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srt:ParentCompanyMember srt:ReportableLegalEntitiesMember 2018-04-01 2018-06-30 0001073429 srt:NonGuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2018-04-01 2018-06-30 0001073429 srt:GuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2018-04-01 2018-06-30 0001073429 srt:ConsolidationEliminationsMember 2018-04-01 2018-06-30 0001073429 srt:ConsolidationEliminationsMember 2019-04-01 2019-06-30 0001073429 srt:GuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2019-04-01 2019-06-30 0001073429 srt:ParentCompanyMember srt:ReportableLegalEntitiesMember 2019-04-01 2019-06-30 0001073429 srt:NonGuarantorSubsidiariesMember srt:ReportableLegalEntitiesMember 2019-04-01 2019-06-30 iso4217:USD uscr:mixer_truck uscr:renewal_option uscr:aggregate_facility uscr:processing_facility uscr:business uscr:Year uscr:reporting_segment iso4217:USD xbrli:shares iso4217:CAD uscr:consecutive_trading_day xbrli:pure xbrli:shares
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended June 30, 2019
 
 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
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=13053712&doc=12
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

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



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 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 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
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
 
There were 16,659,689 shares of common stock, par value $.001 per share, of the registrant outstanding as of August 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)
June 30, 2019

December 31, 2018
ASSETS
(Unaudited)

 
Current assets:
 

 
Cash and cash equivalents
$
24.8


$
20.0

Trade accounts receivable, net of allowances of $4.2 as of June 30, 2019 and $6.1 as of December 31, 2018
239.5


226.6

Inventories
52.8


51.2

Other receivables, net
21.0


18.4

Prepaid expenses and other
8.7


7.9

Total current assets
346.8


324.1

Property, plant and equipment, net of accumulated depreciation, depletion and amortization of $263.5 as of June 30, 2019 and $236.1 as of December 31, 2018
676.2


680.2

Operating lease assets
72.1

 

Goodwill
239.5


239.3

Intangible assets, net
103.9


116.6

Other assets
11.2


11.1

Total assets
$
1,449.7


$
1,371.3

LIABILITIES AND EQUITY
 


 

Current liabilities:
 


 

Accounts payable
$
124.6


$
125.8

Accrued liabilities
98.1


96.3

Current maturities of long-term debt
32.5


30.8

Current operating lease liabilities
13.6

 

Total current liabilities
268.8


252.9

Long-term debt, net of current maturities
684.2


683.3

Long-term operating lease liabilities
61.0

 

Other long-term obligations and deferred credits
45.5


54.8

Deferred income taxes
45.6


43.1

Total liabilities
1,105.1


1,034.1

Commitments and contingencies (Note 12)





Equity:
 


 

Preferred stock



Common stock



Additional paid-in capital
340.9


329.6

Retained earnings
14.2


16.2

Treasury stock, at cost
(35.6
)

(33.4
)
Total shareholders' equity
319.5


312.4

Non-controlling interest
25.1

 
24.8

Total equity
344.6

 
337.2

Total liabilities and equity
$
1,449.7


$
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
June 30,

Six Months Ended
June 30,
(in millions except per share)
 
2019

2018

2019

2018
Revenue
 
$
367.5


$
404.2


$
700.6


$
732.0

Cost of goods sold before depreciation, depletion and amortization
 
296.8


320.2


565.2


587.4

Selling, general and administrative expenses
 
39.2


31.9


71.3


64.2

Depreciation, depletion and amortization
 
25.1


22.1


47.9


42.7

Change in value of contingent consideration
 
0.3

 
(1.6
)
 
1.3

 
(1.3
)
Impairment of assets
 

 
1.3

 

 
1.3

Loss (gain) on sale/disposal of assets, net
 
0.1


(0.3
)

1.0


(0.5
)
Operating income
 
6.0


30.6

 
13.9

 
38.2

Interest expense, net
 
11.6


11.5


23.2


22.9

Other income, net
 
(7.2
)

(1.4
)

(7.6
)

(3.0
)
Income (loss) before income taxes
 
1.6


20.5

 
(1.7
)
 
18.3

Income tax expense
 
0.7


4.2




5.9

Net income (loss)
 
0.9


16.3

 
(1.7
)
 
12.4

Less: Net income attributable to non-controlling interest
 
(0.2
)
 

 
(0.3
)
 

