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Dynamic quotes 
OFFON

U.S. CONCRETE, INC.

(USCR)
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U S CONCRETE : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

08/05/2021 | 12:53pm EDT
The following discussion should be read in conjunction with the accompanying
quarterly unaudited condensed consolidated financial statements as well as our
Annual Report on Form 10-K for the year ended December 31, 2020 ("2020 10-K").
Our 2020 10-K includes additional information about our significant and critical
accounting policies, as well as a detailed discussion of the most significant
risks associated with our financial condition and operating results. Unless
noted otherwise, the discussions that follow refer to the three months ended
June 30, 2021 as "the quarter" and the six months ended June 30, 2021 as "the
first six months" and compare the results to the three months and six months
ended June 30, 2020, respectively.

Pending Acquisition by Vulcan Materials Company


On June 6, 2021, Vulcan Materials Company ("Vulcan"), Grizzly Merger Sub I,
Inc., a wholly owned subsidiary of Vulcan ("Grizzly Merger Sub") and the Company
entered into an Agreement and Plan of Merger (the "Merger Agreement"). The
Merger Agreement provides that, subject to the terms and conditions set forth
therein, Grizzly Merger Sub will merge with and into the Company (the "Merger"),
with the Company surviving the Merger and becoming a wholly owned subsidiary of
Vulcan. Subject to the terms and conditions of the Merger Agreement, at the
effective time of the Merger, each issued and outstanding share of USCR Stock
(other than such shares (i) owned by the Company, Vulcan or Grizzly Merger Sub
or owned by any wholly owned subsidiary of Vulcan (other than Grizzly Merger
Sub) or of the Company or (ii) exercising dissenters rights in accordance with
Section 262 of the General Corporation Law of the State of Delaware) will be
converted into the right to receive $74.00 in cash, without interest. The
transaction has been unanimously approved by the boards of directors of both
companies and is expected to close in the second half of 2021, subject to the
receipt of required regulatory approvals, approval by our stockholders, and
other customary closing conditions. If the Merger is consummated, USCR Stock
will be delisted from Nasdaq and deregistered under the Securities Exchange Act
of 1934, as amended.

The Merger Agreement provides each of the Company and Vulcan with certain termination rights and, under certain circumstances, may require the Company or Vulcan to pay a $50.0 million termination fee.

General


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

Ready-mixed concrete.  Our ready-mixed concrete segment (which represented 84.1%
of our revenue for the six months ended June 30, 2021) engages principally in
the formulation, preparation and delivery of ready-mixed concrete to our
customers' job sites. We provide ready-mixed concrete from our operations in
Texas, Northern California, New York City, New Jersey, Washington, D.C.,
Philadelphia, Oklahoma and the U.S. Virgin Islands. Ready-mixed concrete is a
highly versatile construction material that results from combining coarse and
fine aggregates, such as gravel, crushed stone and sand, with water, various
chemical admixtures and cement. We also provide services intended to reduce our
customers' overall construction costs by lowering the installed, or "in-place,"
cost of concrete. These services include the formulation of mixtures for
specific design uses, on-site and lab-based product quality control and
customized delivery programs to meet our customers' needs.

                                       18
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Aggregate products. Our aggregate products segment (which represented 11.2% of
our revenue for the six months ended June 30, 2021, excluding $29.3 million of
intersegment sales) produces crushed stone, sand and gravel from our aggregates
facilities located in British Columbia, Canada; Texas; Oklahoma; New Jersey; New
York; and the U.S. Virgin Islands. We sell these aggregates for use in
commercial, industrial, and public works projects, as well as consume them
internally in the production of ready-mixed concrete. We produced approximately
6.3 million tons of aggregates during the six months ended June 30, 2021, with
Canada representing 35%, Texas/Oklahoma representing 37%, New Jersey/New York
representing 26%, and the U.S. Virgin Islands representing 2% of the total
production. We believe our aggregate reserves provide us with additional raw
materials sourcing flexibility and supply availability.

Coronavirus Impact


The coronavirus ("COVID-19") pandemic began to impact our operations in March
2020 when residents throughout the U.S. began varying periods under
"stay-at-home" or "shelter-in-place" orders and has continued to impact numerous
aspects of our business since then. We continue to follow the enhanced safety
and health protocols established in 2020, while following evolving state and
local guidelines, and we have maintained our focus on cost containment efforts
to help minimize the resulting impact to our operating results. In addition, we
continue to monitor the impact of the pandemic on our customers and our
pipeline. The long-term impact to our business remains unknown because we are
unable to accurately predict the impact of COVID-19 due to various
uncertainties, including the severity of the virus, the duration of the
outbreak, the impact of variants of the virus, the availability and efficacy of
vaccines, the speed at which such vaccines are administered, the likelihood of a
resurgence of positive cases, actions that may be taken by governmental
authorities intended to minimize the spread of the pandemic or to stimulate the
economy and other unintended consequences. Accordingly, business disruption
related to the COVID-19 outbreak may continue to cause significant fluctuations
in our business, impact demand for our products and our workforce availability
and magnify risks associated with our business and operations.

