U.S. Concrete Announces Third Quarter 2020 Results
EULESS, Texas, Oct. 29, 2020 /PRNewswire/ -- U.S. Concrete, Inc. (NASDAQ: USCR), a leading producer of construction materials in select major markets across the United States, today reported results for the quarter ended September 30, 2020.
THIRD QUARTER 2020 RESULTS((1)) AND HIGHLIGHTS, INCLUDING RECORD AGGREGATE RESULTS
-- Consolidated revenue was $374.2 million
-- Aggregate products revenue was $63.6 million, an all-time quarterly high
-- Aggregate products average selling price per ton, $13.37, and volumes
sold, 3.7 million, were both all-time quarterly highs
-- Aggregate products Adjusted EBITDA was $26.8 million, an all-time
quarterly high and a 64.4% increase compared to the prior year third
quarter
-- Net income was $24.1 million
-- Total Adjusted EBITDA((2)) increased 2.9% to $63.9 million compared to
the prior year third quarter
-- Net income margin was 6.4% and Total Adjusted EBITDA Margin((2)) was
17.1%
-- Net cash provided by operating activities increased 19.0% to $61.3
million compared to the prior year third quarter
-- Adjusted Free Cash Flow((2)) increased 40.7% to $58.4 million compared
to the prior year third quarter
-- Completed a $400.0 million private placement of 5.125% senior unsecured
notes due 2029
_________
(1) Certain computations within this
press release may reflect rounding
adjustments.
(2) Total Adjusted EBITDA, Adjusted Free
Cash Flow and related margins are
non-GAAP financial measures.
Please refer to the reconciliations
and other information at the end of
this press release.
Ronnie Pruitt, President and Chief Executive Officer of U.S. Concrete, Inc. stated, "We believe our business is well positioned to continue to deliver strong results, both in the short and long term. We are very proud to announce record results for the quarter, and record six-month results when combining the second and third quarters of 2020, all in the context of lower revenues amid the pandemic. The transformation we have undertaken over the past several years to reshape our portfolio and capabilities for growth and better margins has proven critical in enabling us to respond to the changing dynamics in the current environment. Our diversified portfolio of operating assets, commitment to innovate, and agile culture have allowed us to respond to the construction demand in the markets that we serve and positions us to deliver meaningful financial results into the future."
OPERATING RESULTS
AGGREGATE PRODUCTS SEGMENT
Three Months Ended Nine Months Ended
September 30, September 30,
($ in millions except
selling prices) 2020 2019 2020 2019
Aggregate Products
Segment:
Sales to external
customers $
45.2 $
37.9 $
114.5 $
105.8
Intersegment sales 18.4 15.0 47.2 39.5
Total aggregate products
revenue $
63.6 $
52.9 $
161.7 $
145.3
Adjusted EBITDA $
26.8 $
16.3 $
59.7 $
38.9
Aggregate Products Data:
Average selling price
("ASP") per ton(1) $
13.37 $
11.86 $
12.87 $
11.93
Sales volume in thousand
tons 3,663 3,116 9,483 8,492
(1) The calculation of ASP excludes
certain other ancillary revenue
and certain freight revenue.
The Company defines revenue for
its aggregate products ASP
calculation as amounts billed
to external and internal
customers for coarse and fine
aggregate products, excluding
delivery charges. The
Company's definition and
calculation of ASP may differ
from other companies in the
construction materials
industry.
Aggregate products revenue increased $10.7 million in the third quarter of 2020 to an all-time high of $63.6 million, resulting from a 17.6% increase in sales volume and a 12.7% increase in average selling price related to the favorable mix of products sold compared to the third quarter of 2019. Aggregate products Adjusted EBITDA of $26.8 million in the third quarter of 2020 increased 64.4% from the third quarter of 2019, primarily related to improved operating efficiencies, increased production volume at the Company's Texas aggregates operations, and the profitability from the Coram Materials business acquired earlier this year.
