 
$
1.4

Net cash paid for income taxes
$
—

 
$
0.6

Capital expenditures funded by finance leases and promissory notes
$
1.3

 
$
2.7

Acquisitions funded by contingent consideration
$
—

 
$
0.9

Leased assets obtained in exchange for new operating lease liabilities
$
0.8

 
$
—


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

5

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.
BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include the accounts of U.S. Concrete, Inc. and its subsidiaries (collectively, "we," "us," "our," the "Company," or "U.S. Concrete") and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for reporting interim financial information. Some information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") have been condensed or omitted pursuant to the SEC’s rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes in our Annual Report on Form 10-K for the year ended December 31, 2018 (the " 2018 10-K").  In the opinion of our management, all material adjustments necessary to state fairly the information in our unaudited condensed consolidated financial statements have been included. All adjustments are of a normal or recurring nature. All amounts are presented in United States dollars, unless otherwise noted. Certain computations may be impacted by the effect of rounding in this report. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year.

The preparation of financial statements and accompanying notes in conformity with U.S. GAAP requires the use of estimates and assumptions by management in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates. Estimates and assumptions that we consider significant in the preparation of our financial statements include those related to our allowance for doubtful accounts, business combinations, goodwill, intangibles, valuation of contingent consideration, accruals for self-insurance, income taxes, the valuation of inventory and the valuation and useful lives of property, plant and equipment.


2.
RECENT ACCOUNTING PRONOUNCEMENTS AND SIGNIFICANT ACCOUNTING POLICIES

Lease Accounting. In February 2016, the Financial Accounting Standards Board ("FASB") issued a new lease accounting standard intended to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new guidance, lessees are required to recognize a right-of-use asset and a lease liability, measured on a discounted basis, at the commencement date for all leases, excluding mineral interest leases, with terms greater than twelve months. Additionally, this guidance requires disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. We adopted the guidance as of January 1, 2019, using the transition approach that permits 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.

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

6

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

3.    LEASES

We are the lessee in a lease contract when we obtain the right to control the asset.  We lease certain land, office space, equipment and vehicles. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is primarily at our discretion. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Certain of our lease agreements include rental payments based on a percentage of volume sold over contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Where observable, we use the implicit interest rate in determining the present value of future payments. Where the implicit interest rate is not observable, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.  We give consideration to our outstanding debt as well as publicly available data for instruments with similar characteristics when calculating our incremental borrowing rates.

Leases ($ in millions)
 
Balance Sheet Classification
 
March 31, 2019
 
Assets:
 
 
 
 
 
Operating lease assets
 
Operating lease assets
 
$
74.0

 
     Finance lease assets
 
Property, plant and equipment, net
 
86.2

(1)  
Total lease assets
 
 
 
$
160.2

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

 
Finance
 
Current maturities of long-term debt
 
20.4

 
Long-term liabilities
 
 
 
 
 
Operating
 
Long-term operating lease liabilities
 
62.8

 
Finance
 
Long-term debt, net of current maturities
 
46.8

 
Total lease liabilities
 
 
 
$
143.5

 

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

Lease Cost ($ in millions)
 
Statement of Operations Classification
 
Three Months Ended March 31, 2019
 
Operating lease cost
 
Selling, general and administrative expenses
 
$
6.4

(1)  
Finance lease cost
 
 
 
 
 
Amortization of leased assets
 
Depreciation, depletion and amortization
 
2.7

 
Interest on lease liabilities
 
Interest expense, net
 
0.6

 
Total finance lease cost
 
 
 
3.3

 
Total
 
 
 
$
9.7

 

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



7

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Maturity of Lease Liabilities   ($ in millions)
 
Operating Leases
 
Finance Leases
 
Total
2019 (remainder of year)
 
$
13.4

 
$
17.4

 
$
30.8

2020
 
15.7

 
21.5

 
37.2

2021
 
14.0

 
16.7

 
30.7

2022
 
11.3

 
10.7

 
22.0

2023
 
9.8

 
5.4

 
15.2

2024
 
8.1

 
0.5

 
8.6

Thereafter
 
25.1

 
—

 
25.1

Total lease payments
 
97.4

 
72.2

 
169.6

Less interest
 
21.1

 
5.0

 
26.1

Present value of lease liabilities
 
$
76.3

 
$
67.2

 
$
143.5

    
Lease Term and Discount Rate
 
March 31, 2019
Weighted-average remaining lease term (years):
 
 
Operating leases
 
5.9

Finance leases
 
3.6

Weighted-average discount rate:
 
 
Operating leases
 
6.1
%
Finance leases
 
3.9
%

Other Information ($ in millions)
 
Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
 
Operating cash flows for operating leases
 
$
4.8

Operating cash flows for finance leases
 
0.6

Financing cash flows for finance leases
 
5.1

Leased assets obtained in exchange for new finance lease liabilities
 
1.3

Leased assets obtained in exchange for new operating lease liabilities
 
0.8


4.
BUSINESS COMBINATIONS

We completed five acquisitions during 2018 that expanded our ready-mixed concrete operations in the Atlantic Region (which we define to include New York, New Jersey, Washington, D.C. and Pennsylvania) and expanded our ready-mixed concrete, aggregate products and other non-reportable operations in West Texas. The aggregate fair value consideration for these acquisitions, which were all accounted for as business combinations, was $70.8 million . The acquisitions included the assets and certain liabilities of the following:

•
On Time Ready Mix, Inc. (" On Time ") located in Flushing, New York on January 10, 2018 ;
•
Cutrell Trucking, LLC., Dumas Concrete, LLC., Pampa Concrete Co., Inc., Panhandle Concrete, LLC., and Texas Sand & Gravel Co., Inc. (collectively " Golden Spread ") located in Amarillo, Texas on March 2, 2018 ;
•
Leon River Aggregate Materials, LLC. ("Leon River") located in Proctor, Texas on August 29, 2018 ; and
•
Two individually immaterial ready-mixed concrete operations in our Atlantic Region and West Texas Region on March 5, 2018 and September 14, 2018 , respectively.


8

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

($ in millions)
2018 Acquisitions
Inventory
$
1.1

Other current assets
0.1

Property, plant and equipment
37.4

Definite-lived intangible assets
19.8

Total assets acquired
58.4

Current liabilities
0.1

Other long-term liabilities
1.1

Total liabilities assumed
1.2

Goodwill
13.6

Total consideration (fair value) (1)
$
70.8


(1) Included $1.1 million of contingent consideration.

Acquired Intangible Assets and Goodwill
A summary of the intangible assets acquired in 2018 and their estimated useful lives is as follows:
($ in millions)
Weighted Average Amortization Period (In Years)
 
Fair Value At Acquisition Date
Customer relationships
5.8
 
$
18.5

Non-compete agreements
5.0
 
1.3

Total
 
 
$
19.8



9

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 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)
$
2.8

2020
3.8

2021
3.0

2022
2.8

2023
1.8

Thereafter
1.8

Total
$
16.0


During the three months ended March 31, 2019 and 2018 , we recorded $0.9 million and $0.1 million of amortization expense related to these intangible assets, respectively.

The goodwill ascribed to the 2018 acquisitions is related to the synergies we expect to achieve with expansion in the markets in which we already operate as well as entry into new metropolitan areas of our existing geographic markets. The goodwill relates to our ready-mixed concrete and other non-reportable segments in the amounts of $12.8 million and $0.8 million , respectively. We generally expect all $13.6 million of goodwill from the 2018 acquisitions to be deductible for tax purposes. See Note 9 for additional information regarding income taxes.

Actual Impact of Acquisitions

During the three months ended March 31, 2019 , we recorded approximately $13.3 million of revenue and $1.0 million of operating income in our condensed consolidated statements of operations related to the 2018 acquisitions following their respective dates of acquisition. During the three months ended March 31, 2018 , we recorded approximately $5.0 million of revenue and $1.0 million of operating income in our condensed consolidated statements of operations in 2018 related to the 2018 acquisitions following their respective dates of acquisition.

Unaudited Pro Forma Impact of Acquisitions

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

($ in millions except per share)
 
 
Three Months Ended March 31, 2018
Revenue
 
 
$
343.4

Net income (loss) attributable to U.S. Concrete
 
 
$
(4.1
)
 
 
 
 
Net income (loss) per share attributable to U.S. Concrete - basic
 
 
$
(0.25
)
Net income (loss) per share attributable to U.S. Concrete - diluted
 
 
$
(0.25
)

The above pro forma results are unaudited and were prepared based on the historical U.S. GAAP results of the Company and the historical results of the acquired companies for which financial information was available, based on data provided by the former owners. These results are not necessarily indicative of what the Company's actual results would have been had the 2018 acquisitions occurred on January 1, 2017 .


10

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 March 31, 2018
Increase in intangible amortization expense
 
 
$
0.8

Exclusion of buyer transaction costs
 
 
0.5

Decrease in income tax expense
 
 
0.1


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

5.    INVENTORIES
 
($ in millions)
March 31, 2019
 
December 31, 2018
Raw materials
$
45.4

 
$
46.4

Building materials for resale
3.0

 
2.8

Other
2.1

 
2.0

Total
$
50.5

 
$
51.2


6.      GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill
    
The accumulated impairment was as follows:
($ in millions)
 
March 31, 2019
 
December 31, 2018
Goodwill, gross
 
$
245.3

 
$
245.1

Accumulated impairment
 
(5.8
)
 
(5.8
)
Goodwill, net
 
$
239.5

 
$
239.3


The changes in goodwill by reportable segment 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 March 31, 2019
 
$
147.9

 
$
86.2

 
$
5.4

 
$
239.5


(1)
Adjustments for the 2018 acquisitions recorded during 2019 included a $0.2 million reduction of property, plant, and equipment.


11

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other Intangible Assets

Our purchased intangible assets were as follows:
 
 
March 31, 2019
($ in millions)
 
Gross
 
Accumulated Amortization
 
Net
 
Weighted Average Remaining Life (In Years)
Definite-lived intangible assets
 
 
 
 
 
 
 
 
Customer relationships
 
$
108.5

 
$
(47.2
)
 
$
61.3

 
4.5
Trade names
 
44.5

 
(11.8
)
 
32.7

 
19.5
Non-competes
 
18.3

 
(12.9
)
 
5.4

 
2.5
Leasehold interests
 
12.5

 
(5.5
)
 
7.0

 
5.8
Favorable contracts
 
4.0

 
(3.8
)
 
0.2

 
1.7
Environmental credits
 
2.8

 
(0.1
)
 
2.7

 
16.8
Total definite-lived intangible assets
 
190.6


(81.3
)

109.3

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

 
—

 
1.2

 
 
Total purchased intangible assets
 
$
191.8

 
$
(81.3
)
 
$
110.5

 
 

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

 
 
December 31, 2018
($ in millions)
 
Gross
 
Accumulated Amortization
 
Net
 
Weighted Average Remaining Life (In Years)
Definite-lived intangible assets
 
 
 
 
 
 
 
 
Customer relationships
 
$
108.5

 
$
(43.1
)
 
$
65.4

 
4.7
Trade names
 
44.5

 
(11.1
)
 
33.4

 
19.6
Non-competes
 
18.3

 
(12.1
)
 
6.2

 
2.6
Leasehold interests
 
12.5

 
(5.1
)
 
7.4

 
5.9
Favorable contracts
 
4.0

 
(3.8
)
 
0.2

 
1.9
Environmental credits
 
2.8

 
—

 
2.8

 
17.0
Total definite-lived intangible assets
 
190.6

 
(75.2
)
 
115.4

 
9.8
Indefinite-lived intangible assets
 
 
 
 
 
 
 
 
Land rights (1)
 
1.2

 
—

 
1.2

 
 
Total purchased intangible assets
 
$
191.8

 
$
(75.2
)
 
$
116.6

 
 

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


12

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of March 31, 2019 , the estimated remaining amortization of our definite-lived intangible assets was as follows (in millions):
2019 (remainder of the year)
$
17.3

2020
21.0

2021
18.7

2022
12.8

2023
6.5

Thereafter
33.0

Total
$
109.3


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

We recorded $6.0 million and $5.4 million of amortization expense on our definite-lived intangible assets and unfavorable lease intangibles for the three months ended March 31, 2019 and 2018 , respectively.

7.
DEBT
 
($ in millions)
March 31, 2019
 
December 31, 2018
Senior unsecured notes due 2024 and unamortized premium (1)
$
608.0

 
$
608.4

Asset based revolving credit facility
16.6

 
15.0

Finance leases
67.2

 
71.2

Other financing
25.8

 
28.5

Debt issuance costs
(8.6
)
 
(9.0
)
Total debt
709.0


714.1

Less: current maturities
(30.2
)
 
(30.8
)
Long-term debt, net of current maturities
$
678.8

 
$
683.3


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

Asset Based Revolving Credit Facility

As of March 31, 2019 , we had $17.5 million of undrawn standby letters of credit under our senior secured credit facility ("Revolving Facility"). Loans under the Revolving Facility are in the form of either base rate loans or LIBOR loans denominated in U.S. dollars. The interest rate for the facility was 5.75% as of March 31, 2019 .

Our actual maximum credit availability under the Revolving Facility varies from time to time and is determined by calculating the value of our eligible accounts receivable, inventory, mixer trucks and machinery, minus reserves imposed by the lenders and certain other adjustments. Our availability under the Revolving Facility at March 31, 2019 was $201.0 million . We are required, upon the occurrence of certain events, to maintain a fixed charge coverage ratio of at least 1.0 to 1.0 for each period of 12 calendar months. As of March 31, 2019 , we were in compliance with all covenants under the loan agreement that governs the Revolving Facility.


