Investor Relations
Press Release
U.S. Concrete Announces Full Year 2018 And Fourth Quarter Results
FULL YEAR 2018 HIGHLIGHTS INCLUDE THE FOLLOWING ALL-TIME ANNUAL HIGHS COMPARED TO FULL YEAR 20171
- Consolidated revenue increased 12.8% to
$1.5 billion - Ready-mixed concrete revenue increased 7.7% to
$1.3 billion - Aggregate products revenue increased 101.3% to
$182.6 million - Aggregate products volume increased 79.3% to 11.1 million tons
Polaris Materials contributed revenue of$92.0 million and volume of 5.0 million tons- Income from continuing operations was
$31.3 million , an increase of$5.1 million - Total Adjusted EBITDA2 increased 0.7% to
$193.5 million - Net cash provided by operating activities increased
$28.0 million to $122.8 million - Adjusted Free Cash Flow2 increased
$47.8 million to $103.4 million
FOURTH QUARTER 2018 HIGHLIGHTS COMPARED TO FOURTH QUARTER 20171
- Consolidated revenue increased 8.4% to
$370.1 million - Ready-mixed concrete revenue increased 5.6% to
$321.0 million - Ready-mixed concrete volume grew by 2.6%
- Aggregate products revenue increased 59.5% to
$46.4 million - Aggregate products volume increased 41.0% to 2.7 million tons
Polaris Materials contributed revenue of$24.3 million and volume of 1.3 million tons- Income from continuing operations was
$3.1 million , an increase of$6.0 million - Total Adjusted EBITDA2 increased 6.0% to
$46.2 million - Net cash provided by operating activities increased
$22.0 million to $32.6 million - Adjusted Free Cash Flow2 increased
$24.4 million to $27.5 million
___________ |
|
1 |
Certain computations within this press release may reflect rounding adjustments. |
2 |
Total Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures. Please refer to the reconciliation and other information at the end of this press release. |
"Despite what can be characterized as a disappointing year because of the weather-related disruptions, there are many positives to note. Our 2018 fourth quarter was our 32nd consecutive quarter of year-over-year increased revenue. Additionally, we delivered an outstanding cash performance through our consistent focus on operations and working capital management, with net cash provided by operating activities exceeding
Mr. Sandbrook concluded, "Our bullishness on the positive economic outlook in 2019 is only tempered by the uncertainties of the past two years of disruptive long-term weather patterns. All segments of the construction markets in our regions are vibrant and there is a distinct possibility of acceleration in publicly-funded infrastructure projects. Our optimism is supported by our backlog of 7.8 million cubic yards of concrete that we entered 2019 with, which represents almost ten months of production of future work."
OPERATING RESULTS
READY-MIXED CONCRETE SEGMENT |
|||||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||||
(in millions, except average sales price) |
2018 |
2017 |
2018 |
2017 |
|||||||||||
Revenue |
$ |
321.0 |
$ |
303.9 |
$ |
1,306.5 |
$ |
1,213.0 |
|||||||
Adjusted EBITDA |
$ |
38.9 |
$ |
41.0 |
$ |
179.2 |
$ |
185.8 |
|||||||
Average sales price per cubic yard |
$ |
137.94 |
$ |
133.96 |
$ |
136.42 |
$ |
134.86 |
|||||||
Sales volume in cubic yards |
2.3 |
2.3 |
9.5 |
9.0 |
Revenue from the ready-mixed concrete segment increased
AGGREGATE PRODUCTS SEGMENT |
|||||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||||
(in millions, except average sales price) |
2018 |
2017 |
2018 |
2017 |
|||||||||||
Sales to external customers (1) |
$ |
35.6 |
$ |
17.5 |
$ |
136.5 |
