USCR - Earnings call transcript Q3 2018

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Operator

Good morning, ladies and gentlemen, and welcome to the U.S. Concrete, Inc.

Third Quarter 2018 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded. to Senior conference Vice like host, to now Kunz, John President would turn over the your I and CFO.

John Kunz

Good earnings Lindsey. third you, morning, to welcome Thank U.S. quarter XXXX call. and Concrete's

today to Joining me and Executive questions. we prepared Bill Officer. will Bill some our I make after Chairman, Chief will is and remarks, on President Sandbrook, open call the which, the call

call call to Presentation turn the website. over available today's cover to few I I our like to Investor Before would the items. a administrative facilitate of Relations is in Bill, section

As will are Except Act update statements detailed we no on changes and Page other of the factors, conform which or X defined in Reform could cause actual legally of materially. forward-looking our Such our subject presentation, obligation undertake to as results to include today's statements U.S. call XXXX. actual Litigation risks, forward-looking statements differ such to results Private uncertainties or expectations. Securities by required, as to

these in of you can to our other SEC. filed on that that note list we factors financial the Please non-GAAP today. filings the X-K call with will a reconciliations in the risk and factors, this information find and contained For the measures disclaimers Form the legal refer regarding earlier discuss please

If receive of section our you email future an up would to the like alerts. Investor Relations website to distribution news sign list be on email in releases, please under

under of a Presentations. call, Relations and available to If will like of the replay today's section Events listen you website to would Investor in it our be

the quarter, market highlights turn for the call the trends Now XXXX. to current outlook over to to I'd discuss Bill like and our for

William Sandbrook

welcome gentlemen, morning, Good call. and Thank you, and to our John. ladies

X have you it. our factor headwinds you the weather we are hearing quarter a once Unfortunately, the as of our elements that quarters. industry assure last are been impacting of results I have markets favorable for frustrated than not our in Our reflect continued tired more mentioning the the quarters. X past several of for third weather-related the again that results

and optimistic XXXX our remain heading anticipated the weather of we in out with into closing normal anticipated XXXX confident patterns. fundamentals and the and However, business growth

We will our later the little more on call. about a outlook discuss

side revenue, positive quarterly by strength again of the the once construction hit our the a quarter, record On markets. we driven for underlying demand in for continued

a Our overall part of become aggregates the company, and contributions continued led our more position from Polaris. expand to significant by meaningful

report economies strength is this years to Slide our year-over-year We presentation. flow consistent, last quarter and XXst operating regional X which cash has as illustrated testament growth, are also revenue teams. of a our It operating to positive the driven X our of for and the strategy also proud that is of consecutive on our strategy

which It is million solid outlook, volume the have revenue double-digits. trends. not seen confuse like macroeconomic underlying feel single last We backlog, have continue important of our a cubic by In weather normalized the demand over confident or reported fundamental to we year. and want at decline I digit costs weather, pressures growth with inflationary supported demand over X markets any that the of to we not in our construction emphasize yards. in remains fact consistently to short-term in high input year-over-year the to months

strong. and teams reemphasize delivered. and ultimately wins coming and the we're regional be seeing in activity in remain these reports, To of bidding work losses Our markets weekly opportunities, to report opportunities new our market, what work to on from backlog regions the

drove million. Materials. synergistic EBITDA Aggregates million increased quarter the adjusted integration volumes $XX.X of This more to Third our set and volume XXXX a X.X of record another aggregate the than continued strength to doubled quarterly million increase on for Polaris $X.X quarter tons in further

to for to lot and of EBITDA million our past upper more XXXX capacity in on further adjusted expand received to next volume finalized volumes During acquisitions the our We at over terminal, sets the approvals recent a up couple Long mid remain quarters, We've with in as excess Beach our teens. quarter, into we year questions the year. announced heading track which for formal expectations throughput expansion exceed margins integrated X aggregate of fully results. were that us full Polaris we of have tons the the at surrounding into

business, and We aggregate have typically our our from On basis, are site. paid transportation that revenue margin freight-adjusted our for explained accurately X from the of aggregate as understand model is through passed we customer customer's responsible and important any cost costs that the significant aggregate the the costs Polaris which our operations to of in freight reflect business revenue associated margins customers. business of X the in a reported the pass-through customer quarry Slide excludes freight. to is on and presentation, with more It the

quarter can margins of profit. our distribution overall approaching is XX% gross has the and solid amount company gross acquisitions, percentage company remained both a recent you aggregate's and our profit. including operations in as profit, aggregate hauling see, total internally-managed and our for of As doubled With total gross our profit our