Net income (loss) attributable to U.S. Concrete
 
$
0.7

 
$
16.3

 
$
(2.0
)
 
$
12.4


 











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


 


 


 

Basic earnings per share
 
$
0.04

 
$
0.99

 
$
(0.12
)
 
$
0.75

Diluted earnings per share
 
$
0.04

 
$
0.99

 
$
(0.12
)
 
$
0.75

 
 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 


 


 


 

Basic
 
16.4


16.5


16.4


16.5

Diluted
 
16.4

 
16.5

 
16.4

 
16.5


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, 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

Stock-based compensation


 
9.4

 

 

 
9.4

 

 
9.4

Restricted stock vesting
0.1


 

 

 

 

 

 

Other treasury share purchases


 

 

 
(1.1
)
 
(1.1
)
 

 
(1.1
)
Net income (loss)


 

 
0.7

 

 
0.7

 
0.2

 
0.9

BALANCE, June 30, 2019
16.7

$

 
$
340.9

 
$
14.2

 
$
(35.6
)
 
$
319.5

 
$
25.1

 
$
344.6




3


U.S. CONCRETE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF TOTAL EQUITY (continued)
(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

Stock-based compensation


 
3.0

 

 

 
3.0

 

 
3.0

Other treasury share purchases


 

 

 
(0.6
)
 
(0.6
)
 

 
(0.6
)
Net income (loss)


 

 
16.3

 

 
16.3

 

 
16.3

BALANCE, June 30, 2018
16.8

$

 
$
324.2

 
$
(1.4
)
 
$
(26.6
)
 
$
296.2

 
$
21.6

 
$
317.8


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



4


U.S. CONCRETE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
($ in millions)
Six Months Ended June 30,
 
2019

2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
Net income (loss)
$
(1.7
)

$
12.4

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


 

Depreciation, depletion and amortization
47.9


42.7

Amortization of debt issuance costs
0.9


0.9

Change in value of contingent consideration
1.3


(1.3
)
Loss (gain) on sale/disposal of assets, net
1.0


(0.5
)
Gains from eminent domain matter and property insurance claims
(6.0
)
 
(2.1
)
Impairment of assets

 
1.3

Deferred income taxes
2.5


(0.2
)
Provision for doubtful accounts and customer disputes
1.3


2.0

Stock-based compensation
11.1


5.1

Other, net
(0.6
)
 
(0.5
)
Changes in assets and liabilities, excluding effects of acquisitions:
 


 

Accounts receivable
(13.1
)

(35.5
)
Inventories
(1.6
)


Prepaid expenses and other current assets
(4.6
)

4.6

Other assets and liabilities
(0.7
)

(1.3
)
Accounts payable and accrued liabilities
2.9


20.3

Net cash provided by operating activities
40.6


47.9

CASH FLOWS FROM INVESTING ACTIVITIES:
 


 

Purchases of property, plant and equipment
(18.1
)

(20.8
)
Payments for acquisitions, net of cash acquired


(61.1
)
Proceeds from disposals of businesses and property, plant and equipment
0.7


1.2

Proceeds from eminent domain matter and property insurance claims
6.0

 
2.1

Net cash used in investing activities
(11.4
)

(78.6
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 


 

Proceeds from revolver borrowings
163.3


228.6

Repayments of revolver borrowings
(157.8
)

(177.2
)
Proceeds from stock option exercises
0.2


0.1

Payments of other long-term obligations
(11.6
)

(3.5
)
Payments for other financing
(16.2
)

(14.1
)
Other treasury share purchases
(2.2
)

(1.9
)
Other proceeds

 
0.5

Net cash provided by (used in) financing activities
(24.3
)

32.5

EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
(0.1
)
 
(0.1
)
NET INCREASE IN CASH AND CASH EQUIVALENTS
4.8


1.7

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
20.0


22.6

CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
24.8


$
24.3


5


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

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

 
 

Net cash paid for interest
$
22.6

 
$
22.7

Net cash paid for income taxes
$
0.6

 
$
2.7

Capital expenditures funded by finance leases and promissory notes
$
13.0

 
$
20.0

Acquisitions funded by contingent consideration
$

 
$
0.9


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

6


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. Certain reclassifications have been made to prior year amounts to conform with the current year presentation.