13

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8.
FAIR VALUE DISCLOSURES

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. Accounting guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

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

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

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

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

We estimate the fair value of acquisition-related contingent consideration arrangements using a Monte Carlo simulation model, an income approach or a discounted cash flow technique, as appropriate. The fair value of the contingent consideration arrangements is sensitive to changes in the forecasts of earnings and/or the relevant operating metrics and changes in discount rates.  The fair value of the contingent consideration is reassessed quarterly based on assumptions used in our latest projections and input provided by practice leaders and management.  Any change in the fair value estimate is recorded in our consolidated statement of operations for that period.  The current portion of contingent consideration is included in accrued liabilities while the long-term portion is included in other long-term obligations and deferred credits, both of which are in our condensed consolidated balance sheets. The use of different estimates and assumptions could increase or decrease the estimated fair value of our contingent consideration liability, which would result in different impacts to our consolidated balance sheets and consolidated statements of operations. These fair value measurements are based on significant inputs not observable in the market, and thus represent Level 3 inputs. Our recurring Level 3 fair value liability, contingent consideration, including the current portion, was $58.3 million as of March 31, 2019 and $60.7 million as of December 31, 2018.

The following tables present the valuation inputs for our three model types of acquisition-related contingent consideration arrangements.
 
 
March 31, 2019
Valuation Inputs
 
Monte Carlo Simulation
 
Income Approach
 
Discounted Cash Flow Technique
Fair value (in millions)
 
$
32.5

 
$
24.9

 
$
0.9

Discount rate
 
10.75% - 12.25%

 
3.70% - 5.00%

 
1.67% - 15.75%

Payment cap (in millions)
 
$
36.0

 
$
25.0

 
$
1.0

Expected payment period remaining (in years)
 
1-3
 
0-1
 
0-4
Management projections of the payout criteria
 
EBITDA/Volumes
 
Permitted reserves/Volumes
 
Volumes


14

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 
 
December 31, 2018
Valuation Inputs
 
Monte Carlo Simulation
 
Income Approach
 
Discounted Cash Flow Technique
Fair value (in millions)
 
$
33.2

 
$
26.5

 
$
1.0

Discount rate
 
10.75% - 12.25%

 
3.70% - 5.00%

 
6.03% - 15.75%

Payment cap (in millions)
 
$
37.3

 
$
27.3

 
$
1.1

Expected payment period remaining (in years)
 
1-3
 
1
 
1-4
Management projections of the payout criteria
 
EBITDA/Volumes
 
Permitted reserves/Volumes
 
Volumes

The following table provides a reconciliation of the changes in Level 3 fair value measurements from December 31, 2018 to March 31, 2019 :
($ in millions)
Contingent Consideration
Balance at December 31, 2018
$
60.7

Change in valuation
1.0

Payments of contingent consideration
(3.4
)
Balance at March 31, 2019
$
58.3


Other Financial Instruments

Our other financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, and long-term debt.  We consider the carrying values of cash and cash equivalents, accounts receivable, and accounts payable to be representative of their respective fair values because of their short-term maturities or expected settlement dates.  The fair value of our 6.375% senior unsecured notes due 2024 ("2024 Notes"), which was estimated based on quoted market prices (i.e., Level 2 inputs), was $610.5 million as of March 31, 2019 . The carrying value of the outstanding amounts under our Revolving Facility approximates fair value due to the floating interest rate.

Other Assets Measured on a Non-Recurring Basis

In connection with our acquisitions described in Note 4, the assets acquired were recorded at their fair value on a non-recurring basis as of their respective acquisition dates. We generally use a third party valuation firm to assist us with developing our estimates of fair value. The fair value of property, plant and equipment was based primarily on comparable sales. In determining the fair value of intangible assets, we utilized the cost approach (primarily through the cost-to-recreate method), the market approach and the income approach. The income approach may incorporate the use of a discounted cash flow method. In applying the discounted cash flow method, the estimated future cash flows and residual values for each intangible asset are discounted to a present value using a discount rate based on an estimated weighted average cost of capital for the building materials industry. These cash flow projections were based on management’s estimates of economic and market conditions including revenue growth rates, operating margins, capital expenditures and working capital requirements. The valuations were prepared using Level 3 inputs.



15

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9.
INCOME TAXES

We recorded an income tax benefit of $0.7 million and an income tax expense of $1.7 million for the three months ended March 31, 2019 and 2018, respectively. For the three months ended March 31, 2019 , our effective tax rate was impacted by (i) losses generated by certain of our Canadian subsidiaries for which no income tax benefit was recognized due to a related full valuation allowance, (ii) our estimated interest expense limitation in accordance with the Tax Cuts and Jobs Act (the "Tax Act") and related proposed regulations for which a full valuation allowance is anticipated, (iii) our estimated global intangible low-taxed income ("GILTI") inclusion for U.S. tax purposes, and (iv) unfavorable discrete items occurring in the first quarter including a net tax shortfall recognized for share-based compensation. These unfavorable items were partially offset by additional state income tax benefits recognized. For the three months ended March 31, 2018 , our effective tax rate differed from the federal statutory rate primarily due to losses generated by our Canadian operations for which no income tax benefit was recognized due to a related full valuation allowance. Our other entities had net pre-tax income and recognized corresponding net income tax expense, which included cumulative adjustments to deferred income taxes resulting in additional income tax expense of $1.3 million .

In accordance with U.S. GAAP, we reduce the value of deferred tax assets to the amount that is more likely than not to be realized in future periods. The ultimate realization of the benefit of deferred tax assets from deductible temporary differences or tax carryovers depends on generating sufficient taxable income during the periods in which those temporary differences become deductible. We considered the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on these considerations, we relied upon the reversal of certain deferred tax liabilities to realize a portion of our deferred tax assets and maintained valuation allowances as of March 31, 2019 and December 31, 2018 for other deferred tax assets because of uncertainty regarding their ultimate realization. Our total net deferred tax liability was approximately $40.2 million as of March 31, 2019 and $38.0 million as of December 31, 2018, of which $45.1 million and $43.1 million were recorded as non-current liabilities. Deferred tax assets for certain state taxing jurisdictions, which were recorded as non-current assets, were $4.9 million as of March 31, 2019, and $5.1 million as of December 31, 2018.

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


10.
EARNINGS (LOSS) PER SHARE

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

The following is a reconciliation of the components of the basic and diluted earnings (loss) per share calculations:

 
Three Months Ended
March 31,
(in millions)
2019 (1)
 
2018 (1)
Numerator for basic and diluted earnings per share:
 
 
 
Net income (loss) attributable to U.S. Concrete
$
(2.7
)
 
$
(3.9
)
 
 
 
 
Denominator for earnings per share:
 
 
 
Basic weighted average common shares outstanding
16.3

 
16.4

Diluted weighted average common shares outstanding
16.3

 
16.4


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


16

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The potentially dilutive shares excluded from the diluted earnings per share calculation for the periods presented related to unvested restricted stock awards and restricted stock units, as their effect would have been anti-dilutive or they had not met their performance target and totaled 249,000 for the three months ended March 31, 2019 and 403,000 for the three months ended March 31, 2018.

11.
COMMITMENTS AND CONTINGENCIES
 
Legal Proceedings
 
From time to time, and currently, we are subject to various claims and litigation brought by employees, customers and other third parties for, among other matters, personal injuries, property damages, product defects and delay damages that have, or allegedly have, resulted from the conduct of our operations.  As a result of these types of claims and litigation, we must periodically evaluate the probability of damages being assessed against us and the range of possible outcomes.  In each reporting period, if we determine that the likelihood of damages being assessed against us is probable, and if we believe we can estimate a range of possible outcomes, then we will record a liability. The amount of the liability will be based upon a specific estimate, if we believe a specific estimate to be likely, or it will reflect the low end of our range. Currently, there are no material legal proceedings pending against us.
 
In the future, we may receive funding deficiency demands related to multi-employer pension plans to which we contribute.  We are unable to estimate the amount of any potential future funding deficiency demands because the actions of each of the other contributing employers in the plans has an effect on each of the other contributing employers, and the development of a rehabilitation plan by the trustees and subsequent submittal to and approval by the Internal Revenue Service is not predictable. Further, the allocation of fund assets and return assumptions by trustees are variable, as are actual investment returns relative to the plan assumptions.

As of May 9, 2019 , there were no material product defect claims pending against us.  Accordingly, our existing accruals for claims against us do not reflect any material amounts relating to product defect claims.  While our management is not aware of any facts that would reasonably be expected to lead to material product defect claims against us that would have a material adverse effect on our business, financial condition or results of operations, it is possible that claims could be asserted against us in the future.  We do not maintain insurance that would cover all damages resulting from product defect claims.  In particular, we generally do not maintain insurance coverage for the cost of removing and rebuilding structures.  In addition, our indemnification arrangements with contractors or others, when obtained, generally provide only limited protection against product defect claims.  Due to inherent uncertainties associated with estimating unasserted claims in our business, we cannot estimate the amount of any future loss that may be attributable to such unasserted product defect claims related to ready-mixed concrete we have delivered prior to March 31, 2019 .

We believe that the resolution of any litigation currently pending or threatened against us or any of our subsidiaries will not materially exceed our existing accruals for those matters.  However, because of the inherent uncertainty of litigation, there is a risk that we may have to increase our accruals for one or more claims or proceedings to which we or any of our subsidiaries is a party as more information becomes available or proceedings progress, and any such increase in accruals could have a material adverse effect on our consolidated financial condition or results of operations.  We expect in the future that we and our operating subsidiaries will, from time to time, be a party to litigation or administrative proceedings that arise in the normal course of our business.
 
We are subject to federal, state and local environmental laws and regulations concerning, among other matters, air emissions and wastewater discharge. Our management believes we are in substantial compliance with applicable environmental laws and regulations. From time to time, we receive claims from federal and state environmental regulatory agencies and entities asserting that we may be in violation of environmental laws and regulations. Based on experience and the information currently available, our management does not believe that these claims will materially exceed our related accruals.  Despite compliance and experience, it is possible that we could be held liable for future charges, which might be material, but are not currently known to us or cannot be estimated by us.  In addition, changes in federal or state laws, regulations or requirements, or discovery of currently unknown conditions, could require additional expenditures.


17

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As permitted under Delaware law, we have agreements that provide indemnification of officers and directors for certain events or occurrences while the officer or director is or was serving at our request in such capacity. The maximum potential amount of future payments that we could be required to make under these indemnification agreements is not limited; however, we have a director and officer insurance policy that potentially limits our exposure and enables us to recover a portion of future amounts that may be paid.  As a result of the insurance policy coverage, we believe the estimated fair value of these indemnification agreements is minimal. Accordingly, we have not recorded any liabilities for these agreements as of March 31, 2019 .

We and our subsidiaries are parties to agreements that require us to provide indemnification in certain instances when we acquire businesses and real estate and in the ordinary course of business with our customers, suppliers, lessors and service providers. As of May 9, 2019 , there were no material pending claims related to such indemnification.

Royalty Assessment

In 2014, Eagle Rock Materials Ltd. (“ERM”), a subsidiary of our Canadian aggregates operation, Polaris Materials ("Polaris"), was notified by the British Columbia Ministry of Forests, Lands and Natural Resource Operations that royalties were due for 2012 and 2013, based on the tenure date, in respect of Polaris’s quarrying lease for the Eagle Rock Quarry project. In 2016, ERM was notified that further royalties were due for 2014, 2015 and 2016 (up to October) based on the tenure date, and in 2017, ERM was notified of interest charges. The total royalties and interest claimed to date are approximately CAD $3.8 million ( $2.9 million ). Although the Company has recorded a provision for a portion of the assessment, it continues to dispute and negotiate certain aspects of the claim, including interest charges and the timing of payment.

Eminent Domain Matter

In 2018, we incurred $0.7 million of expenses to dismantle and move a ready-mixed concrete plant and office to another location, because the District of Columbia exercised its power of eminent domain over the former site. We incurred certain additional expenditures that were capitalized for the new facilities. We have filed reimbursement claims for all of our costs, but have not recognized a receivable for such reimbursement pending approval by a third-party right-of-way agent and the District of Columbia Department of Transportation.

Insurance Programs

We maintain third-party insurance coverage against certain workers’ compensation, automobile and general liability risks.  Under certain components of our insurance program, we share the risk of loss with our insurance underwriters by maintaining high deductibles subject to aggregate annual loss limitations.  Generally, our deductible retentions per occurrence for auto, workers’ compensation and general liability insurance programs are $1.0 million , although certain of our operations are self-insured for workers’ compensation.  We fund these deductibles and record an expense for expected losses under the programs.  The expected losses are determined using a combination of our historical loss experience and subjective assessments of our future loss exposure. The estimated losses are subject to uncertainty, including changes in claims reporting patterns, claims settlement patterns, judicial decisions, legislation and economic conditions.  Although we believe that the estimated losses we have recorded are reasonable, significant differences related to the items noted above could materially affect our insurance obligations and future expense. The amount accrued for self-insurance claims, which was recorded in accrued liabilities and other long-term obligations, was $21.4 million as of March 31, 2019 and $20.4 million as of December 31, 2018 .