READY-MIXED CONCRETE SEGMENT
Three Months Ended Nine Months Ended
September 30, September 30,
($ in millions
except selling
prices) 2020 2019 2020 2019
Ready-Mixed
Concrete
Segment:
Revenue $
313.3 $
354.1 $
877.9 $
958.5
Adjusted EBITDA $
45.9 $
51.5 $
115.7 $
124.1
Ready-Mixed
Concrete Data:
ASP per cubic
yard(1) $
141.38 $
138.54 $
140.99 $
138.81
Sales volume in
thousand cubic
yards 2,213 2,551 6,216 6,892
(1) Calculation excludes certain
ancillary revenue that is
reported within the segment.
Revenue from the ready-mixed concrete segment for the third quarter of 2020 decreased $40.8 million, or 11.5%, compared to the prior year third quarter, as the business continued to be impacted by regional effects of the pandemic, including certain construction project delays and cement supply shortages. Partially offsetting the impact of the volume decline on revenue, overall ASP increased due to changes in the product and geographical mix of revenue compared to the third quarter of 2019. Despite the volume decline, business contingency actions, including labor management, concrete mix optimization, higher asset utilization and delivery efficiencies, which included lower fuel expenses, reduced the impact to Adjusted EBITDA in the third quarter of 2020. Adjusted EBITDA as a percentage of revenue improved in the third quarter of 2020 compared to the third quarter of 2019 aided by our overall cost containment efforts.
CONSOLIDATED THIRD QUARTER 2020 RESULTS COMPARED TO THIRD QUARTER 2019
Consolidated revenue decreased $34.7 million, or 8.5%, compared to the prior year third quarter, primarily as a result of lower ready-mixed concrete volumes, which were partially offset by record revenue from aggregate products. During the third quarter of 2020, operating income was $32.3 million compared to $33.3 million in the third quarter of 2019, with an operating income margin of 8.6% compared to 8.1% in the third quarter of 2019. Aggressive cost containment measures, operating efficiencies, growth from the aggregate products segment, which included the Coram Materials acquisition, and lower fuel expenses helped to mitigate the impact on operating income from lower revenue.
Selling, general and administrative expenses ("SG&A") were $32.1 million in the third quarter of 2020 compared to $32.0 million in the third quarter of 2019. SG&A as a percentage of revenue was 8.6% in the third quarter of 2020 compared to 7.8% in the prior year third quarter. On a non-GAAP basis, Adjusted SG&A, which excludes non-cash stock compensation, acquisition-related costs, a pension withdrawal liability, and realignment initiative costs, was 7.3% of revenue in the 2020 third quarter compared to 6.3% in the prior year third quarter, with reduced leverage due to the lower sales volumes. Adjusted SG&A as a percentage of revenue is a non-GAAP financial measure. Please refer to the definitions, reconciliations, and other information at the end of this press release.
The income tax benefit for the third quarter of 2020 included the impact of $10.2 million of tax benefits related to the finalization of the interest limitation provisions contained in the Tax Cuts and Jobs Act and the net operating loss carryback provisions of the Coronavirus Aid, Relief and Economic Security Act ("CARES Act").
BALANCE SHEET AND LIQUIDITY
Net cash provided by operating activities in the third quarter of 2020 increased 19.0% to $61.3 million, compared to $51.5 million in the prior year third quarter. The Company's Adjusted Free Cash Flow in the third quarter of 2020 increased 40.7% to $58.4 million, compared to $41.5 million in the prior year third quarter. Adjusted Free Cash Flow is a non-GAAP financial measure. Please refer to the definitions, reconciliations, and other information at the end of this press release.
On September 23, 2020, U.S. Concrete completed a private offering of $400.0 million aggregate principal amount of 5.125% senior unsecured notes due 2029. In October 2020, the Company used the net proceeds from that notes offering plus borrowings from its revolving credit facility to redeem $400.0 million of its outstanding 6.375% senior unsecured notes due 2024. As of September 30, 2020, the Company had available borrowing capacity of $240.4 million under its revolving credit facility and $179.6 million under its delayed draw term loan facility, resulting in total liquidity of $825.5 million when combined with its cash balances. At September 30, 2020, U.S. Concrete had cash and cash equivalents of $405.5 million and total debt of $1,102.8 million, resulting in Net Debt of $697.3 million. Net Debt as of September 30, 2020 increased $50.6 million from December 31, 2019 due primarily to the acquisition of Coram Materials in February 2020. Net debt at September 30, 2020 decreased $44.1 million from June 30, 2020 following positive cash flow performance. Net Debt is a non-GAAP financial measure. Please refer to the definitions, reconciliations, and other information at the end of this press release.