$ |
49.8 |
|||||||
Intersegment sales (1) |
10.8 |
11.6 |
46.1 |
40.9 |
|||||||||||
Total aggregate products revenue (1) |
$ |
46.4 |
$ |
29.1 |
$ |
182.6 |
$ |
90.7 |
|||||||
Adjusted EBITDA (1) |
$ |
12.5 |
$ |
8.3 |
$ |
41.6 |
$ |
27.2 |
|||||||
Average sales price per ton (2) |
$ |
11.35 |
$ |
13.73 |
$ |
11.28 |
$ |
12.92 |
|||||||
Sales volume in tons |
2.7 |
1.9 |
11.1 |
6.2 |
(1) |
During the quarter ended June 30, 2018, the Company re-characterized the results of its Polaris (defined below) 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 the reporting with how the Company manages and reports its other aggregate products operations. As a result of this change, certain first quarter amounts were reclassified from those previously reported. |
(2) |
The Company's calculation of the aggregate products segment ASP (defined below) excludes certain other ancillary revenue and Polaris's 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
FULL YEAR 2018 RESULTS COMPARED TO FULL YEAR 2017 RESULTS
Consolidated revenue for 2018 increased 12.8% to
CONSOLIDATED FOURTH QUARTER 2018 RESULTS COMPARED TO FOURTH QUARTER 2017
Fourth quarter 2018 consolidated revenue increased 8.4% compared to the prior year fourth quarter, primarily resulting from acquisition-related growth. During the fourth quarter of 2018, operating income was
Selling, general and administrative expenses ("SG&A") as a percentage of revenue was 8.1% in the 2018 fourth quarter compared to 9.7% in the prior year fourth quarter. SG&A decreased
BALANCE SHEET AND LIQUIDITY
Net cash provided by operating activities in the 2018 fourth quarter was
At December 31, 2018, the Company had cash and cash equivalents of
OUTLOOK FOR 2019
2019 Guidance |
||||
Category |
Low |
High |
||
Consolidated revenue |
$1.51 billion |
$1.65 billion |
||
Total Adjusted EBITDA (1) |
$205 million |
$225 million |
(1) |
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 measures. |
CONFERENCE CALL AND WEBCAST DETAILS
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 15 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.
ABOUT
U.S. Concrete, Inc. (NASDAQ: USCR) is a leading supplier of concrete and aggregates for large-scale commercial, residential and infrastructure projects across the country. The Company holds leading market positions in the high-growth metropolitan markets of New York, Philadelphia, San Francisco, Dallas/Fort Worth 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
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.
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
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 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 measures.
(Tables Follow)
U.S. CONCRETE, INC. AND SUBSIDIARIES |
|||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
(Unaudited) |
|||||||||||||||
(in millions except per share amounts) |
|||||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Revenue |
$ |
370.1 |
$ |
341.3 |
$ |
1,506.4 |
$ |
1,336.0 |
|||||||
Cost of goods sold before depreciation, depletion and amortization |
299.5 |
278.3 |
1,212.2 |
1,056.6 |
|||||||||||
Selling, general and administrative expenses |
30.1 |
33.0 |
126.5 |
119.2 |
|||||||||||
Depreciation, depletion and amortization |
23.6 |
19.0 |
91.8 |
67.8 |
|||||||||||
Change in value of contingent consideration |
0.9 |
5.9 |
— |
7.9 |
|||||||||||
Impairment of goodwill and other assets |
— |
5.6 |
1.3 |
6.2 |
|||||||||||
Gain on sale of business and assets, net |
(0.7) |
(0.2) |
(15.3) |
(0.7) |
|||||||||||