Acquisitions and Business Combinations


On February 24, 2020, we acquired all of the equity of Coram Materials Corp. and
certain of its affiliates, a sand and gravel products provider located on Long
Island in New York. On November 7, 2020, we acquired a ready-mixed concrete
business in our West Region.

On March 12, 2021, we acquired property and the underlying royalty agreement
associated with the Orca Quarry on Vancouver Island, British Columbia, Canada
for $28.7 million (the "Orca Acquisition"). We made this investment to eliminate
future royalty payments, which had previously been recognized in cost of goods
sold excluding depreciation, depletion and amortization in our condensed
consolidated statements of operations.

On April 20, 2021, we purchased a rail terminal and bulk storage facility for
cementitious materials in Stockton, California for $8.2 million that is
currently leased to and operated by a third party (the "Stockton Acquisition").
We made this investment to increase the control and stability over our raw
material supply chain to support our West Region ready-mixed concrete business.


                                       19
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Results of Operations


The discussions that follow reflect results for the three and six months ended
June 30, 2021 ("quarter" and "first six months of 2021", respectively) compared
to the three and six months ended June 30, 2020, respectively, unless otherwise
noted.

                                            Three Months Ended                                            Six Months Ended
                                                 June 30,                           %                         June 30,                          %
($ in millions except selling prices)     2021               2020               Change(1)              2021              2020               Change(1)
Revenue                               $    327.4          $  322.7                1.5%              $  613.1          $  657.1               (6.7)%
Cost of goods sold excluding
depreciation, depletion and
amortization                               259.4             250.1                 3.7                 492.5             524.0                (6.0)
Selling, general and administrative
expenses                                    48.3              31.7                52.4                  77.6              65.4                18.7
Depreciation, depletion and
amortization                                25.7              25.2                 2.0                  50.1              48.6                 3.1
Change in value of contingent
consideration                                  -              (5.8)               100.0                 (0.1)             (5.5)               98.2
Gain on sale/disposal of assets and
business, net                               (0.1)             (0.1)                 -                   (1.6)             (0.1)             (1,500.0)
Operating income (loss)                     (5.9)             21.6               (127.3)                (5.4)             24.7               (121.9)
Interest expense, net                       10.3              11.4                (9.6)                 20.7              22.8                (9.2)
Loss on extinguishment of debt               5.5                 -                 NM                    5.5                 -                 NM
Other income, net                           (0.5)             (0.6)              (16.7)                 (0.9)             (1.2)               25.0
Income (loss) before income taxes          (21.2)             10.8               (296.3)               (30.7)              3.1              (1,090.3)
Income tax expense (benefit)                (0.7)              4.3               (116.3)                (5.4)             (0.6)              (800.0)
Net income (loss)                          (20.5)              6.5               (415.4)               (25.3)              3.7               (783.8)
Amounts attributable to
non-controlling interest                    (0.2)             (0.1)              (100.0)                (0.2)              0.2               (200.0)
Net income (loss) attributable to
U.S. Concrete                         $    (20.3)         $    6.6              (407.6)%            $  (25.1)         $    3.5              (817.1)%

Ready-Mixed Concrete Data:
Average selling price ("ASP") per
cubic yard                            $   138.18          $ 137.18                0.7%              $ 139.72          $ 140.77               (0.7)%
Sales volume in thousand cubic yards       1,968             1,982               (0.7)%                3,672             4,003               (8.3)%

Aggregate Products Data:
ASP per ton(2)                        $    13.50          $  12.83                5.2%              $  13.42          $  12.56                6.8%
Sales volume in thousand tons              3,034             3,188               (4.8)%                5,620             5,820               (3.4)%


(1)  "NM" is defined as "not meaningful."
(2)  Our calculation of ASP excludes freight and certain other ancillary revenue
and may differ from other companies in the construction materials industry.