even our presentation. Total resulted quarter, the Turning both from in for up was the acquisitions year-over-year Slide decline our contributions results volume Northeast the received in the headwinds of recent ready-mixed slight during quarter. starting volume to XX a on though solid quarter. We weather organic and for X% in Texas the the

volume presentation, their On the the each the year we XX Dallas-Fort weather context, of between next put into relationship the slide, and in pressures month. this Page ready-mix Worth

declines, month in and or the set again for months. significant, February both once remaining. the that Worth new ever X October, all-time records rainfall were see we the in with Worth Dallas-Fort volume Unfortunately, still Dallas-Fort in and growth totals lower in rainfall a record months wettest September set XXXX making year now can for for Metroplex in of the the months You of

has monthly monthly rainfall of not average the X significantly can in of XXXX. first in we months specifically explain X exceeded of the ready-mix August. the was labor the totals our have more been they X that impact that lowest than have costs in records, York the it and more see volume weather, exceeded lower and largest months, driver costs also Remember To materials, September model. delivery business the of after City, are you than cost Although XX% New in

how market rainfall Texas, that generating is measure drivers more yards pressures the company short-term was a that weather significant pay like metric During on creates yards-per-man-hour than per the markets delivering adverse continue record short-term of than hour was margins. In pay. shows a clarity which man per and revenue is driver hour. in event September, and to A of volume, we year lower year concrete our last of our productivity September. lower internally a a the must creates multi-region in to like on in results. non-union DFW key track X% month we prior XX% efficiently deferral little to on I'd put for alone the our still the It

years. the lose lot vertical Focusing conditions saturated the a York on weeks, construction of rain construction. volume. vertical second construction for ground defer September, saw regions In high represent of may Jersey a the can DFW, in and XX.X% Extremely our day. where unlike September record is work, our only flat Atlantic area wettest work not DFW for Texas and The XX New region New and recorded rainfall you

Atlantic Texas result, the XX.X% pace July/August on on the due a company-wide and As By revenues Dallas-Fort region were by to basis anomalous XX% we XX% volumes in in events. by compared ready-mix to September's August West in average September. weather XX%, Worth declined the September region, a and July in from in declined

our in the total XX%. as their With XX% drivers the we costs quarter have many July be seats. the are September again run in business rate. overall is average of of repeatedly weather. margin the unabsorbed, the these to EBITDA month and due weather, company-wide markets become order as million thus once to approximately margin and Texas, over semi-fixed the to EBITDA operations our declined in our on adjusted impact negative dropped in impact declined improved that margins our maintain more SG&A cost $XX to EBITDA adjusted in contribution profitability approximately July X.X%, said, the impacts, drivers revenue EBITDA from in as to margin absorbed overheads adjusted to significantly was XX.X%. reducing our company-wide have dramatically. are Even New York significantly, August significant fixed company XX.X%, weather On We margin of In in a alone. Contribution due August the Similarly million can $XX September, September the margins a in estimate year-to-date and including basis, in impacted average was margin

setting records. are days, the good news. On Now our volumes sunny

temporary with For this sold yards. our a the production volume, this emphatically example, record as short-term presentation growth over I on has of yards seen impact XX,XXX our issue. strong solid daily reemphasize Tuesday ready-mix of around quarter XX compared where where month can and our of year on be third Slide and of to the DFW XX,XXX must average is week, the remained efficiency not been pressure had show Again, weather-dependent demand pricing of day markets underlying an weather in our only. in of all on we each

markets. overcoming up the price with the most pressures We to quarter team prior for X% our of to our third more increases quarter, in continue the response of we on over than X% with major prior pricing Organic mix as the pressures prices. was quarter cost are year, over the pleased in in pricing up see

responses starts quarter order material points our As initial basis improve have these the and sequentially we and I'll quarters, as next replace responses, the margins approach pricing cover from spread mentioned margins to improved XX.X% of spread range in seen unexpected of second on We couple we to quarter. our you pressures as quarter, newly-priced XX put the take for results the through to over each place last call anticipate cost positive work markets. XX% from now of backlog. material we

represented by our of another in revenue. which record our previous quarter, with region, outlook high topping second its success revenue of this XX% quarter confirmed California Northern Our continued

all all to major the a at Materials Our contribution Polaris acquisition decreasing are successfully unemployment and among present activity integration seeing strong rate across continues moving a ready-mix strength. significant we markets, is remained sectors lowest along and our our of long-term operations. X.X%, concrete Construction of from