CONFERENCE CALL AND WEBCAST DETAILS
U.S. Concrete will host a conference call on Thursday, October 29, 2020 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time), to review its third quarter 2020 results. To participate in the call, please dial (877) 312-8806 - Conference ID: 9977758 at least 20 minutes before the conference call begins and ask for the U.S. Concrete conference call.
A live webcast will be available on the Investor Relations section of the Company's website at www.us-concrete.com. Please visit the website at least 20 minutes before the call begins to register, download and install any necessary audio software. A replay of the conference call and archive of the webcast will be available shortly after the call on the Investor Relations section of the Company's website at www.us-concrete.com.
2020 INVESTOR DAY
U.S. Concrete will host a virtual Investor Day on Thursday, November 12, 2020 at 10:30 a.m. Eastern Time (9:30 a.m. Central Time). The event will include presentations on the Company's business strategy from Ronnie Pruitt, U.S. Concrete's President and Chief Executive Officer, and John Kunz, Senior Vice President and Chief Financial Officer. The live webcast and presentation slides will be available on the Investor Relations section of the Company's website at www.us-concrete.com. A replay of the event will also be made available on the Company's website following the event.
ABOUT U.S. CONCRETE
U.S. Concrete, Inc. (NASDAQ: USCR) is a leading supplier of aggregates and concrete for infrastructure, residential and commercial projects across the country. The Company holds leading market positions in the high-growth metropolitan markets of Dallas/Fort Worth, San Francisco, New York City, Philadelphia, and Washington, D.C., and its materials have been used in some of the most complex and highly specialized construction projects of the last decade. U.S. Concrete has continued to grow organically and through a series of strategic acquisitions of independent producers in our target markets.
For more information on U.S. Concrete, visit www.us-concrete.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements and information provided in this press release are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include, without limitation, statements concerning plans, objectives, goals, projections, outlook, 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," "intend," "should," "expect," "plan," "anticipate," "believe," "estimate," "outlook," "predict," "potential" or "continue," the negative of such terms or other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. These statements are predictions based on our current expectations and projections about future events which we believe are reasonable. Actual events or results may differ materially.
By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We believe that these risks and uncertainties include, but are not limited to: 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. These risks and uncertainties also include the effects of COVID-19; the length and severity of the COVID-19 pandemic; the pace of recovery following the COVID-19 pandemic; our ability to implement cost containment strategies; and the adverse effects of the COVID-19 pandemic on our business, the economy and the markets we serve.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. All written and oral forward-looking statements made in connection with this press release that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by the "Risk Factors" in our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. We are under no duty to update any of the forward-looking statements after the date of this press release to conform such statements to actual results or to changes in our expectations, except as required by federal securities laws. There can be no assurance that other factors will not affect the accuracy of these forward-looking statements or that our actual results will not differ materially from the results anticipated in such forward-looking statements. Unpredictable or unknown factors we have not discussed in this press release also could have material effects on actual results or matters that are the subject of our forward-looking statements. We undertake no obligation to, and do not intend to, update our description of important factors each time a potential important factor arises.
Non-GAAP Financial Measures
Included in this press release are certain non-GAAP financial measures that we believe are useful for investors. These non-GAAP financial measures may not be comparable to similarly titled measures other companies report and are not intended to be used as an alternative to any measure of our performance in accordance with GAAP.
Reconciliations and definitions of the non-GAAP financial measures used in this press release are included at the end of this press release. Because certain GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP financial measures.