Operating income (loss) |
16.7 |
(0.3) |
89.9 |
79.0 |
|||||||||||
Interest expense, net |
11.8 |
11.0 |
46.4 |
42.0 |
|||||||||||
Derivative loss |
— |
— |
— |
0.8 |
|||||||||||
Other expense (income), net |
(0.5) |
— |
(4.6) |
(2.4) |
|||||||||||
Income from continuing operations before income taxes |
5.4 |
(11.3) |
48.1 |
38.6 |
|||||||||||
Income tax expense (benefit) |
2.3 |
(8.4) |
16.8 |
12.4 |
|||||||||||
Income (loss) from continuing operations |
3.1 |
(2.9) |
31.3 |
26.2 |
|||||||||||
Loss from discontinued operations, net of taxes |
— |
(0.1) |
— |
(0.6) |
|||||||||||
Net income (loss) |
3.1 |
(3.0) |
31.3 |
25.6 |
|||||||||||
Less: Net income attributable to non-controlling interest |
(1.1) |
(0.1) |
(1.3) |
(0.1) |
|||||||||||
Net income (loss) attributable to U.S. Concrete |
$ |
2.0 |
$ |
(3.1) |
$ |
30.0 |
$ |
25.5 |
|||||||
Basic income (loss) per share attributable to U.S. Concrete: |
|||||||||||||||
Income (loss) from continuing operations |
$ |
0.12 |
$ |
(0.18) |
$ |
1.82 |
$ |
1.64 |
|||||||
Loss from discontinued operations, net of taxes |
— |
(0.01) |
— |
(0.04) |
|||||||||||
Net income (loss) per share attributable to U.S. Concrete - basic |
$ |
0.12 |
$ |
(0.19) |
$ |
1.82 |
$ |
1.60 |
|||||||
Diluted income (loss) per share attributable to U.S. Concrete: |
|||||||||||||||
Income (loss) from continuing operations |
$ |
0.12 |
$ |
(0.18) |
$ |
1.82 |
$ |
1.57 |
|||||||
Loss from discontinued operations, net of taxes |
— |
(0.01) |
— |
(0.04) |
|||||||||||
Net income (loss) per share attributable to U.S. Concrete - diluted |
$ |
0.12 |
$ |
(0.19) |
$ |
1.82 |
$ |
1.53 |
|||||||
Weighted average shares outstanding: |
|||||||||||||||
Basic |
16.4 |
16.4 |
16.5 |
15.9 |
|||||||||||
Diluted |
16.5 |
16.4 |
16.5 |
16.6 |
Note: Certain computations within this press release may reflect rounding adjustments. |
U.S. CONCRETE, INC. AND SUBSIDIARIES |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(Unaudited) |
||||||||
(in millions) |
||||||||
December 31, 2018 |
December 31, 2017 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
20.0 |
$ |
22.6 |
||||
Trade accounts receivable, net |
226.6 |
214.2 |
||||||
Inventories |
51.2 |
48.1 |
||||||
Other receivables |
18.4 |
19.2 |
||||||
Prepaid expenses and other |
7.9 |
7.6 |
||||||
Total current assets |
324.1 |
311.7 |
||||||
Property, plant and equipment, net |
680.2 |
636.3 |
||||||
Goodwill |
239.3 |
204.7 |
||||||
Intangible assets, net |
116.6 |
118.1 |
||||||
Other assets |
11.1 |
5.3 |
||||||
Total assets |
$ |
1,371.3 |
$ |
1,276.1 |
||||
LIABILITIES AND EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
125.8 |
$ |
117.1 |
||||
Accrued liabilities |
96.3 |
65.4 |
||||||
Current maturities of long-term debt |
30.8 |
26.0 |
||||||
Total current liabilities |
252.9 |
208.5 |
||||||
Long-term debt, net of current maturities |
683.3 |
667.4 |
||||||
Other long-term obligations and deferred credits |
54.8 |
93.3 |
||||||
Deferred income taxes |
43.1 |
4.8 |
||||||
Total liabilities |
1,034.1 |
974.0 |
||||||
Equity: |
||||||||
Preferred stock |
— |
— |
||||||
Common stock |
— |
— |
||||||
Additional paid-in capital |
329.6 |
319.0 |
||||||
Retained earnings (accumulated deficit) |
16.2 |
(13.8) |
||||||
Treasury stock, at cost |
(33.4) |
(24.8) |
||||||
Total shareholders' equity |
312.4 |
280.4 |
||||||
Non-controlling interest |
24.8 |
21.7 |
||||||
Total equity |
337.2 |
302.1 |
||||||
Total liabilities and equity |
$ |
1,371.3 |
$ |
1,276.1 |
U.S. CONCRETE, INC. AND SUBSIDIARIES |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(Unaudited) |