I about I'm Southern growth, SBX needed provide to our top Speaking California. our to Normally, add long-term when is line long-term happy aggregate-only an construction earnings California of This strong. you, the outlook region and surviving now for the markets us is sustainability successful are remains on our increasing the for successful growth. market to to contributor This concrete and our talking presentation. and ready-mix markets. increasing of election our will we present much completion

This During we annually, quarter, its the of deliver throughput our supply whole constraint market. Polaris increasing is operations Southern illustrates X Beach on from capacity doubling tons contributions million in Long throughput effectively impact look major is expansion able growing California. announced and market and at that specified the Southern the and forward terminal. to Polaris third to aggregates now of a I to company as the a aggregates up having highly California our our

comeback more our Another Virgin division in a of up and coming Islands. the U.S. region is Southeast story,

Irma back recovery following Hurricanes and they on in Looking are XXXX. our efforts, Maria

Our face the our the all to effective gave across From employees employees' from is USVI employees. our the country, destruction to inspiring. -- other of utter in help resilience provide generously of country

mode. comeback trail to billion. In long-term more a and efforts in to are on a is total growth expected recent reconstruction total aid report, a $X than they help the Now

refinery quarter, a quarter, again from The experienced for the quite Beyond wettest growth our considering Worth, impact represented significant expected inches feat receive under future. Dallas-Fort $X.X of billion the building in September of rain. volume to the is XX% the the revenue BP's showed is a formally Dallas-Fort XX federal ownership. Metroplex Worth once up and September which to to sector refurbish Hovensa ever restart aid for the with weather. closed The this was private which stepped invest funding, plant over

to concrete rose to months. X results other highlight disruptive our seeing during is normalized continue I the report X.X% Dallas how to quarter X.X% the Dallas it the remains to indicator prospects. the and business estate Land relocations, for future. Institute Worth real as foreseeable outlook and The sectors all we released expect growth. us and the Urban DFW a want Worth. the show precipitation rose to operations during months environment performed Fort ranked living XXXX of across PricewaterhouseCoopers The continued work index growth Unemployment Fort in continued from construction low, the A on Metroplex the in market's expect see we Metroplex. operations, level we ending X.X%. see giving at this cycle strongest and in of top of While population of headquarter market well and market overall the strength and growth activity our favorable drive are business-friendly in to recently low is corporate cost and leading The this

Our region, its comprised year-over-year which third West our significant Texas quarter of growth. revenue continued revenue XX% quarterly

efficiencies Coincident of significant peak. Permian released year over XXXX continue we The New investment with Basin months. of XXX in impact that to the in growth only X.X% accretive the an in rig runway New support earlier our borough drive all will spending and $XX of a Spread the fundamentals to there both coupled past new a spending this and show City to continue an Golden evolving represented $XXX Redi-Mix to to construction in of York the acquisition market continue in in Indicators a continue billion The York of indicators construction projected rose for be construction a billion New Recent XXXX. New rate cycle will outlook ready-mix market. continued X.X% forecast, still in outer revenue next concrete markets alone. the have Our this region. forecast that York in for economic These These of over in the XX% following in XX% construction years, continues and combined this strong has added released optimistic in in has and rigs, X quarter increase XX% aggregates. remain this expectation July stated Building the in with and our Index economy strong this markets cycle. York over risen Overall, intact with XXXX previous increase and market Congress integration across building make XX our Economic see August, we counts of over at plenty Recently, X.X% State annual in for our our this

us a backlog, of significant demand XXXX heading continued remainder Our year XXXX. growth pent-up and ready-mix and for poor give significant cycle aggregates into during the our weather continuous concrete optimism from the

I Now the to back to call like over would turn John.

John Kunz

Thanks, Bill.

of to revenue of a million significant third in down As new quarterly $XX.X with record due once XXXX. was Bill to for we set weather-related mentioned, the again slightly $XXX month total the headwinds quarter of Adjusted EBITDA million, final the quarter.