Performance Bonds
 
In the normal course of business, we and our subsidiaries were contingently liable under $36.4 million in performance bonds that various contractors, states and municipalities have required as of March 31, 2019 . The bonds principally relate to construction contracts, reclamation obligations, licensing and permitting. We and our subsidiaries have indemnified the underwriting insurance company against any exposure under the performance bonds. No material claims have been made against these bonds.




18

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

12.
SEGMENT INFORMATION

Our two reportable segments consist of ready-mixed concrete and aggregate products as described below.

Our ready-mixed concrete segment produces and sells ready-mixed concrete. This segment serves the following markets: Texas, Northern California, New York, New Jersey, Pennsylvania, Washington, D.C., Oklahoma and the U.S. Virgin Islands. Our aggregate products segment produces crushed stone, sand and gravel and serves the markets in which our ready-mixed concrete segment operates as well as the West Coast and Hawaii. Other operations and products not associated with a reportable segment include our aggregates distribution operations, building materials stores, hauling operations, ARIDUS ® Rapid Drying Concrete technology, brokered product sales and recycled aggregates. Other operations and products also previously included lime slurry operations until they were sold on September 5, 2018.

Our customers are generally involved in the construction industry, which is a cyclical business and is subject to general and more localized economic conditions.  In addition, our business is impacted by seasonal variations in weather conditions, which vary by regional market.  Accordingly, demand for our products and services during the winter months is typically lower than in other months of the year because of inclement weather.  Also, sustained periods of inclement weather and other adverse weather conditions could cause the delay of construction projects during other times of the year.

Our chief operating decision maker evaluates segment performance and allocates resources based on Adjusted EBITDA. We define Adjusted EBITDA as our net income (loss), excluding the impact of income tax expense (benefit), depreciation, depletion and amortization, net interest expense and certain other non-cash, non-recurring and/or unusual, non-operating items including, but not limited to: non-cash stock compensation expense, non-cash change in value of contingent consideration, impairment of assets, acquisition-related costs, officer transition expenses, quarry dredge costs for specific event, and hurricane-related losses, net of recoveries. Acquisition-related costs consist of fees and expenses for accountants, lawyers and other professionals incurred during the negotiation and closing of strategic acquisitions and certain acquired entities' management severance costs. Acquisition-related costs do not include fees or expenses associated with post-closing integration of strategic acquisitions. Many of the impacts excluded to derive Adjusted EBITDA are similar to those excluded in calculating our compliance with our debt covenants.

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

Adjusted EBITDA should not be construed as an alternative to, or a better indicator of, operating income or loss, is not based on U.S. GAAP, and is not a measure of our cash flows or ability to fund our cash needs. Our measurements of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies, and may not be comparable to similarly titled measures used in the agreements governing our debt.

We generally account for inter-segment sales at market prices. Corporate includes executive, administrative, financial, legal, human resources, business development and risk management activities that are not allocated to reportable segments and are excluded from segment Adjusted EBITDA. Eliminations include transactions to account for intercompany activity.

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

19

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following tables set forth certain financial information relating to our operations by reportable segment:



Three Months Ended
March 31,
($ in millions)

2019

2018
Revenue by Segment:

 

 
Ready-mixed concrete




Sales to external customers

$
290.4


$
289.2

Aggregate products




Sales to external customers

31.8


24.7

Intersegment sales

11.1


9.5

Total aggregate products
 
42.9

 
34.2

Total reportable segment revenue

333.3

 
323.4

Other products and eliminations

(0.2
)

4.4

Total revenue

$
333.1


$
327.8






Reportable Segment Adjusted EBITDA:

 

 
Ready-mixed concrete

$
34.5


$
41.0

Aggregate products

10.4


4.7

Total reportable segment Adjusted EBITDA

$
44.9

 
$
45.7






Reconciliation of Total Reportable Segment Adjusted EBITDA to Net Income (Loss):




Total reportable segment Adjusted EBITDA
 
$
44.9

 
$
45.7

Other products and eliminations from operations
 
(0.1
)
 
1.1

Corporate overhead
 
(14.5
)
 
(15.5
)
Depreciation, depletion and amortization for reportable segments
 
(20.8
)
 
(19.2
)
Acquisition-related costs
 
—

 
(1.0
)
Hurricane-related losses, net of recoveries
 
—

 
(0.3
)
Quarry dredge costs for specific event
 
—

 
(0.2
)
Purchase accounting adjustments for inventory
 
—

 
(0.7
)
Interest expense, net
 
(11.6
)
 
(11.4
)
Change in value of contingent consideration for reportable segments
 
(1.0
)
 
(0.3
)
Loss on mixer truck fire
 
(0.6
)
 
—

Corporate, other products and eliminations other income, net
 
0.4

 
(0.4
)
Income from operations before income taxes
 
(3.3
)
 
(2.2
)
Income tax benefit (expense)
 
0.7

 
(1.7
)
Net income (loss)
 
$
(2.6
)
 
$
(3.9
)



20

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 
 
Three Months Ended
March 31,
($ in millions)
 
2019
 
2018
Capital Expenditures:
 
 
 
 
Ready-mixed concrete
 
$
5.8

 
$
6.5

Aggregate products
 
1.2

 
0.9

Other products and corporate
 
0.2

 
1.0

Total capital expenditures
 
$
7.2

 
$
8.4


 
 
Three Months Ended
March 31,
($ in millions)
 
2019
 
2018
Revenue by Product:
 
 
 
 
Ready-mixed concrete
 
$
290.4

 
$
289.2

Aggregate products
 
31.8

 
24.7

Aggregates distribution
 
5.3

 
4.1

Building materials
 
4.6

 
5.9

Lime
 
—

 
2.3

Hauling
 
0.9

 
1.1

Other
 
0.1

 
0.5

Total revenue
 
$
333.1

 
$
327.8

 
($ in millions)
 
March 31, 2019
 
December 31, 2018

Identifiable Property, Plant and Equipment Assets:
 
 
 
 
Ready-mixed concrete
 
$
288.6

 
$
295.5

Aggregate products
 
355.0

 
355.0

Other products and corporate
 
29.0

 
29.7

Total identifiable assets
 
$
672.6

 
$
680.2





21

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

13.
SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

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

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

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



22

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 2019
(in millions)
 
 
Parent
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations and Reclassifications
 
U.S. Concrete Consolidated
ASSETS
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
—

 
$
13.6

 
$
10.3

 
$
—

 
$
23.9

Trade accounts receivable, net
 
—

 
214.8

 
10.8

 
—

 
225.6

Inventories
 
—

 
41.3

 
9.2

 
—

 
50.5

Other receivables
 
3.0

 
16.5

 
0.2

 
—

 
19.7

Prepaid expenses and other
 
—

 
9.5

 
0.5

 
—

 
10.0

Intercompany receivables
 
9.7

 
—

 
0.3

 
(10.0
)
 
—

Total current assets
 
12.7

 
295.7

 
31.3

 
(10.0
)
 
329.7

Property, plant and equipment, net
 
—

 
463.9

 
208.7

 
—

 
672.6

Operating lease assets
 
—

 
60.3

 
13.7

 
—

 
74.0

Goodwill
 
—

 
155.7

 
83.8

 
—

 
239.5

Intangible assets, net
 
—

 
105.9

 
4.6

 
—

 
110.5

Investment in subsidiaries
 
607.3

 
—

 
—

 
(607.3
)
 
—

Long-term intercompany receivables
 
321.7

 
—

 
3.6

 
(325.3
)
 
—

Other assets
 
—

 
9.7

 
1.4

 
—

 
11.1

Total assets
 
$
941.7

 
$
1,091.2

 
$
347.1

 
$
(942.6
)
 
$
1,437.4

LIABILITIES AND EQUITY
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Accounts payable
 
$
—

 
$
107.9

 
$
2.4

 
$
—

 
$
110.3

Accrued liabilities
 
13.9

 
87.6

 
8.3

 
—

 
109.8

Current operating lease liabilities
 
—

 
11.9

 
1.6

 
—

 
13.5

Current maturities of long-term debt
 
0.3

 
29.5

 
0.4

 
—

 
30.2

Intercompany payables
 
—

 
—

 
10.0

 
(10.0
)
 
—

Total current liabilities
 
14.2

 
236.9

 
22.7

 
(10.0
)
 
263.8

Long-term debt, net of current maturities
 
617.0

 
61.6

 
0.2

 
—

 
678.8

Long-term operating lease liabilities
 
—

 
50.5

 
12.3

 
—

 
62.8

Other long-term obligations and deferred credits
 
—

 
48.4

 
3.1

 
—

 
51.5

Deferred income taxes
 
—

 
21.5

 
23.6

 
—

 
45.1

Long-term intercompany payables
 
—

 
201.9

 
123.4

 
(325.3
)
 
—

Total liabilities
 
631.2

 
620.8

 
185.3

 
(335.3
)
 
1,102.0

Total shareholders' equity
 
310.5

 
470.4

 
136.9

 
(607.3
)
 
310.5

Non-controlling interest
 
—

 
—

 
24.9

 
—

 
24.9

Total equity
 
310.5

 
470.4

 
161.8

 
(607.3
)
 
335.4

Total liabilities and equity
 
$
941.7

 
$
1,091.2

 
$
347.1

 
$
(942.6
)
 
$
1,437.4


23

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 and Reclassifications
 
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


24

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2019
(in millions)
 
 
Parent
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations and Reclassifications
 
U.S. Concrete Consolidated
Revenue
 
$
—

 
$
303.1

 
$
30.0

 
$
—

 
$
333.1

Cost of goods sold before depreciation, depletion and amortization
 
—

 
247.2

 
21.2

 
—

 
268.4

Selling, general and administrative expenses
 
—

 
30.5

 
1.6

 
—

 
32.1

Depreciation, depletion and amortization
 
—

 
18.8

 
4.0

 
—

 
22.8

Change in value of contingent consideration
 
—

 
1.0

 
—

 
—

 
1.0

Loss (gain) on sale/disposal of assets, net
 
—

 
0.9

 
—

 
—

 
0.9

Operating income (loss)
 
—

 
4.7

 
3.2

 
—

 
7.9

Interest expense, net
 
9.9

 
1.0

 
0.7

 
—

 
11.6

Other expense (income), net
 
—

 
(0.4
)
 
—

 
—

 
(0.4
)
Income (loss) before income taxes, equity in earnings of subsidiaries and non-controlling interest
 
(9.9
)
 
4.1

 
2.5

 
—

 
(3.3
)
Income tax expense (benefit)
 
(3.0
)
 
2.0

 
0.3

 
—

 
(0.7
)
Net income (loss) before equity in earnings of subsidiaries and non-controlling interest
 
(6.9
)
 
2.1

 
2.2

 
—

 
(2.6
)
Equity in earnings of subsidiaries
 
4.2

 
—

 
—

 
(4.2
)
 
—

Net income (loss)
 
(2.7
)
 
2.1

 
2.2

 
(4.2
)
 
(2.6
)
Less: Net income attributable to non-controlling interest
 
—

 
—

 
(0.1
)
 
—

 
(0.1
)
Net income (loss) attributable to U.S. Concrete
 
$
(2.7
)
 
$
2.1

 
$
2.1

 
$
(4.2
)
 
$
(2.7
)


















25

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2018
(in millions)
 
 
Parent
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations and Reclassifications
 
U.S. Concrete Consolidated
Revenue
 
$
—

 
$
308.8

 
$
19.0

 
$
—

 
$
327.8

Cost of goods sold before depreciation, depletion and amortization
 
—

 
250.6

 
16.6

 
—

 
267.2

Selling, general and administrative expenses
 
—

 
29.6

 
2.7

 
—

 
32.3

Depreciation, depletion and amortization
 
—

 
17.3

 
3.3

 
—

 
20.6

Change in value of contingent consideration
 
—

 
0.3

 
—

 
—

 
0.3

Loss (gain) on sale/disposal of assets, net
 
—

 
(0.2
)
 
—

 
—

 
(0.2
)
Operating income (loss)
 
—

 
11.2

 
(3.6
)
 
—

 
7.6

Interest expense, net
 
9.8

 
0.9

 
0.7

 
—

 
11.4

Other expense (income), net
 
—

 
(1.0
)
 
(0.6
)
 
—

 
(1.6
)
Income (loss) before income taxes and equity in earnings of subsidiaries
 
(9.8
)
 
11.3

 
(3.7
)
 
—

 
(2.2
)
Income tax expense (benefit)
 
(2.7
)
 
4.4

 
—

 
—

 
1.7

Net income (loss) before equity in earnings of subsidiaries
 
(7.1
)
 
6.9

 
(3.7
)
 
—

 
(3.9
)
Equity in earnings of subsidiaries
 
3.3

 
—

 
—

 
(3.3
)
 
—

Net income (loss)
 
(3.8
)
 
6.9

 
(3.7
)
 
(3.3
)
 
(3.9
)
Less: Net income attributable to non-controlling interest
 
—

 
—

 
—

 
—

 
—

Net income (loss) attributable to U.S. Concrete
 
$
(3.8
)
 
$
6.9

 
$
(3.7
)
 
$
(3.3
)
 
$
(3.9
)




















26

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2019
(in millions)
 
 
Parent
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
U.S. Concrete Consolidated
Net cash provided by (used in) operating activities
 
$
(0.9
)
 
$
26.2

 
$
2.6

 
$
(6.0
)
 
$
21.9

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Purchases of property, plant and equipment
 
—

 
(7.2
)
 