|||||||
(in millions) |
|||||||
Twelve Months Ended December 31, |
|||||||
2018 |
2017 |
||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||||
Net income |
$ |
31.3 |
$ |
25.6 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation, depletion and amortization |
91.8 |
67.8 |
|||||
Amortization of debt issuance costs |
1.8 |
2.0 |
|||||
Derivative loss |
— |
0.8 |
|||||
Change in value of contingent consideration |
— |
7.9 |
|||||
Net gain on disposal of businesses and assets |
(15.3) |
(0.7) |
|||||
Impairments of goodwill and other assets |
1.3 |
6.2 |
|||||
Deferred income taxes |
14.6 |
(3.4) |
|||||
Provision for doubtful accounts and customer disputes |
4.6 |
4.6 |
|||||
Stock-based compensation |
10.4 |
8.3 |
|||||
Other, net |
(1.3) |
(0.5) |
|||||
Changes in assets and liabilities, excluding effects of acquisitions: |
|||||||
Accounts receivable |
(16.9) |
(5.7) |
|||||
Inventories |
(2.1) |
0.6 |
|||||
Prepaid expenses and other current assets |
(2.0) |
(2.8) |
|||||
Other assets and liabilities |
(3.0) |
2.6 |
|||||
Accounts payable and accrued liabilities |
7.6 |
(18.5) |
|||||
Net cash provided by operating activities |
122.8 |
94.8 |
|||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||||
Purchases of property, plant and equipment |
(39.9) |
(42.7) |
|||||
Payments related to acquisitions, net of cash acquired |
(72.3) |
(295.1) |
|||||
Proceeds from disposals of businesses and property, plant and equipment |
20.7 |
3.5 |
|||||
Purchases of environmental credits |
(2.8) |
— |
|||||
Insurance proceeds from property loss claims |
2.6 |
— |
|||||
Net cash used in investing activities |
(91.7) |
(334.3) |
|||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||||||
Proceeds from revolver borrowings |
431.2 |
54.4 |
|||||
Repayments of revolver borrowings |
(425.2) |
(45.4) |
|||||
Proceeds from issuance of debt |
— |
211.5 |
|||||
Proceeds from exercise of warrants and stock options |
0.1 |
2.7 |
|||||
Payments of other long-term obligations |
(5.9) |
(9.0) |
|||||
Payments for other financing |
(29.6) |
(20.3) |
|||||
Debt issuance costs |
— |
(4.5) |
|||||
Payments for share repurchases |
(6.7) |
— |
|||||
Other treasury share purchases |
(1.9) |
(3.1) |
|||||
Other proceeds |
4.6 |
— |
|||||
Net cash provided by (used in) financing activities |
(33.4) |
186.3 |
|||||
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS |
(0.3) |
— |
|||||
NET DECREASE IN CASH AND CASH EQUIVALENTS |
(2.6) |
(53.2) |
|||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
22.6 |
75.8 |
|||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ |
20.0 |
$ |
22.6 |
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 income (loss) from continuing operations, 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. 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 income (loss) from continuing operations (in millions).
Three Months Ended |
Twelve Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Total Adjusted EBITDA Reconciliation |
|||||||||||||||
Income (loss) from continuing operations |
$ |
3.1 |
$ |
(2.9) |
$ |
31.3 |
$ |
26.2 |
|||||||
Add/subtract: Income tax expense (benefit) |
2.3 |
(8.4) |
16.8 |
12.4 |
|||||||||||
Income (loss) from continuing operations before income taxes |
5.4 |
(11.3) |
48.1 |
38.6 |
|||||||||||
Add: Depreciation, depletion and amortization |
23.6 |
19.0 |
91.8 |
67.8 |
|||||||||||
Add: Interest expense, net |
11.8 |
10.9 |
46.4 |
42.0 |
|||||||||||
Add: Non-cash stock compensation expense |
2.4 |
1.8 |