compensation, quarter Our contingent stock of event, consideration the lime business strategic related that the implementation XXXX past to related adjustments for to on a the and of our plant slurry costs our for D.C., for settlement gain relocation acquisitions. Washington sale in litigation initiatives, in changes a

improve divestiture the expanding balance reduced realign borrowings. the the strategically During lime sold lime the and portfolio The liquidity quarter, we Metroplex. our and through business to continued to slurry business assets slurry in our of our allocate aggregate provided Worth to Dallas-Fort further sheet

of through to domain city. Washington were one eminent action, within D.C. relocate our an the facilities Additionally, required we

for the was cost We be of quarter third prior reimbursed in X.X% of the XXXX litigation to Adjusted quarter. acquisition-related X% quarter the quarter. plant it was in third relocation year revenue the associated facility. to X.X% of revenue and for expect costs, eminent with prior compared expenses the to costs, of the of excluding of compensation, majority and compared the year SG&A X.X% settlement the in stock costs domain SG&A, XXXX, relocation

with impacted gross weather-related in synergies operating to acquisitions by recent continue deferrals, and volumes area. leverage been inefficiencies increased drive negatively profit Although this had our created from margins

included costs. equipment on $XXX XXXX, million equipment, million. $X of unsecured million This due debt, As total of debt issuance of $XX credit senior for facility in including XX, million million approximately new revolving consisting other of and debt, mobile notes outstanding current our maturities, September $XXX net was trucks mixer our and financing $XX mainly of

the reducing remain generate leverage total of our cash liquidity had quarters drive XX, and availability and cash and on equivalents $XXX net was $XX as our recent debt acquisitions, increased of At in additional our September including focused adjusted fully under revolver. we earnings XXXX, of million September synergize million, As We EBITDA we X.Xx. $XXX cash to XX, of million coming flow.

position no We a facility. ABL continue maturities our or have with notes to senior solid and near-term liquidity associated

Moving to cash sheet. flow and the balance

quarter During $XX quarter. to generated of We the proactive in very million prior to our were to approximately third as working the our in $XX our our cash capital primarily operating for million million the expenditures in quarter year flow, cash headwinds $XX compared cash year. million generate $XX same prior capital the sale spent expenditures lime continued compared free adjusted markets, of from XXXX, year to and of generated slurry to we third the provided assets, quarter. equipment the weather-related compared million to plants, We response the on during of support $XX XXXX, proceeds approximately million during by including in the increased demand We flow. the last our to capital and the machinery effectively activities period $XX to manage quarter related

for months X the we September last $XX compared spent period million, XX, to year. For the million same $XX ended

our approximately flow associated capital range, For million to and cash of with costs the to upper to XX% million our the capital in EBITDA. of through $X Washington plant the XX% to expenditures from year, in of equipment $XX the million adjusted relocation leases we be the full of including be operations $XX excluding range end of anticipate our acquired in D.C.,

We authorization repurchases. in for have million $XX share continue to

anticipate along operations and in strategy. back flow the year We Bill. to are support solid to over acquisition remainder generation confident for turn now near-term adequate liquidity call the outlook ongoing I'll with continued with of our the our cash

William Sandbrook

I've mentioned about Thanks, let's outlook briefly, it expectations moving and forward. John. talk our but

Given XXXX. adjusting the we third full impact for weather unexpected quarter, our guidance of are the year

based recent We by in acquisition line expect continued the between Overall, adjusted growth year, adjusting Based fourth anticipate to revenues of quarter, using volume represents fourth quarter quarter, just conditions of expectations revenue billion and We growth company the last and EBITDA we XXXX, last over year million organic of to the driven compared our expectations adjusted EBITDA of billion, to pricing be the which estimate. growth the anticipate are between of we in on our and place full year, the growth XXXX. in put addition in solid $XXX X% these response midpoint $X.X XXXX, our momentum. $X.XX quarter fully EBITDA on total the XXXX top in normal XXXX estimate. be XX% million from margin we continued $XXX to using combined which the expansion operating represents for adjusted full and now anticipated have gains approximately over midpoint pricing

we've the at fundamentals solid Although we last which weather months ourselves driven strengthening continued in regions. within The fall in ultimately our markets. supports of year, of the by we Dodge activity. each remains of construction of very the our confident In the than this will year, high shown XX% higher year, demand time short construction strong growth, continued Index for this Momentum normalized beginning the remain of set expectations we

of the In have in months QX start of first the the exceeded since addition, Commerce Index, according the to index for Construction XX XXXX. backlog Commercial Chamber time levels

in we we As our outlook both revenue bullish for EBITDA remain look growth. and to and XXXX, finish forward year the

U.S. expect environment metrics we XXXX, Absence continue in severe into Concrete. growth would revenue demand to conditions will which robust EBITDA of experienced XXXX, weather and customers meaningful solid XXXX. a growth throughout translate for improved Our we operating in see and

and fourth expect to conclusion, in provide of We are for budget our we of on XXXX continued demand our our In trajectory on call. the will process quarter growth additional earnings remain optimistic our markets. in the details finalizing capitalize underlying pent-up each and

substantial and vertical and multi-year has cyclical remaining steady from in positioned the We runway aggregates exposure integration increased vibrant recovery we to are well markets. our that benefit believe our

strength the profitability flow growth. to maintaining the turn generation continue back would over We by and our your generating on continued to Concrete. U.S. strong cash We question-and-answer interest shareholder for value regional the on achieving Thank operator session. call capitalizing of for markets, now to the be in focused our like you

Operator

[Operator Instructions].