Revenue. Revenue for the quarter increased 1.5%, or $4.7 million, resulting from
an increase in sales of ready-mixed concrete and other products that was
partially offset by lower revenue from aggregate products. Our results were
impacted by regional differences in weather and levels of construction activity,
lingering effects of COVID-19 pandemic-related delays in construction jobs, and
demand for our products. Our East Region realized an increase in sales volume
for the quarter, in both ready-mixed concrete and aggregate products. Our
Central Region was impacted by inclement weather and cement supply allocations,
with a decline in ready-mixed concrete volumes, but a slight increase in sales
of aggregate products. Our West Region experienced declines in sales volumes of
both ready-mixed concrete and aggregate products, with expectations for
construction activity to increase in the second half of 2021. Our overall
ready-mixed concrete ASP increased 0.7% during the quarter due to product and
geographic mix. While sales volume of aggregate products for the quarter
declined 4.8%, higher ASP helped mitigate the impact on revenue for the
aggregate products segment. Higher sales volumes of aggregate products in our
East Region in the quarter were more than offset by sales declines in other
markets, particularly our West Region, which was impacted by lower demand from
construction activity.
                                       20
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Revenue for the first six months of 2021 decreased 6.7%. Impacted by both the
regional effects of inclement weather and the lingering effect of COVID-19
pandemic-related delays on construction jobs, ready-mixed concrete volumes were
down in all regions. In addition, our average ready-mixed concrete ASP was lower
due to product and geographic mix. Power disruptions associated with Winter
Storm Uri forced us to suspend operations in Texas temporarily in February 2021.
Higher rain levels in Texas also negatively impacted construction activity in
the first six months of 2021. Increases in our aggregate products segment ASP
helped to mitigate the decline in sales volume of aggregates; however, pass
through freight was lower in the first six months of 2021 due to the lower sales
volume.

Cost of goods sold excluding depreciation, depletion and amortization ("DD&A").
Cost of goods sold excluding DD&A increased for the quarter, with the majority
resulting from higher variable costs (particularly plant costs and delivery
costs, which include higher fuel costs) as well as higher fixed costs.

Cost of goods sold excluding DD&A decreased for the first six months of 2021,
but as a percentage of sales were not fully leveraged with the decline in
revenue due to higher plant costs, particularly repair and maintenance costs,
and fuel costs.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased $16.6 million, or 52.4%, for the quarter,
primarily due to a $12.2 million increase in stock-compensation expense and an
increase in professional fees associated with the Merger, partially offset by
lower personnel expenses. The increase in stock-based compensation expense was
due to the increase in our stock price from the time the 2021 annual equity
award was approved by our Board of Directors as of March 1, 2021 to when our
stockholders approved the equity plan amendment to add shares to the equity plan
(and the award was deemed granted for accounting purposes) at our annual
stockholders' meeting on May 13, 2021, including certain performance thresholds
being met, and the award level.

Selling, general and administrative expenses were higher in the first six months
of 2021 due primarily to an $11.4 million increase in stock-based compensation
expense and $4.4 million of incremental professional expenses, partially offset
by lower expenses resulting from our cost saving initiatives.

Change in value of contingent consideration. The non-cash gain on the
revaluation of contingent consideration recorded during the second quarter and
first six months of 2020 resulted from changes in management's expectations in
2020 EBITDA.

Gain on sale/disposal of assets and business, net. The first six months of 2021 included gains from sales of a non-core piece of real estate in Texas and certain ready-mixed concrete plants in Oklahoma.


Income taxes.  We recorded an income tax benefit of $0.7 million and $5.4
million for the three and six months ended June 30, 2021, respectively, using
the discrete method. The discrete method treats the year-to-date period as if it
was the annual period and determines the income tax expense or benefit on that
basis. We have historically calculated the provision for income taxes during
interim reporting periods by applying an estimate of the annual effective tax
rate for the full year to "ordinary" income or loss for the reporting period.
However, for the three and six-month periods ended June 30, 2021, we determined
that since minor changes in estimated "ordinary" income would result in
significant changes in the estimated annual effective tax rate, our historical
method would not provide a reliable estimate of income tax benefit. Our
effective tax rate utilizing the discrete method differed substantially from the
statutory tax rate primarily due to (1) significant Section 162(m) limitations
on executive compensation and (2) our estimated interest expense limitation in
accordance with the Tax Cuts and Jobs Act for which a full valuation allowance
is anticipated. These differences reduced the income tax benefit recorded for
the three and six months ended June 30, 2021, which was partially offset by
excess tax benefits recognized for stock-based compensation.