—

 
—

 
(7.2
)
Proceeds from disposals of businesses and property, plant and equipment
 
—

 
0.4

 
—

 
—

 
0.4

Net cash used in investing activities
 
—

 
(6.8
)
 
—

 
—

 
(6.8
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
Proceeds from revolver borrowings
 
76.3

 
—

 
—

 
—

 
76.3

Repayments of revolver borrowings
 
(74.8
)
 
—

 
—

 
—

 
(74.8
)
Proceeds from exercise of stock options
 
0.2

 
—

 
—

 
—

 
0.2

Payments of other long-term obligations
 
(0.7
)
 
(3.0
)
 
—

 
—

 
(3.7
)
Payments for other financing
 
—

 
(7.8
)
 
(0.3
)
 
—

 
(8.1
)
Other treasury share purchases
 
(1.1
)
 
—

 
—

 
—

 
(1.1
)
Intercompany funding
 
—

 
(5.6
)
 
(1.4
)
 
7.0

 
—

Net cash provided by (used in) financing activities
 
(0.1
)
 
(16.4
)
 
(1.7
)
 
7.0

 
(11.2
)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
 
(1.0
)
 
3.0

 
0.9

 
1.0

 
3.9

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
 
—

 
10.8

 
9.2

 
—

 
20.0

CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
(1.0
)
 
$
13.8

 
$
10.1

 
$
1.0

 
$
23.9


27

U.S. CONCRETE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2018
(in millions)
 
 
Parent
 
Guarantor Subsidiaries
 
Non-Guarantor Subsidiaries
 
Eliminations
 
U.S. Concrete Consolidated
Net cash provided by (used in) operating activities
 
$
(0.7
)
 
$
32.2

 
$
0.7

 
$
(6.3
)
 
$
25.9

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 

Purchases of property, plant and equipment
 
—

 
(7.9
)
 
(0.5
)
 
—

 
(8.4
)
Payments for acquisitions, net of cash acquired
 
—

 
(60.3
)
 
—

 
—

 
(60.3
)
Proceeds from disposals of businesses and property, plant and equipment
 
—

 
0.4

 
—

 
—

 
0.4

Insurance proceeds from property loss claims
 
—

 
1.6

 
—

 
—

 
1.6

Net cash provided by (used in) investing activities
 
—

 
(66.2
)
 
(0.5
)
 
—

 
(66.7
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
 
Proceeds from revolver borrowings
 
135.7

 
—

 
—

 
—

 
135.7

Repayments of revolver borrowings
 
(69.7
)
 
—

 
—

 
—

 
(69.7
)
Payments of other long-term obligations
 
(1.4
)
 
(2.1
)
 
—

 
—

 
(3.5
)
Payments for other financing
 
—

 
(6.2
)
 
(0.2
)
 
—

 
(6.4
)
Other treasury share purchases
 
(1.2
)
 
—

 
—

 
—

 
(1.2
)
Intercompany funding
 
(62.7
)
 
54.8

 
1.6

 
6.3

 
—

Net cash provided by (used in) financing activities
 
0.7

 
46.5

 
1.4

 
6.3

 
54.9

EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
 
—

 
—

 
(0.1
)
 
—

 
(0.1
)
NET INCREASE IN CASH AND CASH EQUIVALENTS
 
—

 
12.5

 
1.5

 
—

 
14.0

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
 
—

 
7.0

 
15.6

 
—

 
22.6

CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
—

 
$
19.5

 
$
17.1

 
$
—

 
$
36.6



28

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 our Annual Report on Form 10-K for the year ended December 31, 2018 (the “ 2018 10-K”). Our 2018 10-K includes additional information about our significant and critical accounting policies, as well as a detailed discussion of the most significant risks associated with our financial condition and operating results.
 
Overview

Our principal business is producing ready-mixed concrete and supplying aggregates in select geographic markets from our operations in the United States, U.S. Virgin Islands and Canada. The geographic markets for our products are generally local, except for our Canadian ag gregate products operation, Polaris Materials ("Polaris"), that primarily serves markets in California. Our customers are generally involved in the construction industry, which is a cyclical business and is subject to general and more localized economic conditions as well as seasonal variations in weather conditions. Our operating results are subject to fluctuations in the level and mix of construction activity that occur in our markets. The level of activity affects the demand for our products, while the product mix of activity among the various segments of the construction industry affects both our relative competitive strengths and our operating margins. Commercial and industrial projects generally provide more opportunities to sell value-added products that are designed to meet the high-performance requirements of these types of projects. We conduct our business primarily through two reportable segments: ready-mixed concrete and aggregate products.

Ready-Mixed Concrete.   Our ready-mixed concrete segment (which represented 87.2% of our revenue for the three months ended March 31, 2019 ) engages principally in the formulation, preparation and delivery of ready-mixed concrete to our customers’ job sites. We provide our ready-mixed concrete from our operations in Texas, New Jersey, New York, Washington, D.C., Pennsylvania, Northern California, Oklahoma and the U.S. Virgin Islands. Ready-mixed concrete is a highly versatile construction material that results from combining coarse and fine aggregates, such as gravel, crushed stone and sand, with water, various chemical admixtures and cement. We also provide services intended to reduce our customers’ overall construction costs by lowering the installed, or “in-place,” cost of concrete. These services include the formulation of mixtures for specific design uses, on-site and lab-based product quality control and customized delivery programs to meet our customers’ needs.

Aggregate Products. Our aggregate products segment (which represented 9.5% of our revenue for the three months ended March 31, 2019 , excluding $11.1 million of intersegment sales) produces crushed stone, sand and gravel from 17 aggregates facilities located in British Columbia, Canada; New Jersey; Texas; Oklahoma; 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 2.8 million tons of aggregates during the three months ended March 31, 2019 , with Canada representing 50% , Texas / Oklahoma representing 34% , New Jersey representing 13% , and the U.S. Virgin Islands representing 3% of the total production. We believe o ur aggregate reserves provide us with additional raw materials sourcing flexibility and supply availability.

Acquisitions and Divestitures

We completed five acquisitions during 2018 that expanded our ready-mixed concrete operations in our Atlantic Region (which we define to include New York, New Jersey, Washington, D.C. and Pennsylvania) and expanded our ready-mixed concrete and aggregate products operations in West Texas. 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.

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



29

Results of Operations
 
 
Three Months Ended
March 31,
 
%
($ in millions except selling prices)
2019
 
2018
 
Change (1)
Revenue
$
333.1

 
$
327.8

 
1.6%
Cost of goods sold before depreciation, depletion and amortization
268.4

 
267.2

 
0.4
Selling, general and administrative expenses
32.1

 
32.3

 
(0.6)
Depreciation, depletion and amortization
22.8

 
20.6

 
10.7
Change in value of contingent consideration
1.0

 
0.3

 
233.3
Loss (gain) on sale/disposal of assets, net
0.9

 
(0.2
)
 
NM
Operating income
7.9

 
7.6

 
3.9
Interest expense, net
11.6

 
11.4

 
1.8
Other income, net
(0.4
)
 
(1.6
)
 
(75.0)
Income (loss) before income taxes
(3.3
)
 
(2.2
)
 
(50.0)
Income tax expense (benefit)
(0.7
)
 
1.7

 
(141.2)
Net income (loss)
(2.6
)
 
(3.9
)
 
33.3
Less: Net income attributable to non-controlling interest
(0.1
)
 
—

 
NM
Net income (loss) attributable to U.S. Concrete
$
(2.7
)
 
$
(3.9
)
 
30.8
 
 
 
 

 
 
Ready-mixed Concrete Data:
 
 


 
 
Average selling price per cubic yard
$
139.60

 
$
136.99

 
1.9%
Sales volume in thousand cubic yards
2,077

 
2,095

 
(0.9)%
 
 
 
 
 
 
Aggregate Products Data:
 
 
 
 
 
Average selling price per ton (2)
$
12.12

 
$
10.90

 
11.2%
Sales volume in thousand tons
2,498

 
2,135

 
17.0%

(1) "NM" is defined as "not meaningful".
(2)
Our calculation of the aggregate products segment average selling price ("ASP") excludes certain other ancillary revenue and Polaris’s freight revenue.  We define revenue for our aggregate products ASP calculation as amounts billed to external and internal customers for coarse and fine aggregate products, excluding delivery charges.  Our definition and calculation of ASP may differ from other companies in the construction materials industry.

Revenue. For the three months ended March 31, 2019 , revenue grew 1.6% , or $5.3 million , compared to the prior year first quarter, primarily driven by contributions from acquisitions. We estimate that acquisitions completed since January 1, 2018 accounted for $8.4 million of revenue growth during the three months ended March 31, 2019 . As our business is seasonal and subject to adverse weather, our results were negatively impacted by inclement weather in various regions. As a result of the strategic expansion of our aggregate products operations and continued vertical integration, our aggregate products sales grew to 12.9% of the total reportable segment revenue in the three months ended March 31, 2019 from 10.6% in the same period last year.


30

In the first quarter of 2019, ready-mixed concrete sales contributed $1.2 million , or 22.6% , of our revenue growth, despite the weather-impacted decrease in volume. The 1.9% increase in the ASP of our ready-mixed concrete segment more than offset the weather-impacted volume decline. The volume decline in our Northern California market, which experienced more inclement weather than the first quarter of 2018, more than offset volume increases in other markets. Aggregate product sales increased $8.7 million , driven by a 17.0% increase in volume and an 11.2% increase in the ASP. Aggregate sales volumes increased primarily for Polaris and in our West Texas market. 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 $4.6 million in the first quarter of 2019 as compared to the first quarter of 2018 . This decline was primarily a result of the divestiture of the lime business, which provided $2.3 million of revenue in the first quarter of 2018, and lower sales of building materials from our stores in Northern California in the first quarter of 2019, which were impacted by inclement weather during the quarter.

Cost of goods sold before depreciation, depletion and amortization ("DD&A"). Cost of goods sold before DD&A increased by $1.2 million , or 0.4% , in the first quarter of 2019 compared to the prior year quarter. As a percentage of revenue, cost of goods sold before DD&A decreased by 0.9% in the first quarter of 2019 compared to the first quarter of 2018 . While delivery costs decreased in comparison to the same quarter last year, we experienced greater increases in other variable and fixed costs in comparison to the same quarter last year. Our increased variable costs were primarily driven by our aggregate products operations, consistent with their increased sales volume. Our fixed costs, which primarily consist of leased equipment costs, property taxes, dispatch costs, quality control, and plant management, increased over the comparable prior year period primarily due to higher personnel and equipment costs needed to operate our facilities, as well as higher overall fixed costs to operate more locations and trucks than in the previous year.

Selling, general and administrative expenses. Selling, general and administrative ("SG&A") expenses decreased $0.2 million , or 0.6% , for the quarter ended March 31, 2019 in comparison to the corresponding 2018 quarter. As a percentage of revenue, SG&A expenses decreased to 9.6% in the 2019 first quarter from 9.8% in the 2018 first quarter .

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

Change in value of contingent consideration.   For the three months ended March 31, 2019 and 2018, we recorded a non-cash loss on revaluation of contingent consideration of $1.0 million and $0.3 million , respectively. This non-cash expense is related to fair value changes in contingent consideration associated with certain of our acquisitions and in both periods was primarily due to the passage of time. The key inputs in determining the fair value of our contingent consideration of $58.3 million at March 31, 2019 included discount rates ranging from 1.67% to 15.75% 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.

Interest expense, net.   Net interest expense increased by $0.2 million for the quarter ended March 31, 2019 from the comparable 2018 quarter.

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

Other income, net. Other income, net, contains non-operating items and was higher in the first quarter of 2018 compared to this year primarily due to gains from insurance proceeds, whereas we did not receive such proceeds in the current quarter.


31

Income taxes.   For the three months ended March 31, 2019 and 2018, we recorded income tax benefit of $0.7 million and income tax expense of $1.7 million , respectively. For the three months ended March 31, 2019 , our effective tax rate was impacted by (i) losses generated by certain of our Canadian subsidiaries for which no income tax benefit was recognized due to a related full valuation allowance, (ii) our estimated interest expense limitation in accordance with the Tax Cuts and Jobs Act (the "Tax Act") and related proposed regulations for which a full valuation allowance is anticipated, (iii) our estimated global intangible low-taxed income ("GILTI") inclusion for U.S. tax purposes, and (iv) unfavorable discrete items occurring in the first quarter including a net tax shortfall recognized for share-based compensation. These unfavorable items were partially offset by additional state income tax benefits recognized. For the three months ended March 31, 2018 , our effective tax rate differed from the federal statutory rate primarily due to losses generated by our Canadian operations for which no income tax benefit was recognized due to a related full valuation allowance. Our other entities had net pre-tax income and recognized corresponding net income tax expense, which included cumulative adjustments to deferred income taxes resulting in additional income tax expense of $1.3 million .

Segment Information

Our chief operating decision maker reviews operating results based on our two reportable segments, which are ready-mixed concrete and aggregate products, and evaluates segment performance and allocates resources based on Adjusted EBITDA. We define Adjusted EBITDA as our net income, excluding the impact of income tax expense (benefit), depreciation, depletion and amortization, net interest expense and certain other non-cash, non-recurring and/or unusual, non-operating items including, but not limited to: non-cash stock compensation expense, non-cash change in value of contingent consideration, impairment of assets, acquisition-related costs, officer transition expenses, quarry dredge costs for specific event, hurricane-related losses, net of recoveries and derivative loss (income). 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.