Seth first SunTrust. question with from Rohit Our comes

Rohit Seth

I've quarter, questions really implies guidance, a The in in we've got October the good XXXX Texas. your two had fourth guidance growth the more One on one, actually. in but backlogs. weather XXXX

a assuming is XX% Just what backlog, be can in cancellations? sequential second you gives what the in kind dip market the question, get margins? haven't backlogs, my And slowing? we saw the growth is you confidence expectation some and in revenue there the Is we quarters, color of and helpful. on to, that are then would seen that several there Any

John Kunz

growth margin and and revenue I'll Bill Seth, to backlog I'll turn the for take your question question. it

If now, into very different we at the from us October. and of impact our for that as changed you of our second the only markets with what guidance that's confident anticipate We're exception had the margins going in in really, the weather. to the look the we've thing QX, quarter been weather still has and

that is right fourth you reflected, $XX by quarter $XX million of million, breakdown around million $X our miss last the think The and the fourth $XX to million. to we brought is down of all million then in if -- relates weather third our about impact we $XX and was third account which around lower guidance for gave quarter the the estimated quarter EBITDA quarter October. is I quarter, of So, guidance

XX very So, we I the implication Page we're ago, provide, we with of have that we it's whole. presentation, $XX days page, different and million last that gave October. as a is our outlook only not XX had The guidance when on comfortable materially than expected when you look at it's that what we the guess

severe Slide the weather severe had weather, poor. also as reduction well chart as what The a pretty differentiating haven't million there weather very for as think September. but on in reasonable was for the in the September factor that for October books proxy shows the we Atlantic $X XX, closed being because We October, the the implications we is be will

that the and for hasn't into outlook. adjustment It's the XXXX, bullish to as Bill And in really very with be $XX our those prospects reasons very bullish respect $XX and So and even to We're about is million 'XX in changed. still overly million, we that and million that think certainly $XX optimistic. optimistic continue -- for the were we said, we're and concerned our number. not achievable guidance going

William Sandbrook

backlog your to answer that. question, Seth, I'll

to remember and have basis excuse you the see production on XX, August July X me, that previous July your You up September, On At X/X were that's on year-over-year periods a yard Slide August that significantly of level, concrete. backlog. cubic is million elevated to up. our compared was XX% and over XX% of

are being selective. We

are prices through. We pushing

think July So jobs XXX,XXX as big do yards of mix tends through months can we to our margins fall whatever margin August I to and I that grow in me all take level, in if shifts material XXX,XXX take. either such yards achieve. all that And number our region to order we've to drive I of forward that I production of what drive selective couple that margin costs, levels off pushing forward the selective tune of we're we want EBITDA we at to these but in in concern regionally the price way or have to past want, projects been and very indicated some the between I to backlog, jobs And at off moderate significant or fall backlog very can or a doesn't -- all. the extent. or XXX,XXX are which also

Operator

line with from Inc. Our Grooms Trey next comes question of Stephens the

Trey Grooms

New we you're in expecting all sounds around 'XX, transition York in the is, me drivers mix and that growth that you does has certain type are growth for markets continued as in into look you're 'XX. union the market? also of B types New about York, It And gone continued within where for but look some talked the look you've market work Where projects to like that you expecting mix given what or question just non-union of at in past maybe process, of this in that work First more in at that of City like backlog 'XX, kind market. the mentioned, specifically in needed transition? projects,

William Sandbrook

Yes, I'll answer that Trey.