(Tables Follow)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in millions except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
---
2020 2019 2020 2019
---
Revenue $
374.2 $
408.9 $
1,031.3 $
1,109.5
Cost of goods sold
before
depreciation,
depletion and
amortization 283.9 321.2 807.9 886.4
Selling, general and
administrative
expenses 32.1 32.0 97.5 103.3
Depreciation,
depletion and
amortization 25.8 22.3 74.4 70.2
Change in value of
contingent
consideration 0.1 0.3 (5.4) 1.6
Loss (gain) on sale/
disposal of assets,
net - (0.2) (0.1) 0.8
Operating income 32.3 33.3 57.0 47.2
Interest expense,
net 12.0 11.6 34.8 34.8
Other income, net (0.4) (0.2) (1.6) (7.8)
Income before income
taxes 20.7 21.9 23.8 20.2
Income tax expense
(benefit) (3.4) 8.3 (4.0) 8.3
Net income 24.1 13.6 27.8 11.9
Less: Net income
attributable to
non-controlling
interest 0.6 0.6 0.8 0.9
Net income
attributable to
U.S. Concrete $
23.5 $
13.0 $
27.0 $
11.0
Earnings per share attributable to
U.S. Concrete:
Basic $
1.42 $
0.79 $
1.63 $
0.67
Diluted $
1.42 $
0.79 $
1.63 $
0.67
Weighted average shares
outstanding:
Basic 16.6 16.5 16.6 16.4
Diluted 16.6 16.5 16.6 16.4
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
September 30, 2020 December 31, 2019
---
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $
405.5 $
40.6
Trade accounts receivable, net 232.4 233.1
Inventories 68.9 59.0
Other receivables, net 10.2 8.4
Prepaid expenses and other 10.9 7.9
Total current assets 727.9 349.0
Property, plant and equipment, net 786.7 673.5
Operating lease assets 69.7 69.8
Goodwill 239.5 239.5
Intangible assets, net 76.6 92.4
Other assets 15.3 9.1
Total assets $
1,915.7 $
1,433.3
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $
137.2 $
136.4
Accrued liabilities 99.4 63.5
Current maturities of long-term debt 435.0 32.5
Current operating lease liabilities 14.0 12.9
Total current liabilities 685.6 245.3
Long-term debt, net of current maturities 667.8 654.8
Long-term operating lease liabilities 59.1 59.7
Other long-term obligations and deferred credits 45.5 49.1
Deferred income taxes 56.1 54.8
Total liabilities 1,514.1 1,063.7
Commitments and contingencies
Equity:
Additional paid-in capital 361.0 348.9
Retained earnings 54.8 31.1
Treasury stock, at cost (37.9) (36.6)
Total shareholders' equity 377.9 343.4
Non-controlling interest 23.7 26.2
Total equity 401.6 369.6
Total liabilities and equity $
1,915.7 $
1,433.3
U.S. CONCRETE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
Nine months ended September 30,
2020 2019
---
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $
27.8 $
11.9
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, depletion and amortization 74.4 70.2
Amortization of debt issuance costs 1.6 1.3
Change in value of contingent consideration (5.4) 1.6
Gains from eminent domain matter and property
insurance claims - (6.0)
Deferred income taxes 2.1 2.0
Provision for doubtful accounts and customer
disputes 1.7 2.2
Stock-based compensation 8.8 16.4
Other, net (1.3) (0.2)
Changes in assets and liabilities, excluding effects of
acquisitions:
Accounts receivable (3.4) (33.9)
Inventories (2.0) (2.7)
Prepaid expenses and other current assets (4.4) 2.9
Other assets and liabilities 9.8 (1.3)
Accounts payable and accrued liabilities 35.7 27.7
Net cash provided by operating activities 145.4 92.1
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (17.5) (28.6)
Payment for acquisition of business (141.8)
Proceeds from sale of property, plant and
equipment 0.7 1.2
Proceeds from eminent domain matter and property
insurance claims - 6.0
Net cash used in investing activities (158.6) (21.4)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 400.0
Proceeds from revolver borrowings 347.9 273.3
Repayments of revolver borrowings (347.9) (277.2)
Payments for acquisition-related liabilities (10.0) (33.4)
Payments for finance leases, promissory notes and
other (17.7) (24.2)
Debt issuance costs (7.5)
Shares redeemed for employee income tax
obligations (1.2) (2.2)
Proceeds from finance leases and other 14.5 0.2
Net cash provided by (used in) financing
activities 378.1 (63.5)
EFFECT OF EXCHANGE RATES ON CASH AND CASH
EQUIVALENTS - (0.2)
NET INCREASE IN CASH AND CASH EQUIVALENTS 364.9 7.0