During the quarter ended June 30, 2018, we re-characterized certain results of our Polaris distribution operations, which include shipping and terminal operations, to the aggregate products segment from other products and eliminations.  This change was made to better reflect how the Polaris business is viewed and operated by management and more closely aligns our reporting with how we manage and report our other aggregate products operations.  As a result of this change, certain first quarter 2018 amounts have been reclassified from those previously reported.
See Note 12, "Segment Information," to our condensed consolidated financial statements in this report for additional information regarding our segments and the reconciliation of Adjusted EBITDA to income before income taxes.

32


Ready-mixed Concrete

 
 
Three Months Ended
March 31,
 
Increase/ (Decrease)
($ in millions except selling prices)
 
2019
 
2018
 
%
Ready-mixed Concrete Segment:
 
 
 
 
 
 
Revenue
 
$
290.4

 
$
289.2

 
0.4%
Segment revenue as a percentage of total revenue
 
87.2
%
 
88.2
%
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
34.5

 
$
41.0

 
(15.9)%
Adjusted EBITDA as a percentage of segment revenue
 
11.9
%
 
14.2
%
 
 
 
 
 
 
 
 
 
Ready-mixed Concrete Data:
 
 
 
 
 
 
Average selling price per cubic yard (1)
 
$
139.60

 
$
136.99

 
1.9%
Sales volume in thousand cubic yards
 
2,077

 
2,095

 
(0.9)%
(1) Calculation excludes certain ancillary revenue that is reported within the segment.


Revenue.   Our ready-mixed concrete sales provided 87.2% and 88.2% of our total revenue in the first quarter of 2019 and 2018 , respectively. Segment revenue for the first quarter of 2019 increased $1.2 million , or 0.4% , from the comparable 2018 period, primarily driven by contributions from our acquisitions. We estimate that acquisitions completed since January 1, 2018 contributed $8.2 million in revenue growth to our 2019 first quarter ready-mixed concrete segment.

In the first quarter of 2019, our revenue growth as compared to the first quarter of 2018 was driven by the 1.9% ASP increase partially offset by a weather-impacted sales volume decline of 0.9% . Our Northern California market's sales volume decreased as a result of inclement weather in the first quarter of 2019 as compared to the same quarter in 2018, which was partially offset by increases in certain other markets.

Adjusted EBITDA.   Adjusted EBITDA for the first quarter of 2019 decreased $6.5 million , or 15.9% from the comparable 2018 period. Our variable costs were higher in the first quarter of 2019 compared to the prior year first quarter . Our fixed costs were higher in the 2019 first quarter compared to the prior year first quarter due to higher personnel and equipment costs needed to operate our facilities, as well as higher overall fixed costs to operate more locations and mixer trucks compared to the previous year. Segment Adjusted EBITDA as a percentage of segment revenue was 11.9% and 14.2% in the first quarter of 2019 and 2018 , respectively, primarily reflecting increased raw material costs and the negative impact of weather-related delays in some of our major markets.



33

Aggregate Products

 
 
Three Months Ended
March 31,
 
Increase/ (Decrease)
($ in millions except selling prices)
 
2019
 
2018
 
%
Aggregate Products Segment:
 
 
 
 
 
 
Sales to external customers
 
$
31.8

 
$
24.7

(1)  
 
Intersegment sales (2)
 
$
11.1

 
$
9.5

(1)  
 
Total aggregate products revenue
 
$
42.9

 
$
34.2

(1)  
25.4%
Segment revenue, excluding intersegment sales, as a percentage of total company revenue
 
9.5
%
 
7.5
%
(1)  
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
10.4

 
$
4.7

 
121.3%
Adjusted EBITDA as a percentage of total aggregate products revenue
 
24.2
%
 
13.7
%
(1)  
 
 
 
 
 
 
 
 
Aggregate Products Data:
 
 

 
 

 
 
       Average selling price per ton (3)
 
$
12.12

 
$
10.90

(1)  
11.2%
       Sales volume in thousand tons
 
2,498

 
2,135

 
17.0%

(1)
During the quarter ended June 30, 2018, we re-characterized certain results of our Polaris distribution operations, which include shipping and terminal operations, to the aggregate products segment from other products and eliminations.  This change was made to better reflect how the Polaris business is viewed and operated by management and more closely aligns our reporting with how we manage and report our other aggregate products operations.  As a result of this change, certain amounts were reclassified from those reported in our 2018 first quarter 10-Q.
(2)
We sell aggregate products to our ready-mixed concrete segment businesses at market price.
(3) 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.

Revenue.    Sales for our aggregate products segment provided 9.5% and 7.5% of our total revenue for the first quarter of 2019 and 2018 , respectively. Segment revenue increased $8.7 million , or 25.4% , compared to prior year levels, primarily driven by increases in Polaris and our West Texas quarries. Both the higher volume and higher ASP contributed to the revenue increase. We estimate that acquisitions completed since January 1, 2018 contributed $0.9 million to this revenue growth in the first quarter of 2019.
 
Adjusted EBITDA.    Adjusted EBITDA for our aggregate products segment increased $5.7 million in the first quarter of 2019 as compared to the first quarter of 2018 primarily reflecting the higher revenue, partially offset by the related higher cost of goods sold associated with the increased volume. Our variable costs associated with cost of goods sold, which include quarry labor and benefits, utilities, repairs and maintenance, and pit costs to mine the aggregates, all rose due to the higher sales volume. Overall, our segment Adjusted EBITDA as a percentage of segment revenue increased to 24.2% in the first quarter of 2019 from 13.7% in the first quarter of 2018, including the impact of increased zero-margin, customer-paid pass-through freight costs.



34

Liquidity and Capital Resources

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

As of March 31, 2019 , we had $23.9 million of cash and cash equivalents and $201.0 million of available borrowing capacity under the Revolving Facility, providing total available liquidity of $224.9 million . Our unused availability under the Revolving Facility at March 31, 2019 decreased from December 31, 2018 , primarily due to decreases in eligible accounts receivable, trucks and machinery balances.

The following key financial measurements reflect our financial condition as of March 31, 2019 and December 31, 2018 :

($ in millions)
March 31, 2019
 
December 31, 2018
Cash and cash equivalents
$
23.9


$
20.0

Working capital
65.9

 
71.2

Total debt (1)
709.0


714.1


(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; (3) purchasing property, plant and equipment; and (4) payments related to strategic acquisitions, including $39.0 million to $40.0 million of contingent and deferred consideration for past acquisitions. Our primary portfolio strategy includes acquisitions in various regions and markets. We may seek financing for acquisitions, including additional debt or equity capital.

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

The projection of our cash needs is based upon many factors, including without limitation, our expected volume, pricing, cost of materials and capital expenditures. Based on our projected cash needs, we believe that cash on hand, availability under the Revolving Facility and cash generated from operations will provide us with sufficient liquidity in the ordinary course of business, not including potential acquisitions. If, however, availability under the Revolving Facility, cash on hand and our operating cash flows are not adequate to fund our operations, we would need to obtain other equity or debt financing or sell assets to provide additional liquidity.

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

•
deterioration of revenue, due to lower volume and/or pricing, because of weakness in the markets in which we operate;
•
declines in gross margins due to shifts in our product mix or increases in the cost of our raw materials and fuel;
•
any deterioration in our ability to collect our accounts receivable from customers as a result of weakening in construction demand or payment difficulties experienced by our customers; and
•
inclement weather beyond normal patterns that could reduce our sales volumes.


35

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 with certain financial institutions named therein as lenders (the "Lenders") and Bank of America, N.A., as agent for the Lenders that provides for up to $350.0 million of revolving borrowings. 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” denominated in U.S. dollars.

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 other adjustments, as specified in the Third Loan Agreement, which matures August 31, 2022. 

The Third Loan Agreement contains usual and customary covenants including, but not limited to, restrictions on our ability to consolidate or merge; substantially change the nature of our business; sell, lease or otherwise transfer any of our assets; create or incur indebtedness; create liens; pay dividends or make other distributions; make loans; prepay certain indebtedness; and make investments or acquisitions. The 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 March 31, 2019 , we were in compliance with all covenants under the Third Loan Agreement.

Senior Unsecured Notes due 2024

We have issued $600.0 million aggregate principal amount of 6.375% senior unsecured notes due 2024 (the "2024 Notes"). The 2024 Notes are governed by an indenture (the “Indenture”) dated as of June 7, 2016, by and among U.S. Concrete, Inc., as issuer, the subsidiary guarantors party thereto, and U.S. Bank National Association, as trustee. The 2024 Notes accrue interest at a rate of 6.375% per annum, 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 basis by each of our restricted subsidiaries that guarantees any obligations under the Revolving Facility or that guarantees certain of our other indebtedness or certain indebtedness of our restricted subsidiaries (other than foreign restricted subsidiaries that guarantee only indebtedness incurred by another foreign subsidiary). The guarantees are joint and several. U.S. Concrete, Inc. does not have any independent assets or operations, and none of its foreign subsidiaries guarantee the 2024 Notes.

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

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

Other Debt

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

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

36

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

We used $ 6.8 million to fund investing activities during the three months ended March 31, 2019 and $ 66.7 million for the three months ended March 31, 2018 . During the three months ended March 31, 2018 , we paid $60.3 million to fund acquisitions. In addition, we used $7.2 million and $8.4 million in the three months ended March 31, 2019 and 2018 , respectively, to fund purchases of machinery and equipment as well as mixer trucks and other vehicles to service our business. Investing activities also included proceeds from the sale of property, plant and equipment of $0.4 million during the first three months of 2019 and proceeds from the sale of businesses and property, plant and equipment of $0.4 million during the first three months of 2018 .
 
Our net cash used in financing activities was $ 11.2 million for the three months ended March 31, 2019 , as compared to net cash provided by financing activities of $ 54.9 million for the comparable period of 2018 . Financing activities during the first three months of 2019 included $1.5 million of net borrowings under our Revolving Facility to operate our business. In addition, we repaid $ 8.1 million of finance leases and notes used to fund capital expenditures and paid $3.7 million for contingent and deferred consideration obligations. Financing activities during the first three months of 2018 included $66.0 million of net borrowings under our Revolving Facility to operate our business and fund acquisitions. In addition, we made payments of $6.4 million related to our finance leases and other financings and paid $3.5 million for contingent and deferred consideration obligations.

Inflation

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

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


37

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

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

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

•
general economic and business conditions, which will, among other things, affect demand for new residential and commercial construction;
•
our ability to successfully identify, manage, and integrate acquisitions;
•
the cyclical nature of, and changes in, the real estate and construction markets, including pricing changes by our competitors;
•
governmental requirements and initiatives, including those related to mortgage lending, financing or deductions, funding for public or infrastructure construction, land usage, and environmental, health, and safety matters;
•
disruptions, uncertainties or volatility in the credit markets that may limit our, our suppliers' and our customers' access to capital;
•
our ability to successfully implement our operating strategy;
•
weather conditions;
•
our substantial indebtedness and the restrictions imposed on us by the terms of our indebtedness;
•
the effects of currency fluctuations on our results of operations and financial condition;
•
our ability to maintain favorable relationships with third parties who supply us with equipment and essential supplies;
•
our ability to retain key personnel and maintain satisfactory labor relations; and
•
product liability, property damage, results of litigation, and other claims and insurance coverage issues.

For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see “Risk Factors” in Item 1A of Part I of our 2018 10-K and "Risk Factors" in Item 1A of Part II of this report.
  
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except as required by federal securities laws.


38

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the information previously reported under Part II, Item 7A of our 2018 10-K.

Item 4.
Controls and Procedures
Acquisitions

We completed the acquisition of Leon River Aggregate Materials, LLC on August 29, 2018 and are in the process of integrating it. Management’s assessment and conclusion on the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2019 , excludes an assessment of the internal control over financial reporting related to this acquisition, which represented 0.4% of our consolidated total assets and less than 0.1% of our consolidated revenue included in our unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2019 .

Disclosure Controls and Procedures

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

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


39

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

There have been no material changes in our risk factors as previously disclosed in "Risk Factors” in Item 1A of Part I of our 2018 10-K. Readers should carefully consider the factors discussed in “Risk Factors” in Item 1A of Part 1 of the 2018 10-K, which could materially affect our business, financial condition or future results. The risks described in our 2018 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.


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

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

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

 
$
—

 
—

 
$
43.3

February 1 - February 28, 2019
—

 
—

 
—

 
43.3

March 1 - March 31, 2019
27,729

 
40.63

 
—

 
43.3

Total
27,729

 
$
40.63

 
—

 
$
43.3


(1)
The total number of shares purchased includes shares of our common stock acquired from employees who elected for us to make their required tax payments upon vesting of certain restricted shares by withholding a number of those vested shares having a value on the date of vesting equal to their tax obligations.
(2)
On March 1, 2017, our Board approved a share repurchase program that allows us to repurchase up to $50.0 million of our common stock until the earlier of March 31, 2020, or a determination by the Board to discontinue the program. The program does not obligate us to acquire any specific number of shares.

Item 4. Mine Safety Disclosures

The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this Quarterly Report on Form 10-Q.


40

Item 6. Exhibits

3.1*
3.2*
3.3*
10.1† 
31.1
31.2
32.1
32.2
95.1
101.INS
—XBRL Instance Document
101.SCH
—XBRL Taxonomy Extension Schema Document
101.CAL
—XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
—XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
—XBRL Taxonomy Extension Label Linkbase Document
101.PRE
—XBRL Taxonomy Extension Presentation Linkbase Document
 
* Incorporated by reference to the filing indicated.
†   Management contract or compensatory plan or arrangement.