We recorded an income tax expense of $4.3 million and an income tax benefit of
$0.6 million for the three and six months ended June 30, 2020, respectively. For
the six months ended June 30, 2020, our effective tax rate differed
substantially from the federal statutory rate primarily due to additional tax
benefits recognized related to the Coronavirus Aid, Relief and Economic Security
Act ("CARES Act") enacted on March 27, 2020. The CARES Act, among other things,
modified the business interest deduction limitation for tax years beginning in
2019 and 2020 from 30% of adjusted taxable income ("ATI") to 50% of ATI. As a
result, we recorded an additional tax benefit of $3.2 million in the six months
ended June 30, 2020 to reflect the CARES Act change to our estimated interest
limitation for the year ended December 31, 2019. This tax benefit was partially
offset by a net tax shortfall for stock-based compensation.

Other receivables, net, on our condensed consolidated balance sheets included
federal and state income tax receivables of $18.7 million as of June 30, 2021
and $5.8 million as of December 31, 2020.
                                       21
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Segment Operating Results


Our chief operating decision maker reviews operating results based on our two
reportable segments, which are ready-mixed concrete and aggregate products, and
evaluates segment performance and allocates resources based on Adjusted EBITDA.
We define Adjusted EBITDA as our net income, 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 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. Acquisition-related costs do
not include fees or expenses associated with post-closing integration of
strategic acquisitions. Many of the impacts excluded to derive Adjusted EBITDA
are similar to those excluded in calculating our compliance with our debt
covenants.

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

Adjusted EBITDA should not be construed as an alternative to, or a better
indicator of, operating income or loss, is not based on accounting principles
generally accepted in the United States of America ("U.S. GAAP"), and is not a
measure of our cash flows or ability to fund our cash needs. Our measurements of
Adjusted EBITDA may not be comparable to similarly titled measures reported by
other companies and may not be comparable to similarly titled measures used in
agreements that govern our debt.

See the prior discussion of revenue within this Item 2 as well as   Note 10,
"Segment Information"   to our condensed consolidated financial statements in
this report for additional information regarding our segments and the
reconciliation of Adjusted EBITDA to net income.

Ready-Mixed Concrete
                                              Three Months Ended          Increase/                 Six Months Ended                  Increase/
                                                   June 30,              (Decrease)                     June 30,                     (Decrease)
($ in millions except selling
prices)                                                  2021               2020                   %                 2021               2020            

%

Ready-Mixed Concrete Segment:
Revenue                                               $  274.3          $    272.4               0.7%             $  515.8          $    564.6          

(8.6)%

Segment revenue as a percentage
of
total revenue                                             83.8  %             84.4  %                                 84.1  %             85.9  %
Adjusted EBITDA                                       $   30.9          $     38.1              (18.9)%           $   55.8          $     69.8              (20.1)%
Adjusted EBITDA as a percentage
of segment revenue                                        11.3  %             14.0  %                                 10.8  %             12.4  %

Ready-Mixed Concrete Data:
ASP per cubic yard(1)                                 $ 138.18          $   137.18               0.7%             $ 139.72          $   140.77              (0.7)%
Sales volume in thousand cubic
yards                                                    1,968               1,982              (0.7)%               3,672               4,003              (8.3)%

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


Adjusted EBITDA.  Despite slightly higher revenue in the quarter, increases in
plant costs and delivery costs, including fuel costs, resulted in a
year-over-year contraction of segment Adjusted EBITDA. While overall costs for
the first six months of 2021 were lower than the same period last year, plant
and delivery costs as a percent of sales did not decrease at the same rate as
revenue, resulting in lower Adjusted EBITDA as a percent of segment revenue year
over year.

                                       22
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Aggregate Products
                                              Three Months Ended           Increase/                   Six Months Ended                   Increase/
                                                   June 30,                (Decrease)                      June 30,                       (Decrease)
($ in millions except selling
prices)                                                   2021                2020                    %                  2021                2020                   %
Aggregate Products Segment:
Sales to external customers                            $  25.2          $      26.1                                   $  47.8          $      47.2
Freight revenue on sales to
external customers                                        11.2                 12.1                                   $  20.6          $      22.1
Intersegment sales(1)                                     16.8                 16.3                                   $  29.3          $      28.8
Total aggregate products revenue                       $  53.2          $      54.5                 (2.4)%            $  97.7          $      98.1                (0.4)%
Segment revenue, excluding
intersegment sales, as a
percentage
of total revenue                                          11.1  %              11.8    %                                 11.2  %              10.5    %
Adjusted EBITDA                                        $  20.1          $      21.6                 (6.9)%            $  32.6          $      32.9                (0.9)%
Adjusted EBITDA as a percentage
of total aggregate products
revenue                                                   37.8  %              39.6    %                                 33.4  %              33.5    %

Aggregate Products Data:
    ASP per ton(2)                                     $ 13.50          $     12.83                  5.2%             $ 13.42          $     12.56                 6.8%
    Sales volume in thousand tons                        3,034                3,188                 (4.8)%              5,620                5,820                (3.4)%


(1)  We sell aggregate products to our ready-mixed concrete segment at market
price.
(2)  Our calculation excludes freight and certain other ancillary revenue.  Our
definition and calculation of ASP may differ from other companies in the
construction materials industry.