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 40.6 20.0
CASH AND CASH EQUIVALENTS AT END OF PERIOD $
405.5 $
27.0
NON-GAAP FINANCIAL MEASURES
(Unaudited)
Total Adjusted EBITDA and Total Adjusted EBITDA Margin
Total Adjusted EBITDA and Total Adjusted EBITDA Margin are non-GAAP financial measures. We define Total Adjusted EBITDA as our net income, excluding the impact of income taxes, 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, acquisition-related costs, officer transition expenses, purchase accounting adjustments for inventory, pension withdrawal liability, and realignment initiative costs. Acquisition-related costs consist of fees and expenses for accountants, lawyers and other professionals incurred during the negotiation and closing of strategic acquisitions and certain acquired entities' management severance costs. Acquisition-related costs do not include fees or expenses associated with post-closing integration of strategic acquisitions. We define Total Adjusted EBITDA Margin as the amount determined by dividing Total Adjusted EBITDA by total revenue. We have included Total Adjusted EBITDA and Total Adjusted EBITDA Margin herein because they are widely used by investors for valuation and comparing our financial performance with the performance of other building material companies. We also use Total Adjusted EBITDA and Total Adjusted EBITDA Margin to monitor and compare the financial performance of our operations. Total Adjusted EBITDA does not give effect to the cash we must use to service our debt or pay our income taxes and thus does not reflect the funds actually available for capital expenditures. In addition, our presentation of Total Adjusted EBITDA may not be comparable to similarly titled measures other companies report. Total Adjusted EBITDA and Total Adjusted EBITDA Margin are not intended to be used as an alternative to any measure of our performance in accordance with GAAP. The following table reconciles Total Adjusted EBITDA to the most directly comparable GAAP financial measure, which is net income (in millions).
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Total Adjusted EBITDA
Reconciliation
Net income $
24.1 $
13.6 $
27.8 $
11.9
Add/(subtract): Income
tax expense (benefit) (3.4) 8.3 (4.0) 8.3
Income before income
taxes 20.7 21.9 23.8 20.2
Add: Depreciation,
depletion and
amortization 25.8 22.3 74.4 70.2
Add: Interest expense,
net 12.0 11.6 34.8 34.8
Add: Non-cash stock
compensation expense 2.6 5.3 8.8 16.4
Add: Pension withdrawal
liability 1.5 1.5
Add/(subtract): Non-
cash change in value of
contingent
consideration 0.1 0.3 (5.4) 1.6
Add: Purchase
accounting adjustments
for inventory 0.4 4.6
Add: Acquisition-
related costs 0.3 0.2 1.6 1.0
Add: Realignment
initiative costs 0.5 1.4
Add: Officer transition
expenses 0.5 0.2 1.1
Add: Loss on mixer
truck fire 0.7
Subtract: Eminent domain
matter (5.3)
Subtract: Hurricane-
related loss
recoveries, net (2.1)
Total Adjusted EBITDA $
63.9 $
62.1 $
145.7 $
138.6
Net income margin 6.4
%
% %
% 3.3 2.7 1.1
Total Adjusted EBITDA 17.1 15.2 14.1
Margin % %
% % 12.5
Adjusted Gross Profit and Adjusted Gross Margin
Adjusted Gross Profit and Adjusted Gross Margin are non-GAAP financial measures. We define Adjusted Gross Profit as our operating income, excluding the impact of depreciation, depletion and amortization ("DD&A"), selling, general and administrative expenses, change in value of contingent consideration, purchase accounting adjustments for inventory and loss (gain) on sale/disposal of assets, net. We define Adjusted Gross Margin as the amount determined by dividing Adjusted Gross Profit by total revenue. We have included Adjusted Gross Profit and Adjusted Gross Margin herein because they are widely used by investors for valuing and comparing our financial performance from period to period. We also use Adjusted Gross Profit and Adjusted Gross Margin to monitor and compare the financial performance of our operations. Adjusted Gross Profit and Adjusted Gross Margin are not intended to be used as an alternative to any measure of our performance in accordance with GAAP. The following table reconciles Adjusted Gross Profit to the most directly comparable GAAP financial measure, which is operating income (in millions).