41

SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
U.S. CONCRETE, INC.
 
 
 
 
Date:
May 9, 2019
By:
/s/ Gibson T. Dawson
 
 
 
Gibson T. Dawson
 
 
 
Vice President, Corporate Controller and Chief Accounting Officer
 
 
 
(Principal Accounting Officer)


42
Exhibit 10.1 EXECUTIVE SEVERANCE AGREEMENT FOR ___________________________________ This Executive Severance Agreement (“Agreement”), including the attached Exhibit “A” which is incorporated herein by reference and made an integral part of this Agreement, is entered into between U.S. Concrete, Inc., a Delaware corporation (the “Company”), and _________________ (“Executive”) effective as of ________________, (the “Effective Date”). In consideration of the mutual agreements, provisions and covenants contained herein, and intending to be legally bound hereby, the Company and Executive agree as follows: 1. Termination 1.1 Termination by the Company. The Company may terminate Executive’s employment for any of the following reasons: a. Termination for Cause. For “Cause” upon the determination by a majority of the Company’s Board of Directors that “Cause” exists to terminate Executive’s employment. “Cause” means (i) Executive’s gross negligence, willful misconduct, or willful neglect in the performance of the material duties and services of Executive to the Company in his current Position (as set forth on Exhibit “A” or any Position to which Executive has been promoted (provided Executive has accepted such promotion)); (ii) Executive’s final conviction of a felony by a trial court, or Executive’s entry of a plea of nolo contendere to a felony charge; (iii) any criminal indictment of Executive relating to an event or occurrence for which Executive was directly responsible which, in the business judgment of a majority of the Company’s Board of Directors, exposes the Company to ridicule, shame or business or financial risk; or (iv) a material breach by Executive of any material provision of this Agreement. If the Company terminates Executive’s employment for Cause, Executive shall be entitled only to Executive’s (a) pro rata Monthly Base Salary (as defined in Exhibit “A”) through the date of such termination, and (b) unused vacation days for the year in which Executive’s termination occurs (the “Accrued Payment”). All future compensation and benefits, other than benefits to which Executive is entitled under the terms of the Company’s compensation and/or benefit plans or applicable law, shall cease as of the date of such termination. In the case of a termination for Cause under subpart (i) above, (a) all stock options previously granted by the Company to Executive that are vested on the date of termination for Cause shall, notwithstanding any contrary provision of any applicable plan or agreement covering any such stock option awards, remain outstanding and continue to be exercisable for a period of 30 days following the date of termination for Cause (or, if earlier, the expiration of their term), (b) all stock options previously granted by the Company to Executive that are not vested on the date of termination for Cause shall terminate immediately and (c) all restricted stock, restricted stock units and other awards that have not vested prior to the date of termination for Cause shall be cancelled immediately. In the case of a termination for Cause under subparts (ii), (iii) or (iv) above, (y) all stock options previously granted by the Company to Executive (whether or not vested) shall terminate immediately and (z) all restricted stock, restricted stock units and other awards that have not vested prior to the date of termination for Cause shall be cancelled immediately. 1

 
Exhibit 10.1 b. Involuntary Termination. Without Cause at the Company’s option at any time, with or without notice and for any reason whatsoever, other than death, Disability or for Cause, in the sole discretion of the Company (“Involuntary Termination”). Upon an Involuntary Termination, Executive shall receive all of the following severance benefits (provided, however, that, in the event of an Involuntary Termination in circumstances in which the provisions of Section 1.3 would be applicable, the provisions of Section 1.3 will instead apply): (i) a lump sum payment in cash (in accordance with Section 4.11) equal to the Monthly Base Salary in effect on the date of Involuntary Termination multiplied by 12; (ii) a lump-sum payment in cash (in accordance with Section 4.11) equal to the amount of (a) Executive’s target bonus for the bonus year in which Executive’s Involuntary Termination occurs, prorated based on the number of days in the bonus year that have elapsed prior to the date of Involuntary Termination, and (b) Executive’s Accrued Payment. (iii) provided that Executive is eligible for and timely elects to receive group medical continuation coverage under COBRA, the Company will pay 100% of applicable medical continuation premiums for the benefit of Executive (and his covered dependents as of the date of his termination, if any) under Executive’s then-current plan election for 18 months after termination, with such coverage to be provided under the closest comparable plan as offered by the Company from time to time; and (iv) fifty percent (50%) of all stock options, restricted stock awards, restricted stock units and similar equity awards granted to Executive by the Company prior to the date of termination (collectively, the “Outstanding Equity Awards”) that would otherwise have vested during the twelve month period following the date of Involuntary Termination if such termination had not occurred shall immediately vest and become exercisable on the date of termination. (v) the remaining portion of all Outstanding Equity Awards, if any, which is unvested on the date of Involuntary Termination shall be forfeited and canceled in its entirety upon the date of Involuntary Termination. (vi) each Outstanding Equity Award which is or becomes vested and exercisable on the date of Involuntary Termination shall remain outstanding and exercisable until the earlier of (a) the expiration of the twelve month period which commences on the date of Involuntary Termination and (b) the expiration date of the original term of the Outstanding Equity Award. c. Death/Disability. Upon Executive’s (i) death, or (ii) Disability. For purposes of this Agreement, “Disability” means if Executive becomes physically or mentally incapacitated and is therefore unable for a period of one hundred twenty (120) consecutive days or one-hundred eighty (180) days during any one (1) year period to perform his duties with substantially the same level of quality as immediately prior to such incapacity. Upon termination of employment due to such death or Disability, Executive or Executive’s heirs shall be entitled to 2

 
Exhibit 10.1 receive all severance benefits described in Section 1.1.b. as if Executive’s employment ended due to an Involuntary Termination by the Company as of the date of death or Disability. Additionally, each Outstanding Equity Award which is (i) vested and exercisable on the date of termination due to death or Disability shall remain outstanding and exercisable until the earlier of (a) the expiration of the twelve month period which commences on the date of such termination and (b) the expiration date of the original term of the Outstanding Equity Award, and (ii) unvested on the date of termination due to death or Disability shall be forfeited and canceled in its entirety upon the date of such termination. 1.2 Termination by Executive. Executive may terminate Executive’s employment for any of the following reasons: a. Termination for Good Cause. For “Good Cause”, which shall mean the occurrence of any of the following events, without Executive’s consent: (i) a material diminution in Executive’s then current Monthly Base Salary, (ii) a material change in the location of Executive’s principal place of employment by the Company from the “Location” set out on Exhibit “A,” (iii) any material diminution in Executive’s Position from that set out on Exhibit “A” or any title or Position to which Executive has been promoted, (iv) any material diminution of Executive’s authority, duties, or responsibilities from those commensurate and consistent with the character, status and dignity appropriate to Executive’s Position or any title or Position to which Executive has been promoted (provided, however, that if at any time Executive ceases to have such duties and responsibilities as are commensurate and consistent with his Position that are associated with a publicly traded company because the Company ceases to have any securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, or ceases to be required to file reports under Section 15(d) of the Securities Exchange Act of 1934, as amended, then Executive’s authority, duties and responsibilities will not be deemed to have been materially diminished solely due to the cessation of such publicly-traded company duties and responsibilities), or (v) any material breach by the Company of any material provision of this Agreement, which in the case of any of (i) through (v) above remains uncorrected by the Company for 30 days following Executive’s written notice to the Company of Good Cause. Executive must provide such written notice to the Company of Good Cause within 60 days of the initial existence of such specified event alleged to constitute Good Cause. Executive shall not be entitled to terminate his employment for Good Cause with respect to specified events unless Executive tenders resignation for Good Cause within 30 days of the Company’s failure to cure. Upon Executive’s termination of employment for Good Cause, Executive shall receive all severance benefits and equity treatment described in Section 1.1.b. as if Executive’s employment ended due to an Involuntary Termination by the Company (provided, however, that, in the event of a termination for Good Cause in circumstances in which the provisions of Section 1.3 would be applicable, the provisions of Section 1.3 will instead apply). b. Voluntary Termination. For any other reason whatsoever, in Executive’s sole discretion, upon thirty (30) days advance written notice to the Company. Upon such voluntary termination by Executive for any reason other than Good Cause (a “Voluntary Termination”), all of Executive’s future compensation and benefits, other than benefits to which Executive is entitled under the terms of the Company’s compensation and/or benefit plans or applicable law, shall cease as of the date of Voluntary Termination, and Executive shall be entitled only to the Accrued Payment. In the case of a Voluntary Termination, (i) all stock 3

 
Exhibit 10.1 options previously granted by the Company to Executive that are vested on the date of Voluntary Termination will remain outstanding and continue to be exercisable by Executive until 90 days after the date of Voluntary Termination (or, if earlier, the expiration of their term), and (ii) all Outstanding Equity Awards that have not vested prior to the date of Voluntary Termination shall be cancelled immediately. 1.3 Termination Following Change In Control. In the event a Change in Control (as defined herein) occurs and within one year after the date of the Change in Control either (a) Executive terminates his employment for Good Cause or (b) the Company or any successor (whether direct or indirect and whether by purchase, merger, consolidation, share exchange or otherwise) to substantially all of the business, properties and/or assets of the Company makes an Involuntary Termination of Executive’s employment, then in either case the Company or its successor shall be required to provide Executive, and Executive shall receive, all of the following Change in Control benefits: (i) a lump sum payment in cash equal to (a) the sum of (I) Executive’s Monthly Base Salary in effect on the termination date multiplied by 12, and (II) the amount of Executive’s full target bonus for the bonus year in which termination occurs, multiplied by (b) the Change in Control Multiplier described on Exhibit “A”, payable on the termination date (subject to Section 4.11); (ii) a lump-sum payment in cash (in accordance with Section 4.11) equal to the Accrued Payments; (iii) provided that Executive is eligible for and timely elects to receive group medical continuation coverage under COBRA, the Company will pay 100% of applicable medical continuation premiums for the benefit of Executive (and his covered dependents as of the date of his termination, if any) under Executive’s then-current plan election for 18 months after termination, with such coverage to be provided under the closest comparable plan as offered by the Company from time to time; and (iv) all stock options, restricted stock awards, restricted stock units and similar awards granted to Executive by the Company prior to the termination date shall be treated in accordance with Section 3.2. 1.4 Offset. In all cases, the compensation and benefits payable to Executive under this Agreement upon termination of Executive’s employment shall be offset by any undisputed amounts that Executive then owes to the Company. Notwithstanding the foregoing, an offset may apply to compensation or benefits under this Agreement only at the time when the compensation or benefits otherwise would have been paid under this Agreement. 1.5 One Recovery. In the event of termination of Executive’s employment, Executive shall be entitled, if at all, to only one set of severance benefits or Change in Control benefits, as applicable, provided in this Agreement. 1.6 Certain Obligations Continue. Upon termination of Executive’s employment, all rights and obligations of Executive and the Company or its successor under this Agreement shall cease as of the effective date of termination except that (i) Executive’s obligations under Article 4

 
Exhibit 10.1 2 and Sections 4.1 and 4.4 of this Agreement and the Company’s or its successor’s obligations under Article 3 and Sections 1.1, 1.2, 1.3, 2.6, 4.1 and 4.4 and the Company’s or its successor’s obligations to provide any severance benefits or Change in Control benefits to Executive shall survive such termination in accordance with their terms, and (ii) Executive shall be entitled to receive all compensation (including bonus) earned and benefits and reimbursements due through the effective date of termination as provided herein. 1.7 Notice of Termination. Any termination of Executive’s employment shall be communicated by Notice of Termination to the non-terminating party, given in accordance with this Agreement. For purposes of this Agreement, “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) specifies the termination date, if such date is other than the date of receipt of such notice. 2. Confidential Information; Post-Employment Obligations 2.1 Company Property. All written materials, records, data, and other documents prepared by Executive during Executive’s employment by the Company are Company property. All information, ideas, concepts, improvements, discoveries, and inventions that are conceived, made, developed, or acquired by Executive individually or in conjunction with others during Executive’s employment (whether during business hours and whether on the Company’s premises or otherwise) which relate to the Company’s business, products, or services are the Company’s sole and exclusive property. All memoranda, notes, records, files, correspondence, drawings, manuals, models, specifications, computer programs, maps, and all other documents, data, or materials of any type embodying such information, ideas, concepts, improvements, discoveries, and inventions are the Company’s property. At the termination of Executive’s employment with the Company for any reason, Executive shall return all of the Company’s documents, data, or other Company property, including all copies, to the Company. 2.2 Confidential Information; Non-Disclosure. a. Executive acknowledges that the business of the Company and its Affiliates is highly competitive and that the Company will provide Executive with access to Confidential Information relating to the business of the Company and its Affiliates. “Confidential Information” means and includes the Company’s and its Affiliates’ confidential and/or proprietary information and/or trade secrets that have been developed or used and/or are reasonably planned to be developed and that cannot be obtained readily by third parties from outside sources. Confidential Information includes, by way of example and without limitation, the following: information regarding customers, employees, contractors, and the industry not generally known to the public; strategies, methods, books, records, and documents; technical information concerning products, equipment, services, and processes, particularly mixing techniques, mix designs or chemical analyses of concrete products; procurement procedures and pricing techniques; the names of and other information concerning customers, investors, and business affiliates (such as contact name, service provided, pricing for that customer, type and amount of services used, credit and financial data, and/or other information relating to the Company’s relationship with that customer); pricing strategies and price curves; positions; plans 5