being year. that market calls, our from undertaken are on I making coverage of A the the the I in any, at B shape and had the previous lower be said still quarter it's efficiently. that complete getting meaningful next recovery great end and I'm any we'll complete in complete from work anticipated as I as I confident quarter, in efficiencies confident even transition boroughs the of process in say and taken to the way, progress area. far form. of where a all coverage fourth enhanced probably very As by strides feel by and we in first transition that rate. not five of still market quarter significantly end by work, or end the at second would It's

new which is the that and just take give quarter that of number years, couple will we've been the York -- line. to beginning of as a and well, in re-opened quarter, market, the plant far Westchester/Bronx things. a concrete -- As the of New capacity Westchester County starting for third additional has a York fourth a opened the up those now middle us five in boroughs now the we've The market, into ramping production mothballed of in New in third the

dollar Manhattan's and bridge York beginning, San metro of so August in Francisco. to us. were be rental dollar apartment North construction starts out specifically bridge as coming the and decade". X Manhattan, vacancy to Beige a highway capacity That's X; not the plant number level York, the by market, amount construction prospects number segment is and number York, marker these you ranked multi-family the came the top very in at In on that ranked New our the multi-family our of X; I Westchester and country additional and August, Book by underlying top to level of County that I'm X for amount a X. New Texas, of New to top But, was top I relation New York. lowest in which Carolina, the pent-up says opening the in the just and York -- New to of indicated decade demand our on opportunities our the states look City area dollar Fed starts its going number August with in market in Dodge. incremental with reopening construction. in the lowest in York I starts, Florida, there underlying am number metropolitan the on X for York. online that just in Illinois, Dallas-Fort area When X for have there vacancies you So was from quote and a of the number contract, X non-union reach pessimistic amount New in are some in belief the areas highway The New New multi-families York, York demand the me leads Worth, recovery was confident New the all X on in so, October rate "In declined X XX, is projects X at Dodge Construction

Trey Grooms

a and might little some kind bit also of here, some maybe geography market off levels still that extremely non-res of it first also concern that the DFW, like be there it theme housing And, of good in peakish. cooling looks pretty a but side, be concerns, the on keep is there there hot that's little been on had maybe could that half then

-- you your I sounds it Given backlog, or mean, and seeing given you expect that what like continue DFW your what sound you're to it do any that you of -- outlook as like growth see, doesn't in well. for market

you you're If buckets, us give market just more that in color and two specifically could seeing? on any those what

William Sandbrook

Sure.

manufacturing, see the construction pushing in quarter, Book major X, during quote, rents. to of pace. and and which foreseeable I still am I'm and activity infrastructure New would high continued the August I expectations XX/XX/XXXX they in Beige I Texas So, bullish that the base, number occupancy I'll and continued should a back Texas a demand metros exceeded Dallas Healthy our published Dallas-Fort optimistic". continue construction Dallas remain York. Worth as up our level Dodge runway, contacts in solid and York I'll and on refer more in on growth Hiring am in quite service. long is New starts residential in say, most highway economic Dallas. and at non-financial I commercial future. a and revert for and than third In outlooks expanded continuing and X to has number activity retail pace in bullish Dallas "Apartment and at and the for quite back even bridge both in customer

Trey Grooms

Okay.

bit the got just mislead if I call I this, sorry late. on a And little

the any So assets I you -- mean, Worth. that, at the obviously, Dallas-Fort pretty your see share in guys undervalued mean, opportunities base, don't in you've repurchase near-term had and look are massive a business you how the just balancing or pullback sold asset here also slurry make With versus Are sense? then in do that acquisition non-core stock you any you other you I assets -- recently. portfolio lime as

John Kunz

you, a there. do trading, somewhere Trey. generated that's break QX repurchase, that's cash sub-X in when I'll EBITDA think, are to respect at a in we're above for it, when ability we've play. at multiple, that you Share I look here QX, look We so of that's in generate been where our $XX did to more, flow, what you year. last we where on cash still around meaningful With trading, mid-Xs, certainly Yes, we as forward flow or

look out respect you there not a have acquisitions our look and at repurchase don't -- when maturity. to company you that respect you share attributes the attributes repurchase and the there current to really company think had if better there at with any have, any our have, we light would we because the any Northern this I our we the that our we have, company is that has its mentioned out it there, our by X, at there. and get profile, look and those balance planning cognizant is certainly do that want New debt to company could in company undertake with value on liquidity. why authorization at out the we're any we attributes, and Dallas certainly we and it there you of of probably where that activity for those capital other other and more California in to buy look out is we the that aggregates just any we So, with are leverage, million in at would. is footprint were unmatched levels York that That's something same trading, When we will $XX table in we respect but When we forward, importantly

So, that we've off table. taken the

We have covenants. maintenance no

not that's an So issue.

out liquidity feel The end that third we At liquidity. each have making evaluating million third have final we we stool as first that all we year we one of the the balance that quarter. progress at into and of sufficient liquidity through sure leg there. the But trying is $XXX individually the and them and to of the certainly just we're of sufficient are quarter, remainder