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Adjusted Gross Profit
Reconciliation
Operating income $
32.3 $
33.3 $
57.0 $
47.2
Add: Depreciation,
depletion and
amortization 25.8 22.3 74.4 70.2
Add: Selling, general
and administrative
expenses 32.1 32.0 97.5 103.3
Add/(subtract):
Change in value of
contingent
consideration 0.1 0.3 (5.4) 1.6
Add: Purchase
accounting
adjustments for
inventory 0.4 4.6
Add/(subtract): Loss
(gain) on sale/
disposal of assets,
net (0.2) (0.1) 0.8
Adjusted Gross Profit $
90.7 $
87.7 $
228.0 $
223.1
Operating income 8.6
margin %
% %
% 8.1 5.5 4.3
Adjusted Gross Profit 24.2 21.4 22.1
Margin % %
% % 20.1
Adjusted SG&A and Adjusted SG&A as a Percentage of Revenue
Adjusted selling, general and administrative expenses ("SG&A") and Adjusted SG&A as a percentage of revenue are non-GAAP financial measures. We define Adjusted SG&A as selling, general and administrative expenses, excluding the impact of non-cash stock compensation expense, acquisition-related costs, officer transition costs, pension withdrawal liability, and realignment initiative cost. We define Adjusted SG&A as a percentage of revenue as Adjusted SG&A divided by total revenue. We have included Adjusted SG&A and Adjusted SG&A as a percentage of revenue herein because they are used by investors to compare our SG&A leverage with the performance of other building materials companies. We use Adjusted SG&A and Adjusted SG&A as a percentage of revenue to monitor and compare the financial performance of our operations. Adjusted SG&A and Adjusted SG&A as a percentage of revenue are not intended to be used as an alternative to any measure of our performance under GAAP. The following table reconciles Adjusted SG&A to the most directly comparable GAAP financial measure, which is SG&A (in millions).
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Adjusted SG&A
Reconciliation
Selling, general and
administrative
expenses $
32.1 $
32.0 $
97.5 $
103.3
Subtract: Non-cash
stock compensation
expense (2.6) (5.3) (8.8) (16.4)
Subtract: Acquisition-
related costs (0.3) (0.2) (1.6) (1.0)
Subtract: Pension
withdrawal liability (1.5) (1.5)
Subtract: Realignment
initiative costs (0.5) (1.4)
Subtract: Officer
transition expenses (0.5) (0.2) (1.1)
Adjusted SG&A $
27.2 $
26.0 $
84.0 $
84.8
SG&A as a percentage 8.6 7.8 9.5
of revenue % %
% % 9.3
Adjusted SG&A as a 7.3 6.3 8.1
percentage of revenue % %
% % 7.6
Adjusted Net Income Attributable to U.S. Concrete and Adjusted Net Income Attributable to U.S. Concrete per Diluted Share
Adjusted Net Income Attributable to U.S. Concrete and Adjusted Net Income Attributable to U.S. Concrete per Diluted Share are non-GAAP financial measures. We define Adjusted Net Income Attributable to U.S. Concrete as net income attributable to U.S. Concrete, net of taxes, income tax expense (benefit) 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, acquisition-related costs, officer transition expenses, purchase accounting adjustments for inventory, and realignment initiative costs. We also adjust Adjusted Net Income Attributable to U.S. Concrete for a normalized effective income tax rate of 27%. We define Adjusted Net Income Attributable to U.S. Concrete per Diluted Share as Adjusted Net Income Attributable to U.S. Concrete on a diluted per share basis. 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.