10.4 |
8.3 |
|||||||||||
Add: Non-cash change in value of contingent consideration |
0.9 |
5.9 |
— |
7.9 |
|||||||||||
Add: Impairment of assets |
— |
5.6 |
1.3 |
6.2 |
|||||||||||
Add: Acquisition-related costs |
1.0 |
5.3 |
6.2 |
10.1 |
|||||||||||
Add: Officer transition expenses |
— |
0.2 |
— |
0.8 |
|||||||||||
Add: Loss on extinguishment of debt |
— |
— |
— |
0.1 |
|||||||||||
Add: Quarry dredge costs for specific event |
0.3 |
1.2 |
1.1 |
3.4 |
|||||||||||
Add: Eminent domain costs |
0.1 |
— |
0.7 |
— |
|||||||||||
Add: Litigation settlement costs |
1.2 |
— |
2.1 |
— |
|||||||||||
Add/subtract: Hurricane-related losses, net of recoveries |
(0.6) |
1.8 |
(0.8) |
3.0 |
|||||||||||
Add: Purchase accounting adjustments for inventory |
0.1 |
1.3 |
0.8 |
1.3 |
|||||||||||
Add: Foreign currency losses resulting from Polaris |
— |
1.9 |
— |
1.9 |
|||||||||||
Add: Derivative loss |
— |
— |
— |
0.8 |
|||||||||||
Subtract: Gain on sale of business |
— |
— |
(14.6) |
— |
|||||||||||
Total Adjusted EBITDA |
$ |
46.2 |
$ |
43.6 |
$ |
193.5 |
$ |
192.2 |
|||||||
Income (loss) from continuing operations margin |
0.8 |
% |
(0.8) |
% |
2.1 |
% |
2.0 |
% |
|||||||
Total Adjusted EBITDA Margin |
12.5 |
% |
12.8 |
% |
12.8 |
% |
14.4 |
% |
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 (loss), excluding the impact of depreciation, depletion and amortization ("DD&A"), selling, general and administrative expenses, and certain other non-cash, non-recurring and/or unusual, non-operating items, including change in value of contingent consideration, impairment of assets, quarry dredge costs for specific event, eminent domain costs, hurricane-related losses in COGS before DD&A, purchase accounting adjustments for inventory and loss (gain) on 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 |
Twelve Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Adjusted Gross Profit Reconciliation |
|||||||||||||||
Operating income (loss) |
$ |
16.7 |
$ |
(0.3) |
$ |
89.9 |
$ |
79.0 |
|||||||
Add: Depreciation, depletion and amortization |
23.6 |
19.0 |
91.8 |
67.8 |
|||||||||||
Add: Selling, general and administrative expenses |
30.1 |
33.0 |
126.5 |
119.2 |
|||||||||||
Add: Change in value of contingent consideration |
0.9 |
5.9 |
— |
7.9 |
|||||||||||
Add: Impairment of assets |
— |
5.6 |
1.3 |
6.2 |
|||||||||||
Add: Quarry dredge costs for specific event |
0.3 |
1.2 |
1.1 |
3.4 |
|||||||||||
Add: Eminent domain costs |
0.1 |
— |
0.7 |
— |
|||||||||||
Add: Hurricane-related losses in COGS before DD&A |
— |
1.5 |
0.3 |
2.4 |
|||||||||||
Add: Purchase accounting adjustments for inventory |
0.1 |
1.3 |
0.8 |
1.3 |
|||||||||||
Subtract: Gain on disposal of assets, net |
(0.7) |
(0.2) |
(15.3) |
(0.7) |
|||||||||||
Adjusted Gross Profit |
$ |
71.1 |
$ |
67.0 |
$ |
297.1 |
$ |
286.5 |
|||||||
Operating income margin |
4.5 |
% |
(0.1) |
% |
6.0 |
% |
5.9 |
% |
|||||||
Adjusted Gross Margin |
19.2 |
% |
19.6 |
% |
19.7 |
% |
21.4 |
% |
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 certain non-cash, non-recurring an/or unusual, non-operating items, including stock compensation expense, acquisition-related costs, officer transition expenses, litigation settlement costs and hurricane-related losses. 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 |
Twelve Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Adjusted SG&A |
|||||||||||||||
Selling, general and administrative expenses |
$ |
30.1 |
$ |
33.0 |
$ |
126.5 |
$ |
119.2 |
|||||||
Subtract: Non-cash stock compensation expense |
(2.4) |
(1.8) |