William Sandbrook

are and to source acquisition we our smaller tuck-in question, And regional bolster and that on your continue to Trey, that will acquisitions footprints further accretive. bolt-on expand

But going company's I be in in we've between now is our to into first some do order we're characteristics to deal and done the and that the activities to self-help deep take operating past now a take right to think there over -- managed place. optimize and really dive disconnect public going margin time company a evaluations years to our improve has synergize we're that private acquisitions X performance. to to expectations the X and a

to activities margins peel that we self-help are down at out non-core. off wouldn't and that that's lime well. I short improve going sell likewise, fully we're acquisitions be We're in So, synergize term term our but the to just can opportunistically nothing acquisitions in and the for big the to portfolio -- short there and looking off have. as in we that assets I see like our there's disposing to be any non-core be any Nothing don't core looking our I regions going now,

Operator

comes Your Craig with Bibb question CJS from next Securities.

now Your open. line is

Craig Bibb

issue are the kind like of it maybe So, looks issue interrelated. price the and backlog

price in had QX. So, you I realize X%

then mix a price, you but to lower price Your Texas kind were modest. X% and because tilted bit Texas, of within little still Texas tilting of was towards West

So, wise just price overview to deploy? by could an anything is changing or you region, give maybe how us

William Sandbrook

wouldn't interrelated And up and added and show would increases price. at these raise thus Thus satisfied end and level play strategy regional the haven't that to complex, they at competition, reporting peak it's it's to there independent earnings available. mean highest more desire out to comes more end and and very making concrete. then you the have those region more on have markets have players, to you the order the is that that these to to rational at these service selling to are opportunity the focus our to the into as we lot such higher of any companies projects who projects drive not on this. answer anything made calls say where there's I and expansion a with think increase they're come I company regional we anomalous times are private within basis thus Thus of publicly-traded since last compete on money. levels, for our price X% our X% aspects in total the desire our our But that and And more hardest have. correlated They in I more say differentiation directly levels very on compete price. of commoditized in in that to levels. more any don't I on average segment you our with regions. against, profile margin compete difficult

Craig Bibb

Okay.

And so they're it's that you rational that following and not players, you're more then, it's talk about so muting increase. when price along less raising and

William Sandbrook

all decision. happens if point I his we Well, and matter different projects will when of competitor, come have project. competitor's in a in It's which and lack competitive in just every want. win I any a to a when I we a make scenarios, do it's happens situation that backlog, that to us go want of versus to the that is can depending those how on situational, low take decision a to time just like that bids of one

the -- to it that I science want affect okay, affect want let one within So, an there is profile margin it's low go, other to I my market. have and art saying, don't and for too into I'm because don't to pricing to going

our what So, those a times quarterly interesting, basis. impact out collective decisions those are those of see is a on decisions, around the you it's XXX regions us XXX a day made and report maybe decisions

Craig Bibb

Okay.

pace, deferred are push Obviously, and X% your backlog, and continues following trying backlog you price weather, And that that guys up players you along to so at and aren't when a that other and then, that's just you September. but volume if do had wet because pivot? only have is you

William Sandbrook

the that's XX% being want year-over-year July projects previous in on. August No, we completely. over. to growth July selective basis a I win and over XX% a was year-over was We're opportunities that don't on volume characterize -- that

third into as the ate first first of backlog wasn't the the out. I've part we But the So, busy. robust months September reported X were in Obviously, quarter. extremely

as XXX,XXX and yards any it. seeing said look either XXX,XXX trends or in not for and -- my over way down. earlier, lose I I'm I trends sleep I don't So any backlog,

Craig Bibb

Okay. I'll see that in If Tuesday, of quick A couple survives guys when revenue? do hand and SBX ones over. it on you

William Sandbrook

had flowing that of There SBX left by, and through. been is projects month already. is some the as here revenue Well, stick

I projects been that months. say bigger would On the XX let yet, XX to haven't

Now, if expanded SBX much is from that survives now good part in footprint it ago. about California and our I year a that does, the is anticipating just am

legacy additive portion have infrastructure had we of put into Bay our very, addition aggregates businesses. the accretive footprint that and on ability all and basis in Beach our hopefully spending, to very that's a as to area there the transportation very tons robust in an to our businesses ongoing us Long increase of the in very Just X million

Craig Bibb

[indiscernible]. the with mean I

William Sandbrook

very federal roads certain -- as it's roads if have roads -- Well, specified high a spec, well.