Adjusted EBITDA. For the quarter, segment Adjusted EBITDA as a percent of
segment revenue declined 180 basis points, while revenue declined 2.4%. The
impact of lower revenue on Adjusted EBITDA was mitigated by the build-up of
inventory to provide product for future construction activity. For the first six
months of 2021, Adjusted EBITDA as a percent of revenue declined 10 basis points
while revenue declined 40 basis points. An increase in average ASP for the first
six months of 2021 mitigated the impact on revenue from lower sales volumes, and
delivery costs were lower, as fewer ships were needed in our West Region to meet
the lower customer demand.

Liquidity and Capital Resources


Our primary sources of liquidity are cash generated from operations, available
cash and cash equivalents, and access to our asset-based revolving credit
facility, which provides for borrowings of up to $300.0 million, subject to a
borrowing base. As of June 30, 2021, we had $20.9 million of cash and cash
equivalents and $214.7 million of available borrowing capacity under the
Revolving Facility (as defined below), providing total available liquidity of
$235.6 million.
The following key financial measurements reflect certain aspects of our
financial condition:
($ in millions)                June 30, 2021       December 31, 2020
Cash and cash equivalents     $         20.9      $             11.1
Working capital               $        100.4      $             56.3
Total debt                    $        789.1      $            702.4



Our primary liquidity needs over the next 12 months consist of (1) working
capital requirements; (2) debt service obligations; (3) capital expenditures;
and (4) payments related to strategic activity. Our primary portfolio strategy
includes acquisitions in various regions and markets.

                                       23
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Our working capital needs are typically at their lowest level in the first
quarter, increase in the second and third quarters to fund increases in accounts
receivable and inventories during those periods, and then decrease in the fourth
quarter. Availability under the Revolving Facility is governed by a borrowing
base primarily determined by our eligible accounts receivable, inventory, mixer
trucks and machinery. Our borrowing base also typically declines during the
first quarter due to lower accounts receivable balances as a result of normal
seasonality of our business caused by winter weather.

The projection of our cash needs is based upon many factors, including without
limitation, our expected volume, pricing, cost of materials and capital
expenditures. Based on our projected cash needs, we believe that cash on hand,
availability under the Revolving Facility, and cash generated from operations
will provide us with sufficient liquidity in the ordinary course of business,
not including potential acquisitions. To help mitigate the impact of the
COVID-19 pandemic on our cash needs, we initiated business contingency planning
and will continue to adjust those plans as needed. If, however, availability
under the Revolving Facility, cash on hand and our operating cash flows are not
adequate to fund our operations, we would need to obtain other equity or debt
financing or sell assets to provide additional liquidity.

The principal factors that could adversely affect the amount of our internally
generated funds include:
•deterioration of revenue, due to lower volume and/or pricing, because of
weakness in the markets in which we operate or due to COVID-19 operating
restrictions;
•declines in gross margins due to shifts in our product mix, increases in fixed
or variable costs or the impact of COVID-19;
•any deterioration in our ability to collect our accounts receivable from
customers as a result of weakening in construction demand or payment
difficulties experienced by our customers, including from COVID-19;
•any further COVID-19 impacts to our business; and
•inclement weather beyond normal patterns that could reduce our sales volumes.

Cash Flows

                                                                    Six Months Ended
                                                                        June 30,
   ($ in millions)                                                  2021           2020
   Net cash provided by (used in):
   Operating activities                                        $    4.4          $  84.1
   Investing activities                                           (43.2)          (154.1)
   Financing activities                                            48.7             46.9
   Effect of exchange rates on cash and cash equivalents           (0.1)               -
   Net increase (decrease) in cash and cash equivalents        $    9.8          $ (23.1)



Our net cash provided by operating activities generally reflects the cash
effects of transactions and other events used in the determination of net income
or loss, including non-controlling interest.  Overall, the decline in cash
generated from operations was driven primarily by the timing impacts of certain
vendor payments, inclement weather and COVID-19 on our operations, and higher
payments of incentive compensation.

In addition to purchases of machinery, equipment, mixer trucks and vehicles to
service our business in both periods, investing activities in the six months
ended June 30, 2021 included the $28.7 million Orca Acquisition and the $8.2
million Stockton Acquisition. Investing activities in the six months ended June
30, 2020 included $140.2 million for the acquisition of a sand and gravel
products producer on Long Island in New York.