(10.4) |
(8.3) |
|||||||||||
Subtract: Acquisition-related costs |
(1.0) |
(5.3) |
(6.2) |
(10.1) |
|||||||||||
Subtract: Officer transition expenses |
— |
(0.2) |
— |
(0.8) |
|||||||||||
Subtract: Litigation settlement costs |
(1.2) |
— |
(2.1) |
— |
|||||||||||
Subtract: Hurricane-related losses |
— |
(0.3) |
— |
(0.3) |
|||||||||||
Adjusted SG&A |
$ |
25.5 |
$ |
25.4 |
$ |
107.8 |
$ |
99.7 |
|||||||
SG&A as a percentage of revenues |
8.1 |
% |
9.7 |
% |
8.4 |
% |
8.9 |
% |
|||||||
Adjusted SG&A as a percentage of revenues |
6.9 |
% |
7.4 |
% |
7.2 |
% |
7.5 |
% |
Adjusted Net Income from Continuing Operations Attributable to
Adjusted Net Income from Continuing Operations Attributable to
We have included Adjusted Net Income from Continuing Operations Attributable to
The following tables reconcile (i) Adjusted Net Income from Continuing Operations Attributable to
Three Months Ended |
Twelve Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Adjusted Net Income from Continuing Operations Attributable to U.S. Concrete Reconciliation |
|||||||||||||||
Net income (loss) attributable to U.S. Concrete |
$ |
2.0 |
$ |
(3.1) |
$ |
30.0 |
$ |
25.5 |
|||||||
Add: Loss from discontinued operations, net of taxes |
— |
0.1 |
— |
0.6 |
|||||||||||
Add/subtract: Income tax expense (benefit) |
2.3 |
(8.4) |
16.8 |
12.4 |
|||||||||||
Adjusted income (loss) from continuing operations before income taxes |
4.3 |
(11.4) |
46.8 |
38.5 |
|||||||||||
Add: Non-cash stock compensation expense |
2.4 |
1.8 |
10.4 |
8.3 |
|||||||||||
Add: Non-cash change in value of contingent consideration |
0.9 |
5.9 |
— |
7.9 |
|||||||||||
Add: Impairment of assets |
— |
5.6 |
1.3 |
6.2 |
|||||||||||
Add: Acquisition-related costs |
1.0 |
5.3 |
6.2 |
10.1 |
|||||||||||
Add: Officer transition expenses |
— |
0.2 |
— |
0.8 |
|||||||||||
Add: Loss on extinguishment of debt |
— |
— |
— |
0.1 |
|||||||||||
Add: Quarry dredge costs for specific event |
0.3 |
1.2 |
1.1 |
3.4 |
|||||||||||
Add: Eminent domain costs |
0.1 |
— |
0.7 |
— |
|||||||||||
Add: Litigation settlement costs |
1.2 |
— |
2.1 |
— |
|||||||||||
Add/subtract: Hurricane-related losses, net of recoveries |
(0.6) |
1.8 |
(0.8) |
3.0 |
|||||||||||
Add: Purchase accounting adjustments for inventory |
0.1 |
1.3 |
0.8 |
1.3 |
|||||||||||
Add: Foreign currency losses resulting from Polaris |
— |
1.9 |
— |
1.9 |
|||||||||||
Add: Derivative loss |
— |
— |
— |
0.8 |
|||||||||||
Subtract: Gain on sale of business |
— |
— |
(14.6) |
— |
|||||||||||
Adjusted income from continuing operations before income taxes |
9.7 |
13.6 |
54.0 |
82.3 |
|||||||||||
Subtract: Normalized income tax expense(1) |
2.6 |
3.7 |
14.6 |
22.2 |
|||||||||||
Adjusted Net Income from Continuing Operations Attributable to U.S. Concrete |
$ |
7.1 |
$ |
9.9 |
$ |
39.4 |
$ |
60.1 |
(1) Assumes a normalized effective tax rate of 27% in all periods. |
Three Months Ended |
Twelve Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Adjusted Net Income from Continuing Operations Attributable to U.S. Concrete per Diluted Share Reconciliation |
|||||||||||||||
Net income (loss) attributable to U.S. Concrete per diluted share |
$ |
0.12 |
$ |
(0.19) |
$ |
1.82 |
$ |
1.53 |
|||||||
Add: Loss from discontinued operations, net of taxes per diluted share |
— |
0.01 |
— |
0.04 |
|||||||||||
Add/subtract: Income tax expense (benefit) per diluted share |
0.14 |
(0.52) |
1.01 |
0.75 |
|||||||||||
Adjusted income (loss) from continuing operations before income taxes per diluted share |
0.26 |
(0.70) |
2.83 |
2.32 |