We have included Adjusted Net Income Attributable to U.S. Concrete and Adjusted Net Income Attributable to U.S. Concrete per Diluted Share herein because they are used by investors for valuation and comparing our financial performance with the performance of other building material companies. We use Adjusted Net Income Attributable to U.S. Concrete and Adjusted Net Income Attributable to U.S. Concrete per Diluted Share to monitor and compare the financial performance of our operations. Adjusted Net Income Attributable to U.S. Concrete and Adjusted Net Income Attributable to U.S. Concrete per Diluted Share are not intended to be used as an alternative to any measure of our performance in accordance with GAAP.
The following tables reconcile (i) Adjusted Net Income Attributable to U.S. Concrete to the most directly comparable GAAP financial measure, which is net income attributable to U.S. Concrete and (ii) Adjusted Net Income Attributable to U.S. Concrete per Diluted Share to the most directly comparable GAAP financial measure, which is net income attributable to U.S. Concrete per diluted share (in millions except per share amounts).
Three Months Ended Nine Months Ended
September 30, September 30,
---
2020 2019 2020 2019
---
Adjusted Net Income Attributable to
U.S. Concrete Reconciliation
Net income
attributable to U.S.
Concrete $
23.5 $
13.0 $
27.0 $
11.0
Add/(subtract):
Income tax expense
(benefit) (3.4) 8.3 (4.0) 8.3
Adjusted income before
income taxes 20.1 21.3 23.0 19.3
Add: Non-cash stock
compensation expense 2.6 5.3 8.8 16.4
Add/(subtract): Non-
cash change in value
of contingent
consideration 0.1 0.3 (5.4) 1.6
Add: Purchase
accounting
adjustments for
inventory 0.4 4.6
Add: Acquisition-
related costs 0.3 0.2 1.6 1.0
Add: Pension
withdrawal liability 1.5 1.5
Add: Realignment
initiative costs 0.5 1.4
Add: Officer
transition expenses - 0.5 0.2 1.1
Add: Loss on mixer
truck fire - 0.7
Subtract: Eminent
domain matter - (5.3)
Subtract: Hurricane-
related loss
recoveries, net - (2.1)
Adjusted income before
income taxes 25.5 27.6 35.7 32.7
Subtract: Normalized
income tax expense(1) 6.9 7.4 9.6 8.8
Adjusted Net Income
Attributable to U.S.
Concrete $
18.6 $
20.2 $
26.1 $
23.9
(1) Assumes a normalized effective tax rate of 27% in all periods.
Three Months Ended Nine Months Ended
September 30, September 30,
---
2020 2019 2020 2019
---
Adjusted Net Income Attributable to
U.S. Concrete per Diluted Share
Reconciliation
Net income
attributable to U.S.
Concrete $
1.42 $
0.79 $
1.63 $
0.67
Add: Income tax
expense (benefit) (0.20) 0.50 (0.24) 0.51
Adjusted income before
income taxes 1.22 1.29 1.39 1.18
Add: Impact of non-
cash stock
compensation expense 0.16 0.32 0.53 1.00
Add/(subtract):
Impact of non-cash
change in value of
contingent
consideration 0.01 0.03 (0.33) 0.10
Add: Impact of
purchase accounting
adjustments for
inventory 0.02 0.28
Add: Impact of
acquisition-related
costs 0.01 0.10 0.06
Add: Impact of pension
withdrawal liability 0.09 0.09
Add: Impact of
realignment
initiative costs 0.03 0.08
Add: Impact of
officer transition
expenses - 0.04 0.01 0.07
Add: Impact of loss
on mixer truck fire - 0.04
Subtract: Impact of
eminent domain matter - (0.32)
Subtract: Impact of
hurricane-related
loss recoveries, net - (0.13)
Adjusted income before
income taxes 1.54 1.68 2.15 2.00
Subtract: Normalized
income tax expense(1) 0.42 0.46 0.58 0.54
Adjusted Net Income
Attributable to U.S.