For the year ending December 31, 2021, we continue to expect to invest (excluding acquisitions such as the Stockton Acquisition and the Orca Acquisition) between $40 million and $50 million in capital expenditures, including expenditures financed through finance leases. Certain capital expenditures may be subject to approvals as provided for in the Merger Agreement. We continue to monitor the COVID-19 pandemic and related economic repercussions for consideration of our capital expenditure levels. Through August 5, 2021, we have invested $36.9 million in current year acquisitions.

                                       24
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Financing activities during the six months ended June 30, 2021 included $296.2
million of net proceeds from our Term Loans issuance, redemption of $200.0
million of our 2024 Notes including a $3.2 million redemption premium (see
discussion below), $3.0 million of net repayments under our Revolving Facility
(as defined below) to operate our business and fund acquisitions and investments
in property, plant and equipment. During the six months ended June 30, 2021, we
made payments of $17.6 million primarily related to our finance leases and
promissory notes and paid $8.2 million for contingent and deferred consideration
obligations. Financing activities during the first six months of 2020 included
$56.5 million of net borrowings under our Revolving Facility and $14.5 million
of financing proceeds primarily for our Texas greenfield aggregates operation.
In addition, during the first six months of 2020, we made payments of $10.8
million primarily related to our finance leases and promissory notes and paid
$9.9 million for contingent and deferred consideration obligations. Cash
provided by financing activities in the first six months of 2020 benefited from
the deferral of $8.4 million of promissory note and finance lease payments that
were deferred to mitigate the cash flow impact from the COVID-19 pandemic.

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

Asset Based Revolving Credit Facility ("Revolving Facility")


We have a Revolving Facility with certain financial institutions named therein
as lenders and Bank of America, N.A., as agent for the lenders that provides for
up to $300.0 million of revolving borrowings. The Revolving Facility also
permits the incurrence of other secured indebtedness not to exceed certain
amounts. The Revolving Facility provides for swingline loans up to a $15.0
million sublimit and letters of credit up to a $50.0 million sublimit. Loans
under the Revolving Facility are in the form of either base rate loans or the
London Interbank Offered Rate ("LIBOR") loans denominated in U.S. dollars.

On June 25, 2021, we and certain of our subsidiaries, as co-borrowers and as
guarantors, entered into the Fourth Amended and Restated Loan Security Agreement
(the "Fourth Loan Agreement"), which amended and restated the Third Amended and
Restated Loan and Security Agreement, dated as of August 31, 2017 (the "Third
Loan Agreement"). Among other things, the Fourth Loan Agreement extended the
maturity date to June 25, 2026 and amended certain terms of the Third Loan
Agreement, including, without limitation, permitting the incurrence of the loans
under the Term Loan Agreement (as defined below). In connection with entering
into the Fourth Loan Agreement, we incurred $1.5 million of debt issuance costs.

The obligations under the Fourth Loan Agreement are secured by first priority
security interests in accounts receivable, inventory and certain other personal
property of the Company and its subsidiaries (the "ABL Collateral") and second
priority liens on and security interests in certain real property of the
Company's subsidiaries and certain personal property of the Company and its
subsidiary guarantors that is not ABL Collateral (the "Term Loan Collateral").

Our actual maximum credit availability under the Revolving Facility varies from
time to time and is determined by calculating the value of our eligible accounts
receivable, inventory, mixer trucks and machinery, minus reserves imposed by the
Lenders and other adjustments, as specified in the Fourth Loan Agreement. Our
availability under the Revolving Facility at June 30, 2021 was $214.7 million.

The Fourth Loan Agreement contains usual and customary covenants including, but
not limited to, restrictions on our, our co-borrower subsidiaries', and our
guarantor subsidiaries' ability to consolidate or merge; substantially change
the nature of our business; sell, lease or otherwise transfer any of our assets;
create or incur indebtedness; create liens; pay dividends or make other
distributions; make loans; prepay certain indebtedness; and make investments or
acquisitions. The covenants are subject to certain exceptions as specified in
the Fourth Loan Agreement. The Fourth Loan Agreement also requires that we, upon
the occurrence of certain events, maintain a fixed charge coverage ratio of at
least 1.0 to 1.0 for each period of 12 calendar months. As of June 30, 2021, we
were in compliance with all covenants under the Fourth Loan Agreement.