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

2.
RECENT ACCOUNTING PRONOUNCEMENTS AND SIGNIFICANT ACCOUNTING POLICIES

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


7


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

Recently Issued - Credit Losses. In June 2016, the FASB issued an update on the measurement of credit losses on financial instruments, which requires entities to use a forward-looking approach based on expected losses rather than the current model of incurred losses to estimate credit losses on certain types of financial instruments, including trade accounts receivable. Application of the new model may result in the earlier recognition of allowances for losses. The guidance becomes effective for us on January 1, 2020, with early adoption permitted. We are in the process of assessing the impact of this new standard on our consolidated financial statements.

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

3.    LEASES

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

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

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

Leases ($ in millions)
 
Balance Sheet Classification
 
June 30, 2019
 
Assets:
 
 
 
 
 
Operating lease assets
 
Operating lease assets
 
$
72.1

 
     Finance lease assets
 
Property, plant and equipment, net
 
88.4

(1) 
Total lease assets
 
 
 
$
160.5

 
Liabilities:
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Operating
 
Current operating lease liabilities
 
$
13.6

 
Finance
 
Current maturities of long-term debt
 
21.2

 
Long-term liabilities:
 
 
 
 
 
Operating
 
Long-term operating lease liabilities
 
61.0

 
Finance
 
Long-term debt, net of current maturities
 
47.1

 
Total lease liabilities
 
 
 
$
142.9

 

(1) Net of accumulated amortization of $25.3 million.

8


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

Lease Cost ($ in millions)
 
Statement of Operations Classification
 
Three Months Ended
June 30, 2019
 
Six Months Ended
June 30, 2019
 
Operating lease cost
 
Selling, general and administrative expenses
 
$
6.6

(1) 
$
13.0

(2) 
Finance lease cost:
 
 
 
 
 
 
 
Amortization of leased assets
 
Depreciation, depletion and amortization
 
2.9

 
5.6

 
Interest on lease liabilities
 
Interest expense, net
 
0.7

 
1.3

 
Total finance lease cost
 
 
 
3.6

 
6.9

 
Total
 
 
 
$
10.2

 
$
19.9

 


(1) Includes short-term lease and variable lease costs of approximately $1.8 million.
(2) Includes short-term lease and variable lease costs of approximately $3.3 million.

Maturity of Lease Liabilities ($ in millions)
 
Operating Leases
 
Finance Leases
 
Total
2019 (remainder of year)
 
$
9.2

 
$
12.3

 
$
21.5

2020
 
16.1

 
22.9

 
39.0

2021
 
14.5

 
18.1

 
32.6

2022
 
11.5

 
12.2

 
23.7

2023
 
9.9

 
6.8

 
16.7

2024
 
8.1

 
1.1

 
9.2

Thereafter
 
24.4

 

 
24.4

Total lease payments
 
93.7

 
73.4

 
167.1

Less interest
 
19.1

 
5.1

 
24.2

Present value of lease liabilities
 
$
74.6

 
$
68.3

 
$
142.9

    
Lease Term and Discount Rate
 
June 30, 2019
Weighted-average remaining lease term (years):
 
 
Operating leases
 
6.0

Finance leases
 
3.5

Weighted-average discount rate:
 
 
Operating leases
 
6.3
%
Finance leases
 
3.9
%


Other Information ($ in millions)
 
Six Months Ended
June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
 
 
Operating cash flows for operating leases
 
$
9.4

Operating cash flows for finance leases
 
1.3

Financing cash flows for finance leases
 
10.4

Leased assets obtained in exchange for new finance lease liabilities
 
7.7

Leased assets obtained in exchange for new operating lease liabilities
 
3.9




9


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

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.

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 and six months ended June 30, 2018, we incurred $0.1 million and $0.6 million of transaction costs, respectively, 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.


10


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

Acquired Intangible Assets and Goodwill
A summary of the intangible assets acquired in 2018 and their estimated useful lives is as follows:
($ in millions)
Weighted Average Amortization Period (In Years)
 
Fair Value At Acquisition Date
Customer relationships
5.5
 
$
18.5

Non-compete agreements
5.0
 
1.3

Total
 
 
$
19.8



As of June 30, 2019, the estimated future aggregate amortization expense of definite-lived intangible assets from the 2018 acquisitions was as follows (in millions):
 
 
2019 (remainder of the year)
$
2.0

2020
3.6

2021
2.8

2022
2.6

2023
1.6

Thereafter
1.8

Total
$
14.4



During the three and six months ended June 30, 2019, we recorded $1.7 million and $2.6 million of amortization expense related to these intangible assets, respectively, of which $0.5 million related to measurement period adjustments. During the three and six months ended June 30, 2018, we recorded $0.8 million and $0.9 million of amortization expense related to these intangible assets, respectively, of which $0.1 million related to measurement period adjustments.