|||||||||||
Add: Impact of non-cash stock compensation expense |
0.15 |
0.11 |
0.63 |
0.50 |
|||||||||||
Add: Impact of non-cash change in value of contingent consideration |
0.05 |
0.36 |
— |
0.47 |
|||||||||||
Add: Impact of impairment of assets |
— |
0.34 |
0.08 |
0.37 |
|||||||||||
Add: Impact of acquisition-related costs |
0.06 |
0.32 |
0.38 |
0.61 |
|||||||||||
Add: Impact of officer transition expenses |
— |
0.01 |
— |
0.05 |
|||||||||||
Add: Impact of loss on extinguishment of debt |
— |
— |
— |
— |
|||||||||||
Add: Impact of quarry dredge costs for specific event |
0.02 |
0.07 |
0.06 |
0.20 |
|||||||||||
Add: Impact of eminent domain costs |
0.01 |
— |
0.04 |
— |
|||||||||||
Add: Impact of litigation settlement costs |
0.07 |
— |
0.13 |
— |
|||||||||||
Add/subtract: Impact of hurricane-related losses, net of recoveries |
(0.04) |
0.11 |
(0.05) |
0.18 |
|||||||||||
Add: Impact of purchase accounting adjustments for inventory |
0.01 |
0.08 |
0.05 |
0.08 |
|||||||||||
Add: Impact of foreign currency losses resulting from Polaris |
— |
0.12 |
— |
0.12 |
|||||||||||
Add: Impact of derivative loss |
— |
— |
— |
0.05 |
|||||||||||
Subtract: Impact of gain on sale of business |
— |
— |
(0.88) |
— |
|||||||||||
Adjusted income from continuing operations before income taxes |
0.59 |
0.82 |
3.27 |
4.95 |
|||||||||||
Subtract: Normalized income tax expense(1) |
0.16 |
0.22 |
0.88 |
1.34 |
|||||||||||
Adjusted Net Income from Continuing Operations Attributable to U.S. Concrete per Diluted Share |
$ |
0.43 |
$ |
0.60 |
$ |
2.39 |
$ |
3.61 |
(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 and purchases of environmental credits plus proceeds from the disposal of businesses and property, plant and equipment and insurance proceeds from 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 |
Twelve Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Adjusted Free Cash Flow Reconciliation |
|||||||||||||||
Net cash provided by operating activities |
$ |
32.6 |
$ |
10.6 |
$ |
122.8 |
$ |
94.8 |
|||||||
Subtract: Purchases of property, plant and equipment |
(7.7) |
(8.7) |
(39.9) |
(42.7) |
|||||||||||
Subtract: Purchases of environmental credits |
— |
— |
(2.8) |
— |
|||||||||||
Add: Proceeds from disposals of businesses and property, plant and equipment |
2.1 |
1.2 |
20.7 |
3.5 |
|||||||||||
Add: Insurance proceeds from property loss claims |
0.5 |
— |
2.6 |
— |
|||||||||||
Adjusted Free Cash Flow |
$ |
27.5 |
$ |
3.1 |
$ |
103.4 |
$ |
55.6 |
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 |
||||||
December 31, 2018 |
December 31, 2017 |
||||||
Net Debt Reconciliation |
|||||||
Total debt, including current maturities and capital lease obligations |
$ |
714.1 |
$ |
693.4 |
|||
Subtract: cash and cash equivalents |
20.0 |
22.6 |
|||||
Net Debt |
$ |
694.1 |
$ |
670.8 |
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 income (loss) from continuing operations, 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). 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") income from continuing operations (in millions). For an explanation and reconciliation of Total Adjusted EBITDA, see page 10 of this release.
Twelve Month Period |
|||
January 1, 2018 to |
|||
December 31, 2018 |
|||
Total Adjusted EBITDA |
$ |
193.5 |
|
Net Debt |
$ |
694.1 |
|
Total debt to LTM income from continuing operations |
22.8x |
||
Net Debt to Total Adjusted EBITDA |
3.6x |
Source: USCR-E
Contact: |
U.S. Concrete, Inc. Investor Relations |
844-828-4774 |
|
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