 
Exhibit 10.1 and strategies for expansion or acquisitions; budgets; customer lists; research; financial and sales data; trading methodologies and terms; evaluations, opinions, and interpretations of information and data; marketing and merchandising techniques; prospective customers’ names and marks; grids and maps; electronic databases; models; specifications; computer programs; internal business records; contracts benefiting or obligating the Company or its Affiliates; bids or proposals submitted to any third party; technologies and methods; training methods and training processes; organizational structure; personnel information, including salaries of personnel; payment amounts or rates paid to consultants or other service providers; and other such confidential or proprietary information. Executive acknowledges that this Confidential Information constitutes a valuable, special, and unique asset used by the Company and its Affiliates in its businesses to obtain a competitive advantage over its competitors. Executive further acknowledges that protection of such Confidential Information against unauthorized disclosure and use is of critical importance to the Company in maintaining its competitive position. Executive also will have access to, or knowledge of, Confidential Information of third parties, such as actual and potential customers, suppliers, partners, joint venturers, investors, financing sources and the like, of the Company. The Company also agrees to provide Executive with access to Confidential Information and specialized training regarding the Company’s and its Affiliates’ methodologies and business strategies, which will enable Executive to perform his job at the Company. b. Executive agrees that Executive will not, at any time during or after Executive’s employment with the Company, make any disclosure of any Confidential Information or specialized training of the Company, or make any use thereof without the express advance written consent of the Company, except in carrying out his employment responsibilities hereunder. Executive also agrees to preserve and protect the confidentiality of third party Confidential Information to the same extent, and on the same basis, as the Company’s Confidential Information. Nothing in this Section 2.2 is intended to prohibit Executive from complying with any court order, lawful subpoena or governmental request for information, provided that Executive notifies the Company promptly upon the receipt of any such order, subpoena or request and before the date of required compliance. 2.3 Non-Competition Obligations. The Company agrees to and shall provide Executive with immediate access to Confidential Information. Ancillary to the rights and severance benefits provided to Executive, the Company’s provision of Confidential Information and specialized training to Executive, and Executive’s agreement not to disclose Confidential Information, and in order to protect the Confidential Information described above, the Company and Executive agree to the following non-competition provisions. Executive agrees that during Executive’s employment with the Company and for the “Period of Post-Employment Non- Competition Obligations” set forth in Exhibit “A,” Executive will not, directly or indirectly, for Executive or for any other person or entity, in the “Geographic Region of Responsibility” described on Exhibit “A” (or, if Executive’s Geographic Region of Responsibility has changed, in any and all geographic regions in which Executive has devoted substantial attention at such location to the material business interest of the Company and its Affiliates during the 12-month period immediately preceding Executive’s termination of employment), engage in, assist, or have any active interest or involvement, whether as an employee, agent, consultant, creditor, advisor, officer, director, stockholder (excluding holdings of 2% or less of the stock of a public company), partner, proprietor, or any type of principal whatsoever in any person, firm, business 6

 
Exhibit 10.1 or other entity that generates more than 10% of its annual revenue from the sale of any concrete- related products and services that the Company or its Affiliates offers, then has plans to offer, or has offered in the preceding 12-month period, including, but not limited to, ready-mixed concrete, pre-cast concrete or related building materials or services such as proportioned mix design services, concrete mold engineering or design services, rebar, mesh, color additives, curing compounds, grouts, wooden forms, or similar products or services, whether at wholesale or retail (a “Competing Business”). Executive understands that the foregoing restrictions may limit Executive’s ability to engage in certain businesses in the geographic region and during the period provided for above, but acknowledges that these restrictions are necessary to protect the Confidential Information the Company has provided to Executive. 2.4 Non-Solicitation of Customers. During Executive’s employment with the Company and for the Period of Post-Employment Non-Competition Obligations, Executive will not call on, service, or solicit Competing Business from clients or customers of the Company or its affiliated entities whom that Executive, within the previous 24 months, (i) provided services to, worked with, solicited or had or made contact with, or (ii) had access to information and files concerning. 2.5 Non-Solicitation of Employees. During Executive’s employment with the Company, and for the Period of Post-Employment Non-Competition Obligations, Executive will not, either directly or indirectly, call on, solicit, or induce any other employee or officer of the Company or its affiliated entities whom Executive had contact with, knowledge of, or association with in the course of employment with the Company to terminate his employment, and will not assist any other person or entity in such a solicitation. 2.6 Early Resolution Conference/Arbitration. The parties are entering into this Agreement with the express understanding that this Agreement is clear and fully enforceable as written. If Executive ever decides to contend that any restriction on activities imposed by Article 2 of this Agreement is no longer enforceable as written or does not apply to an activity in which Executive intends to engage, Executive first will notify the Company’s Chief Executive Officer and its General Counsel in writing and meet with a Company representative at least 14 days before engaging in any activity that foreseeably could fall within the questioned restriction to discuss resolution of such claims (an “Early Resolution Conference”). Should the parties not be able to resolve disputes at the Early Resolution Conference, the parties agree to use confidential, binding arbitration to resolve the disputes. The arbitration shall be conducted in Dallas, Texas, in accordance with the then-current employment arbitration rules of the American Arbitration Association, before an arbitrator licensed to practice law in Texas. Each party shall bear its own costs and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with any dispute and/or arbitration arising out of or relating to this Agreement; provided, however, that the parties agree that the arbitrator, in the arbitrator’s discretion, may award a prevailing party, a reasonable attorney’s fee, including arbitration expenses and costs. Either party may seek a temporary restraining order, injunction, specific performance, or other equitable relief regarding the provisions of this Section if the other party fails to comply with obligations stated herein. The parties’ agreement to arbitrate applies only to the matters subject to an Early Resolution Conference. 7

 
Exhibit 10.1 2.7 Warranty and Indemnification. Executive warrants that Executive is not a party to any restrictive agreement limiting Executive’s activities in his employment by the Company. Executive further warrants that at the time of the signing of this Agreement, Executive knows of no written or oral contract or of any other impediment that would inhibit or prohibit employment with the Company, and that Executive will not knowingly use any trade secret, confidential information, or other intellectual property right of any other party in the performance of Executive’s duties hereunder. Executive shall hold the Company harmless from any and all suits and claims arising out of any breach of such restrictive agreement or contracts. 2.8 Modification. Executive and the Company agree that if the scope or enforceability of a restrictive covenant described in this Article 2 is disputed, the arbitrator or court with competent jurisdiction may modify and enforce the covenant to the extent that it determines the covenant to be reasonable. 3. Change in Control 3.1 Definitions. a. For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred on the earliest of any of the following dates: (i) the date the Company merges or consolidates with any other person or entity, and the voting securities of the Company outstanding immediately prior to such merger or consolidation do not continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; (ii) the date the Company sells all or substantially all of its assets to any other person or entity; (iii) the date the Company is dissolved; (iv) the date any person or entity together with its Affiliates (as defined herein) becomes, directly or indirectly, the Beneficial Owner (as defined herein) of voting securities representing more than 50% of the total voting power of all then outstanding voting securities of the Company; or (v) the date the individuals who constituted the non-employee members of the Company’s Board of Directors (“Incumbent Board”) as of the Effective Date cease for any reason to constitute at least a majority of the non-employee members of the Board, provided that for purposes of this clause (v) any person becoming a director of the Company whose election or nomination for election by the Company’s stockholders was approved by a vote of at least 80% of the directors comprising the Incumbent Board then still in office (or whose election or nomination was previously so approved) shall be, for purposes of this clause (v), considered as though such person were a member of the Incumbent Board; 8

 
Exhibit 10.1 provided, however, that notwithstanding anything to the contrary contained in clauses (i) - (v), a Change in Control shall not be deemed to have occurred in connection with any bankruptcy or insolvency of the Company, or any transaction in connection therewith. b. As used in this Agreement, the following terms are defined as follows: (i) “Affiliate” shall mean, with respect to any person or entity, any person or entity that, directly or indirectly, Controls, is Controlled by, or is under common Control with such person or entity in question. For the purposes of the definition of Affiliate, “Control” (including, with correlative meaning, the terms “Controlled by” and “under common Control with”) as used with respect to any person or entity, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person or entity whether through the ownership of voting securities or by contract or otherwise; (ii) “Beneficial Owner” has the meaning ascribed to it pursuant to Rule 13d-3 under the Securities Exchange Act of 1934; and (iii) “Parent” means a corporation, partnership, trust, limited liability company or other entity that is the ultimate Beneficial Owner of more than 50% of the Company’s or its successor’s outstanding voting securities. 3.2 Vesting of Awards. a. All stock options, restricted stock awards, restricted stock units and similar equity awards granted to Executive by the Company prior to the date of a Change in Control shall, notwithstanding any contrary provision of any applicable plan or agreement covering any such stock options, restricted stock awards, restricted stock units or similar awards, fully vest and become exercisable in full upon the consummation of such Change in Control and shall remain outstanding and in effect in accordance with their terms, and any restrictions, forfeiture conditions or other conditions or criteria applicable to any such awards shall lapse immediately upon the consummation of such Change in Control. Notwithstanding the foregoing, any such award that is subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations promulgated thereunder (and such other Treasury or Internal Revenue Service guidance) as in effect from time to time (“Section 409A”) shall only fully vest and become exercisable in full immediately upon a “change in ownership or effective control” as defined in Section 409A that also constitutes a Change in Control as defined in Section 3.1 above. Subject to Section 3.2(b) below, Executive may exercise any such stock options or other exercisable awards at any time before the expiration of their term. b. Notwithstanding anything in Section 3.2(a) to the contrary, in the event of a Change in Control, the Company may, in its sole discretion, provide for the cancellation upon the consummation of such Change in Control of all outstanding stock options, restricted stock awards, restricted stock units and similar equity awards granted to Executive by the Company prior to the date of such Change in Control, whether or not vested and exercisable, and a payment in cash, property, or a combination thereof, will be made to Executive within ten (10) days after the consummation of the Change in Control in an amount equal to (a) in the case of 9

 
Exhibit 10.1 stock options and similar appreciation awards, the excess, if any, of (i) the per share consideration received by a shareholder of the Company’s capital stock in connection with the Change in Control (the “Change in Control Price”) over (ii) the exercise price or purchase price per share, if any, of the underlying award, multiplied by the number of unexercised shares subject to such equity award, and (b) in the case of restricted stock awards, restricted stock units and similar full-value equity awards, the Change in Control Price multiplied by the number of shares subject to such equity award. If the Change in Control Price is less than the exercise price or purchase price of a stock option or similar equity award, such stock option or similar equity award will be automatically cancelled with no payment therefor. 3.3 Section 280G Cutback. Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company or its successor to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Code (such excise tax, together with any interest thereon, any penalties, additions to tax, or additional amounts with respect to such excise tax, and any interest in respect of such penalties, additions to tax or additional amounts, being collectively referred herein to as the “Excise Tax”), then if the aggregate of all Payments that would be subject to the Excise Tax, reduced by all Federal, state and local taxes applicable thereto, including the Excise Tax is less than the amount Executive would receive, after all such applicable taxes, if Executive received Payments equal to an amount which is $1.00 less than three times the Executive's “base amount”, as defined in and determined under Section 280G of the Code, then, such Payments shall be reduced or eliminated to the extent necessary so that the aggregate Payments received by Executive will not be subject to the Excise Tax. If a reduction in the Payments is necessary, reduction shall occur in the following order: first, a reduction of cash payments not attributable to equity awards which vest in an accelerated basis; second, a reduction in any other cash amount payable to Executive; third, the reduction of any employee benefit valued as a “parachute payment” (as defined in Section 280G of the Code); and fourth, the cancellation of accelerated vesting of stock awards. If acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of Executive's stock awards. All determinations made under this Section 3.3 and the assumptions to be utilized in arriving at such determinations shall be made by a registered public accounting firm designated by Executive and reasonably acceptable to the Company (the “Accounting Firm”). All fees and expenses of the Accounting Firm shall be borne solely by the Company or its successor. 4. Miscellaneous 4.1 Statements about the Company or Executive. Except as may be required to comply with a court order, lawful subpoena or governmental request for information, Executive and the Company shall refrain, both during and after Executive’s employment, from publishing any oral or written statements about the other that are disparaging, slanderous, libelous, or defamatory, or that disclose private or confidential information about their business affairs. 4.2 Notices. Notices and all other communications hereunder shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail. Notices to the Company shall be sent to its President and its 10