                                       25
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Term Loans


On June 25, 2021, we entered into a secured term loan agreement (the "Term Loan
Agreement") with certain subsidiaries, as guarantors, JPMorgan Chase Bank, N.A.,
as administrative agent and collateral agent, and the lenders and other named
parties. The Term Loan Agreement provides for $300.0 million in aggregate
principal amount of term loans (the "Term Loans"), which will mature on June 25,
2028. In connection with entering into the Term Loan Agreement, we incurred $4.6
million of debt issuance costs. Proceeds of the Term Loans will be used for
general corporate purposes, including repayment of certain borrowings under the
Fourth Loan Agreement and redemption of the Company's 6.375% senior unsecured
notes due 2024 (the "2024 Notes"), as further discussed below.

The Term Loans bear interest at the Company's option of either: (1) the LIBOR
(subject to a floor of 0.50%) plus a margin of 2.75% or (2) a base rate (which
is equal to the greatest of prime rate, the Federal Reserve Bank of New York
effective rate plus 0.50% and LIBOR plus 1.00%, and is subject to a floor of
1.50%) plus a margin of 1.75%. Additionally, the Term Loans were issued at a
price of 99.75%. The Term Loans are secured by a first priority lien on and
security interest in the Term Loan Collateral and a second priority security
interest in the ABL Collateral. The Term Loan Agreement contains customary
representations, warranties, covenants and events of default, but does not
contain any financial maintenance covenants.

Termination of Delayed Draw Term Loan Facility


On June 25, 2021, in connection with entering into the Term Loan Agreement, we
terminated the Credit and Guaranty Agreement, dated as of April 1, 2020, among
the Company, certain subsidiaries as guarantors, Bank of America, N.A., as
administrative agent and collateral agent, the lenders and other parties named
therein (the "Delayed Draw Term Loan Agreement"). There were no outstanding
borrowings under the Delayed Draw Term Loan at the time of termination. The
Delayed Draw Term Loan was secured by a first priority lien on and security
interest in the Term Loan Collateral. During the three months ended June 30,
2021, we incurred a $2.3 million pre-tax loss on the Delayed Draw Term Loan
termination due to write-off of unamortized debt issuance costs.

Redemption of 2024 Notes


On June 26, 2021, we redeemed all of the $200.0 million outstanding 2024 Notes,
at a price of 101.594% of the principal amount plus accrued, unpaid interest.
During the three months ended June 30, 2021, we incurred a $3.1 million pre-tax
loss on this redemption, which included the redemption premium of $3.2 million
and a $1.4 million write-off of unamortized debt issuance costs, net of
$1.5 million of unamortized issuance premium.

Senior Unsecured Notes

At June 30, 2021, we had outstanding $400.0 million aggregate principal amount of 5.125% senior unsecured notes due 2029 ("2029 Notes").


The 2029 Notes are governed by the Indenture dated as of September 23, 2020,
among U.S. Concrete, Inc. (the "Issuer"), the subsidiary guarantors party
thereto and U.S. Bank National Association, as trustee (the "2029 Indenture").
The 2029 Indenture contains customary covenants, including negative covenants
that restrict our ability and our restricted subsidiaries ability to engage in
certain transactions. The 2029 Notes accrue interest at a rate of 5.125% per
annum, which is payable on March 1 and September 1 of each year. The 2029 Notes
mature on March 1, 2029 and are redeemable at our option prior to maturity at
prices specified in the 2029 Indenture.

The 2029 Notes are guaranteed on a full and unconditional senior unsecured basis
by each of the Issuer's restricted subsidiaries (each, a "Guarantor Subsidiary,"
and collectively, the "Guarantor Subsidiaries") that guarantee any obligations
under the Revolving Facility and certain of the Issuer's other indebtedness or
certain indebtedness of the Issuer's restricted subsidiaries (other than a
foreign subsidiary or domestic subsidiary thereof that guarantees only
indebtedness incurred by a foreign subsidiary or a domestic subsidiary thereof).
Each Guarantor Subsidiary is directly or indirectly 100% owned by the Issuer.
The guarantees are joint and several. The Issuer does not have any independent
assets or operations. There are no significant restrictions in the 2029
Indenture on the ability of the Guarantor Subsidiaries to make distributions to
the Issuer. The 2029 Notes are not guaranteed by any of the Issuer's direct or
indirect foreign subsidiaries (or any domestic subsidiaries of any such foreign
subsidiaries), U.S. Virgin Islands subsidiaries or domestic subsidiaries that
are not wholly owned (collectively, the "Non-Guarantor Subsidiaries").
                                       26
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The 2029 Notes and the guarantees thereof are effectively subordinated to all of
the Issuer's and the Guarantor Subsidiaries' existing and future secured
obligations, including obligations under the Revolving Facility, the Term Loans,
our finance leases and our promissory notes, to the extent of the value of the
collateral securing such obligations; senior in right of payment to any of our
and the Guarantor Subsidiaries' future subordinated indebtedness; pari passu in
right of payment with any of our and the Guarantor Subsidiaries' existing and
future senior indebtedness, including the Issuer's and the Guarantor
Subsidiaries' obligations under the Revolving Facility, the Term Loans and our
finance leases; and structurally subordinated to all existing and future
indebtedness and other claims and liabilities, including trade payables and
preferred stock, of any Non-Guarantor Subsidiaries.