Concrete per Diluted
Share $
1.12 $
1.22 $
1.57 $
1.46
(1) Assumes a normalized effective tax rate of 27% in all periods.
Adjusted Free Cash Flow
Adjusted Free Cash Flow is a non-GAAP financial measure. We define Adjusted Free Cash Flow as net cash provided by operating activities less purchases of property, plant and equipment plus proceeds from the sale of property, plant and equipment, eminent domain matter and property loss claims. We consider Adjusted Free Cash Flow to be an important indicator of our ability to service our debt and generate cash for acquisitions and other strategic investments. However, Adjusted Free Cash Flow is not intended to be used as an alternative to any measure of our liquidity in accordance with GAAP. The following table reconciles Adjusted Free Cash Flow to the most directly comparable GAAP financial measure, which is net cash provided by operating activities (in millions).
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Adjusted Free Cash
Flow Reconciliation
Net cash provided by
operating activities $
61.3 $
51.5 $
145.4 $
92.1
Subtract: Purchases of
property, plant and
equipment (3.3) (10.5) (17.5) (28.6)
Add: Proceeds from
sale of property,
plant and equipment 0.4 0.5 0.7 1.2
Add: Proceeds from
eminent domain matter
and property
insurance claims 6.0
Adjusted Free Cash
Flow $
58.4 $
41.5 $
128.6 $
70.7
Net Debt
Net Debt is a non-GAAP financial measure. We define Net Debt as total debt, including current maturities and capital lease obligations, less cash and cash equivalents. We believe that Net Debt is useful to investors as a measure of our financial position. We use Net Debt to monitor and compare our financial position from period to period. However, Net Debt is not intended to be used as an alternative to any measure of our financial position in accordance with GAAP. The following table reconciles Net Debt to the most directly comparable GAAP financial measure, which is total debt, including current maturities and capital lease obligations (in millions).
As of As of
September 30, 2020 December 31, 2019
Net Debt Reconciliation
Total debt, including current maturities and finance lease obligations $
1,102.8 $
687.3
Subtract: cash and cash equivalents 405.5 40.6
Net Debt $
697.3 $
646.7
Net Debt to Total Adjusted EBITDA
Net Debt to Total Adjusted EBITDA is a non-GAAP financial measure. We define Net Debt to Total Adjusted EBITDA as Net Debt divided by Total Adjusted EBITDA for the applicable last twelve-month period. We define Total Adjusted EBITDA as our net income, excluding the impact of income taxes, 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, acquisition-related costs, officer transition expenses, purchase accounting adjustments for inventory, pension withdrawal liability, and realignment initiative costs. We believe that Net Debt to Total Adjusted EBITDA is useful to investors as a measure of our financial position. We use this measure to monitor and compare our financial position from period to period. However, Net Debt to Total Adjusted EBITDA is not intended to be used as an alternative to any measure of our financial position in accordance with GAAP. The following table presents our calculation of Net Debt to Total Adjusted EBITDA and the most directly comparable GAAP ratio, which is total debt to last twelve months ("LTM") net income (in millions).
Twelve Months
Ended
September 30, 2020
Total LTM Adjusted EBITDA Reconciliation
Net income $
32.3
Add: Income tax expense
Income before income taxes 32.3
Add: Depreciation, depletion and amortization 97.4
Add: Interest expense, net 46.1
Add: Non-cash stock compensation expense 11.4
Add/(subtract): Non-cash change in value of contingent consideration (4.2)
Add: Purchase accounting adjustments for inventory 4.6
Add: Pension withdrawal liability 1.5
Add: Realignment initiative costs 1.4
Add: Acquisition-related costs, net 0.7
Add: Litigation settlement cost 0.3
Add: Officer transition expenses (0.3)
Total LTM Adjusted EBITDA 191.2
Net Debt $
697.3
Total debt to LTM net income 34.14x
Net Debt to Total LTM Adjusted EBITDA as of September 30, 2020 3.65x
Source: USCR-E
Contact: U.S. Concrete, Inc. Investor
Relations
844-828-4774
IR@us-concrete.com
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SOURCE U.S. Concrete, Inc.