 
Exhibit 10.1 Secretary at: U.S. Concrete, Inc., 331 N. Main Street, Euless, Texas 76039. Notices and communications to Executive shall be sent to the address Executive most recently provided in writing to the Company. 4.3 No Waiver. No failure by either party at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of any provisions or conditions of this Agreement. 4.4 Mediation. If a dispute arises out of or relates to Executive’s termination, other than a dispute regarding Executive’s obligations under Article 2, and if the dispute cannot be settled through direct discussions, then the Company and Executive agree to try to settle the dispute in an amicable manner by confidential mediation before having recourse to any other proceeding or forum. 4.5 Governing Law. This Agreement shall be deemed to be made in the State of Delaware, and the validity, interpretation, construction, and performance of this Agreement in all respects shall be governed by the laws of the State of Delaware without regard to its principles of conflicts of law. No provision of this Agreement or any related document will be construed against or interpreted to the disadvantage of any party hereto by any court or other governmental or judicial authority by reason of such party having or being deemed to have structured or drafted such provision. 4.6 Consent to Jurisdiction; Waiver of Jury Trial. a. Except as otherwise specifically provided herein, Executive and the Company each hereby irrevocably submits to the exclusive jurisdiction of the United States District Court for the District of Delaware (or, if subject matter jurisdiction in that court is not available, in any state court located within Wilmington, Delaware) over any dispute arising out of or relating to this Agreement. Except as otherwise specifically provided in this Agreement, the parties undertake not to commence any suit, action or proceeding arising out of or relating to this Agreement in a forum other than a forum described in this Section 4.6; provided, however, that nothing herein shall preclude the Company or Executive from bringing any suit, action or proceeding in any other court for the purposes of enforcing the provisions of this Section 4.6 or enforcing any judgment obtained by the Company. b. The agreement of the parties to the forum described in Section 4.6(a) is independent of the law that may be applied in any suit, action, or proceeding and the parties agree to such forum even if such forum may under applicable law choose to apply non-forum law. The parties hereby waive, to the fullest extent permitted by applicable law, any objection which they now or hereafter have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding brought in an applicable court described in Section 4.6(a), and the parties agree that they shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court. The parties agree that, to the fullest extent permitted by applicable law, a final and non-appealable judgment in any suit, action or proceeding brought in any applicable court described in Section 4.6(a) shall be conclusive and binding upon the parties and may be enforced in any other jurisdiction. 11

 
Exhibit 10.1 c. The parties hereto irrevocably consent to the service of any and all process in any suit, action or proceeding arising out of or relating to this Agreement by the mailing of copies of such process to such party at such party’s address specified in Section 4.2. d. Each party hereto hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding arising out of or relating to this Agreement. Each party hereto (i) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such party would not, in the event of any action, suit or proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other party hereto has been induced to enter into this Agreement by, among other things, the mutual waiver and certifications in this Section 4.6(d). e. Each party shall bear its own costs and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with any dispute arising out of or relating to this Agreement. 4.7 Assignment. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective heirs, legal representatives, successors and permitted assigns. The Company may assign this Agreement to any affiliated entity. Executive’s rights and obligations under this Agreement are personal, and they shall not be assigned or transferred without the Company’s prior written consent otherwise than by will or the laws of descent and distribution. The Company will require any successor (direct or indirect and whether by purchase, merger, consolidation, share exchange or otherwise) to substantially all of the business, properties and assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Company would have been required to perform it had no succession taken place. 4.8 Other Agreements/Entire Agreement. This Agreement shall supersede any and all existing oral or written agreements, representations or warranties between Executive and the Company or any of its Affiliates relating to the terms of Executive’s termination by the Company or any of its Affiliates. This Agreement (including Exhibit “A” attached hereto, which is incorporated herein by reference and made an integral part of this Agreement) constitutes the entire agreement of the parties with respect to the subject matters of this Agreement. Any modification of this Agreement (including without limitation to Exhibit “A”) will be effective only if it is in writing and signed by each party. Executive is also a party to that certain Indemnification Agreement, dated ___________________, between Executive and the Company (the “Indemnification Agreement”). Nothing in this Agreement is intended to alter or amend the terms or effect of the Indemnification Agreement, which shall remain in effect in accordance with its terms, notwithstanding the execution or termination of this Agreement. 4.9 Invalidity. Should any provision(s) in this Agreement be held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall be unaffected and shall continue in full force and effect, and the invalid, void or unenforceable provision(s) shall be deemed not to be part of this Agreement. 4.10 Withholding. All payments required to be made to Executive pursuant to this Agreement shall be subject to the withholding of amounts relating to income and employment 12

 
Exhibit 10.1 taxes and other customary employee deductions in conformity with the Company’s payroll policies in effect from time to time. 4.11 Time of Payments and Section 409A. a. All amounts payable under Sections 1.1.b, 1.2.a and 1.3 of this Agreement shall be paid only after Executive’s timely execution, without revocation, of a waiver and general release of claims in favor of the Company, its subsidiaries and Affiliates, and their respective predecessors and successors, and all of the respective current or former directors, officers, employees, shareholders, partners, members, agents or representatives of any of the foregoing, in a form satisfactory to the Company. The Company shall provide the aforementioned release to Executive within 10 days following the date of Executive’s termination of employment. Executive’s execution of the release shall be considered timely only if the release is executed and returned to the Company by the deadline specified by the Company, which deadline shall not be earlier than the 21st day following the date the release is provided to Executive nor later than the 55th day following the date of termination of Executive’s employment. If Executive has timely returned the executed release and the revocation period has expired, the amounts payable under Sections 1.1.b, 1.2.a and 1.3 of this Agreement, to the extent payable in a lump sum, shall be paid on the 65th day following the date of Executive’s termination of employment. b. The parties intend that any amounts payable hereunder that could constitute “deferred compensation” within the meaning of Section 409A will be compliant with Section 409A, and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. With respect to the time of payments of any amounts under this Agreement that are “deferred compensation” subject to Section 409A, references in this Agreement to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A. For purposes of Section 409A, each of the payments that may be made under this Agreement are designated as separate payments for purposes of Treasury Regulations Section 1.409A-1(b)(4)(i)(F), 1.409A-1(b)(9)(iii) and 1.409A-1(b)(9)(v)(B). c. Notwithstanding anything in this Agreement to the contrary, if Executive is deemed to be a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) and Executive is not “disabled” within the meaning of Section 409A(a)(2)(C), no payments hereunder to be made in connection with a “separation from service” that are “deferred compensation” subject to Section 409A shall be made to Executive prior to the date that is six (6) months after the date of Executive’s “separation from service” (as defined in Section 409A) or, if earlier, Executive’s date of death. This Section 4.11 shall be applied by accumulating all payments that otherwise would have been paid within six months of Executive’s termination and paying such accumulated amounts in a single lump sum on the earliest date permitted under Section 409A that is also a business day. Executive shall be a “specified employee” for the twelve-month period beginning on April 1 of a year if Executive is a “key employee” as defined in Section 416(i) of the Code (without regard to Section 416(i)(5)) as of December 31 of the preceding year or using such dates as designated by the Company in accordance with Section 409A and in a manner that is consistent with respect to all of the Company’s nonqualified deferred compensation plans, if any. For purposes of 13

 
Exhibit 10.1 determining the identity of specified employees, the Company may establish procedures as it deems appropriate in accordance with Section 409A. d. For the avoidance of doubt, it is intended that any indemnification payment or expense reimbursement made hereunder shall be exempt from Section 409A. Notwithstanding the foregoing, if any indemnification payment or expense reimbursement made hereunder shall be determined to be “deferred compensation” within the meaning of Section 409A, then (i) the amount of the indemnification payment or expense reimbursement during one taxable year shall not affect the amount of the indemnification payments or expense reimbursement during any other taxable year, (ii) the indemnification payments or expense reimbursement shall be made on or before the last day of Executive’s taxable year following the year in which the expense was incurred, and (iii) the right to indemnification payments or expense reimbursement hereunder shall not be subject to liquidation or exchange for another benefit. 4.12 Headings. The Article and Section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 4.13 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. IN WITNESS WHEREOF, the Company and Executive have executed this Agreement in multiple originals to be effective on the Effective Date. _______________________ (“Executive”) U.S. Concrete, Inc. (the “Company”) By: By: Date: Printed Name: Title: Date: 14

 
Exhibit 10.1 EXHIBIT “A” TO EXECUTIVE SEVERANCE AGREEMENT BETWEEN U.S. CONCRETE AND ___________________________ Position: Location: Geographic Region of Responsibility: During Executive’s employment with the Company, within 75 miles of any plant or other operating facility in which the Company is then engaged in business. Upon termination of Executive’s employment with the Company, within 75 miles of any plant or other operating facility in which the Company was engaged in business on the date immediately prior to Executive’s termination. Change in Control Multiplier: 2 Period of Post-Employment If Executive’s employment is terminated under Non-Competition Obligations: Section 1.1 or 1.2, the Period of Post- Employment Non-Competition Obligations shall be one year from the date of termination. If Executive’s employment is terminated under Section 1.3, the Period of Post-Employment Non-Competition Obligations shall commence on the date of termination and continue for period of time equal to (a) 12 months multiplied by (b) the Change in Control Multiplier. Annual Base Salary: Annual Paid Vacation: 15

 
                                                    
Exhibit 31.1

CERTIFICATION

I, William J. Sandbrook, certify that:
 
1.       I have reviewed this quarterly report on Form 10-Q of U.S. Concrete, Inc. for the quarterly period ended March 31, 2019 ;
 
2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.       The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b)         Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.       The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date:
May 9, 2019
By:
/s/ William J. Sandbrook
 
 
 
William J. Sandbrook
 
 
 
Chairman and Chief Executive Officer
 
 
 
(Principal Executive Officer)


Exhibit 31.2

CERTIFICATION

I, John E. Kunz, certify that:
 
1.       I have reviewed this quarterly report on Form 10-Q of U.S. Concrete, Inc. for the quarterly period ended March 31, 2019 ;
 
2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.       The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
(a)         Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b)         Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c)         Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d)         Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.       The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a)         All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)         Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date:
May 9, 2019
By:
/s/ John E. Kunz
 
 
 
John E. Kunz
 
 
 
Senior Vice President and Chief Financial Officer
 
 
 
(Principal Financial Officer)



Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the quarterly report of U.S. Concrete, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2019 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, William J. Sandbrook, President, Chief Executive Officer and Vice Chairman of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
Date:
May 9, 2019
By:
/s/ William J. Sandbrook
 
 
 
William J. Sandbrook
 
 
 
Chairman and Chief Executive Officer
 
 
 
(Principal Executive Officer)



Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the quarterly report of U.S. Concrete, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2019 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, I, John E. Kunz, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
Date:
May 9, 2019
By:
/s/ John E. Kunz
 
 
 
John E. Kunz
 
 
 
Senior Vice President and Chief Financial Officer
 
 
 
(Principal Financial Officer)



Exhibit 95.1

Section 1503. Mine Safety Disclosures

On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Act, was enacted. Section 1503 of the Act contains reporting requirements regarding mine safety. We are committed to providing a safe workplace for all of our employees, including those working at our quarries. The operation of our quarries is subject to regulation by the federal Mine Safety and Health Administration, or MSHA, under the Federal Mine Safety and Health Act of 1977. Set forth below is the required information regarding certain mining safety and health matters for the quarter ended March 31, 2019 . In evaluating this information, consideration should be given to factors such as: (i) the number of citations and orders will vary depending on the size of the quarry, (ii) the number of citations issued will vary from inspector-to-inspector and mine-to-mine, and (iii) citations and orders can be contested and appealed, and in that process, may be reduced in severity and amount, and are sometimes dismissed. The table below includes references to specific sections of the Mine Act.

We are providing the information in the table by mine as that is how we manage and operate our business.
 
 
 
 
 
 
 
 
(H)
 
(A)
(B)
(C)
(D)
(E)
(F)
(G)
Pending
 
Section
Section
Section
Section
Section
Proposed
 
Legal
Mine Name/ID
104 S&S
104(b)
104(d)
110(b)(2)
107(a)
Assessments
Fatalities
Action
Leon River / Proctor 4105206
-
-
-
-
-
-

-
-
Robert Lee Quarry / 4102617
-
-
-
-
-
-

-
-
Cox Bend Quarry / 4102977
-
-
-
-
-
$
121

-
-
Bronte Quarry / 4104210
-
-
-
-
-
-

-
-
Waurika Quarry / 3400362
-
-
-
-
-
-

-
-
Vernon Quarry / 3401820
-
-
-
-
-
-

-
-
Ingram North Amarillo / 4103599
1
-
-
-
-
-

-
-
Red River Quarry / 3401945
-
-
-
-
-
-

-
-
Chatfield Plant / 4104209
-
-
-
-
-
-

-
-
Hamburg Quarry / 2800011
1
-
-
-
-
$
917

-
-
Glen Gardner Quarry / 2800009
-
-
-
-
-
-

-
-
Cedar Bridge Quarry / 2800717
-
-
-
-
-
-

-
-
Wantage Quarry / 2801035
-
-
-
-
-
-

-
-
Quinton Twp Pit / 2801014
-
-
-
-
-
-

-
-
Springfield Quarry / 5500002
3
-
-
-
-
-

-
-
Brookman Quarry / 5500008
1
-
-
-
-
$
14,818

-
-
(A)
The total number of violations of mandatory health or safety standards that could significantly and substantially contribute to the cause and effect of a coal or other mine safety or health hazard under section 104 of the Mine Safety and Health Act of 1977 (30 U.S.C. 814) for which the operator received a citation from the Mine Safety and Health Administration.
(B)
The total number of orders issued under section 104(b) of such Act (30 U.S.C. 814(b)).
(C)
The total number of citations and orders for unwarrantable failure of the mine operator to comply with mandatory health or safety standards under section 104(d) of such Act (30 U.S.C. 814(d)).
(D)
The total number of flagrant violations under section 110(b)(2) of such Act (30 U.S.C. 820(b)(2)).
(E)
The total number of imminent danger orders issued under section 107(a) of such Act (30 U.S.C. 817(a)).
(F)
The total dollar value of proposed assessments from the Mine Safety and Health Administration under such Act (30 U.S.C. 801 et seq.).
(G)
The total number of mining-related fatalities.
(H)
Any pending legal action before the Federal Mine Safety and Health Review Commission involving such coal or other mine.