Other Debt


We have financing agreements with various lenders primarily for the purchase of
mixer trucks and other machinery and equipment with $95.8 million of remaining
principal as of June 30, 2021.

For additional information regarding our arrangements relating to outstanding indebtedness, see the information set forth in Note 5, "Debt" to our condensed consolidated financial statements included in this report.

Inflation


We experienced minimal increases in operating costs during the second quarter of
2021 related to inflation. However, in non-recessionary conditions, cement
prices and certain other raw material prices, including aggregates, have
generally risen faster than regional inflationary rates. When these price
increases have occurred, we have generally been able to mitigate the cost
increases with price increases we obtain for selling our products. Cement supply
in Texas has been disrupted by temporary closures of certain cement producers'
plants. As a result, our cement supply has been constrained, and cement prices
began to rise in March 2021. We implemented price increases in April 2021 and
will continue to do so as needed to help mitigate the impact of these increases.

Critical Accounting Policies


We prepared the preceding discussion based on the accompanying interim unaudited
condensed consolidated financial statements, which have been prepared in
accordance with U.S. GAAP. Such preparation of financial statements requires the
use of estimates and assumptions by management in determining the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities as of the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Estimates are based on
historical experience, currently available information and various other
assumptions that we believe to be reasonable under the circumstances. These
estimates form the basis for making judgments about the carrying values of
assets and liabilities that are not readily available from other sources. Actual
results could differ from those estimates. We described our critical accounting
policies in Item 7 of Part II of our 2020 10-K. Our critical accounting policies
involve the use of estimates in the recording of business combinations, goodwill
and intangible assets and any related impairment, accruals for self-insurance,
accruals for income taxes, and assessing impairment of long-lived assets. See
Note 1, "Organization and Summary of Significant Accounting Policies" to our
condensed consolidated financial statements included in Item 8 of Part II of the
2020 10-K for a discussion of our critical and significant accounting policies.

                                       27
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           CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

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

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


•the occurrence of any event, change, or other circumstances that could give
rise to the termination of the Merger Agreement;
•the inability to obtain the requisite shareholder approval for the proposed
Merger or the failure to satisfy other conditions to completion of the proposed
Merger, including the receipt of regulatory approvals;
•risks that the proposed Merger disrupts our current plans and operations;
•the amount of the costs, fees, and expenses and charges related to the Merger;
•the results of litigation related to the Merger;
•the expected timing and anticipated closing of the Merger,
•general economic and business conditions, which will, among other things,
affect demand for commercial and residential construction;
•our ability to successfully implement our operating strategy;
•our ability to successfully identify, manage, and integrate acquisitions;
•governmental requirements and initiatives, including those related to mortgage
lending, financing or deductions, funding for public or infrastructure
construction, land usage, and environmental, health, and safety matters;
•seasonal and inclement weather conditions, which impede the placement of
ready-mixed concrete;
•the cyclical nature of, and changes in, the real estate and construction
markets, including pricing changes by our competitors;
•our ability to maintain favorable relationships with third parties who supply
us with equipment and essential supplies;
•our ability to retain key personnel and maintain satisfactory labor relations;
•disruptions, uncertainties or volatility in the credit markets that may limit
our, our suppliers' and our customers' access to capital;
•product liability, property damage, results of litigation and other claims and
insurance coverage issues;
•our substantial indebtedness and the restrictions imposed on us by the terms of
our indebtedness;
•the effects of currency fluctuations on our results of operations and financial
condition;
•the length and severity of the COVID-19 pandemic;
•the pace of recovery following the COVID-19 pandemic;
•our ability to implement cost containment strategies; and
•the adverse effects of the COVID-19 pandemic on our business, the economy and
the markets we serve.

For additional information regarding known material factors that could cause our
actual results to differ from our projected results, please see "Risk Factors"
in Item 1A of Part I of our 2020 10-K and "Risk Factors" in Item 1A of Part II
of our subsequent quarterly reports on Form 10-Q.
Readers are cautioned not to place undue reliance on forward-looking statements,
which speak only as of the date hereof. We undertake no obligation to publicly
update or revise any forward-looking statements after the date they are made,
whether as a result of new information, future events or otherwise, except as
required by federal securities laws.
                                       28

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