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

Impact of Acquisitions

During the three months ended June 30, 2018, we recorded approximately $16.6 million of revenue and $2.9 million of operating income in our condensed consolidated statements of operations related to the 2018 acquisitions following their respective dates of acquisition. During the six months ended June 30, 2018, we recorded approximately $21.6 million of revenue and $3.9 million of operating income in our condensed consolidated statements of operations related to the 2018 acquisitions following their respective dates of acquisition.


11


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

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 June 30, 2018
 
Six Months Ended June 30, 2018
Revenue
$
404.2

 
$
747.6

Net income attributable to U.S. Concrete
$
16.2

 
$
12.1

 
 
 
 
Net income per share attributable to U.S. Concrete - basic
$
0.99

 
$
0.74

Net income per share attributable to U.S. Concrete - diluted
$
0.98

 
$
0.73



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.

The unaudited pro forma amounts above reflect the following adjustments:
($ in millions)
Three Months Ended June 30, 2018
 
Six Months Ended June 30, 2018
Increase in intangible amortization expense
$
0.1

 
$
1.0

Exclusion of buyer transaction costs
0.1

 
0.6

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)
June 30, 2019
 
December 31, 2018
Raw materials
$
47.6

 
$
46.4

Building materials for resale
3.1

 
2.8

Other
2.1

 
2.0

Total
$
52.8

 
$
51.2




12


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

6.    GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill
    
The accumulated impairment was as follows:
($ in millions)
 
June 30, 2019
 
December 31, 2018
Goodwill, gross
 
$
245.3

 
$
245.1

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

 
$
239.3


The changes in goodwill by reportable segment were as follows:
($ in millions)
 
Ready-Mixed Concrete Segment
 
Aggregate Products Segment
 
Other Non-Reportable Segments
 
Total
Goodwill, net at December 31, 2018
 
$
147.7

 
$
86.2

 
$
5.4

 
$
239.3

Measurement period adjustments for prior year business combinations (1)
 
0.2

 

 

 
0.2

Goodwill, net at June 30, 2019
 
$
147.9

 
$
86.2

 
$
5.4

 
$
239.5



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

Other Intangible Assets

Our purchased intangible assets were as follows:
 
 
June 30, 2019
($ in millions)
 
Gross
 
Accumulated Amortization
 
Net
 
Weighted Average Remaining Life (In Years)
Definite-lived intangible assets
 
 
 
 
 
 
 
 
Customer relationships
 
$
108.5

 
$
(51.7
)
 
$
56.8

 
4.3
Trade names
 
44.5

 
(12.5
)
 
32.0

 
19.4
Non-competes
 
18.3

 
(13.8
)
 
4.5

 
2.5
Leasehold interests
 
12.5

 
(5.9
)
 
6.6

 
5.6
Favorable contracts
 
4.0

 
(3.9
)
 
0.1

 
1.4
Environmental credits
 
2.8

 
(0.1
)
 
2.7

 
16.5
Total definite-lived intangible assets
 
190.6


(87.9
)

102.7

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

 

 
1.2

 
 
Total purchased intangible assets
 
$
191.8

 
$
(87.9
)
 
$
103.9

 
 


(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.


13


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

 
 
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.

As of June 30, 2019, the estimated remaining amortization of our definite-lived intangible assets was as follows (in millions):
2019 (remainder of the year)
$
11.4

2020
20.9

2021
18.6

2022
12.7

2023
6.3

Thereafter
32.8

Total
$
102.7



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 June 30, 2019 and December 31, 2018, and a net carrying amount of $0.6 million and $0.8 million as of June 30, 2019 and December 31, 2018, respectively. These unfavorable lease intangibles had a weighted average remaining life of 4.1 years as of June 30, 2019.

We recorded $6.6 million and $6.2 million of amortization expense on our definite-lived intangible assets and unfavorable lease intangibles for the three months ended June 30, 2019 and 2018, respectively. We recorded $12.6 million and $11.6 million of amortization expense on our definite-lived intangible assets and unfavorable lease intangibles for the six months ended June 30, 2019 and 2018, respectively.


14