Craig Bibb

guys buying stock, X:X, below And sure Bill? want to last but is that when you Okay. buy back one. then I'm stock not until can people debt you see

John Kunz

I'll Craig is well, that wash can his I for changed months while X I buy sold. because plan put back just just ability he sold. buy the in he XXbX-X well, August. sale for just until Bill. ended he think speak out that There he there, Bill's don't don't -- to think he -- can buy rule -- He limits it it after he a

he So, be buy March. could probably I'd earliest the would say

Operator

comes Our Thielman D.A. question Davidson. next from with Brent

Brent Thielman

profitability Can on Sales up the and volume to did shrink. but out back XQ aggregates. stepped XQ, headwinds parse quarter-over-quarter, the on the you exist margins Maybe quarter there?

John Kunz

had QX. in increase transportation and relates the little are quarries Polaris in And of at impact I with -- bit -- relatively Obviously, weather of Dallas associated and have you're think then to the with there York Because Polaris aggregates-only or to influence respect in to little there QX, in to the margins respect looking it as you but we're along, that continues in we going that's in really we're will are a looking at basis with as ramping you're costs because impact it volume to there bit logistics well? have to you going up margins. that a the and on mix with it solid move QX to to an have quarter region. mix there, impact New going are versus respect

quarries So, it the really it did. impact didn't in QX, whereas

William Sandbrook

ships they and ton would at did they're have we been ultimate an that X Long say our ships. unloaded offloaded transit. had I not And times, about XX,XXX and loaded Francisco large from San were at Polaris and were both on a reference, in of we in ships to point similar so docks recognized either is are there and third-party the when one other Beach, sale revenue

large incurred we of that so worth profit. without production And of X revenue costs the any offsetting of ships or material

and have of on an do So, that capacities and numbers those there. those those you're number at volumes the impact seeing ships, those

Brent Thielman

product, value higher And I mean, given growing? on Okay. then the the Polaris shouldn't ASP, that be

John Kunz

we're landed not are at the Brent Well, there ASP core and the the looking is what only cost. we from counting

landed cost $XX. Long going look get you like to you're if So, a in Beach, at

around If or the right core, you're number to going maybe single digit get ASP $XX. the at from you're looking a

associated. is the difference we're cost. What not big there is just the So, landed cost, a reporting quarry

Brent Thielman

some Okay. when aggregates price than of lot But higher in other the California locations? in your of theoretically a be

William Sandbrook

Brent, higher. it is

we subtract just yet. the to we're only You has through finalized incurred be have -- at negotiated cost being remember, this haven't our and with negotiations you our to And that that -- our have to we've price the Polaris point -- transportation even we year. lapped ownership Cemex

So successfully negotiation, our than Long been which Cemex able the we other the completed. would of Beach has outcome to have price been increases on incur pending that throughout have been basically hold,

to and that going are markets high digit double we plan Going we in single anticipate would forward, California. in digit area to pricing our see growth I low in fully

Brent Thielman

it think be how to then would $XX flow different million Is free to into I fourth quarter? almost cash -- quarter. it fourth the about reason I think should year? million any year-to-date. $XX mean, in tends we be the think, pretty there you've robust this Typically, And

John Kunz

with you at upper same end CapEx in XX% When XX% of expect the to couple would then guidance would look going your you we I then the we're of say the light range. look in to the operating our say No, we our cash thing. I provided. be at guidance, it and flow, that we

cash that we what So you cash would back points you $XX where we gave think sort flow is. about you it and number of EBITDA into on expect then those X number can associated of million think guidance the the into give back with based really We will the flow EBITDA sort of today.

Brent Thielman

last maybe one. then Okay. And

from today from you based made you pie markets, year business? activity guess, don't backlog, on look the obviously, if presentation the is to You color a that kind a you going lot any a by lot the make you where regional big different on the good do what have end mix within perspective changes regional from and of see think Bill, and mean, ready-mix, now, I market on in of I

William Sandbrook

you're Well, change. to going I structurally see don't a think

and but an a if will our Texas, would not underlying slight I impacted, to there'd it basis we bit a was shift, York see concrete, impacts ability decline because in be in You of dynamics. increase percentage pattern -- little of get so weather market of the of produce that and here. of only increase because New probably most Texas think on the to normalized because California, weather because

Operator

Davis. Our comes next Thalhimer from Thompson with question Adam

Adam Thalhimer

First question, your of as could XXXX? pricing just inflation? they you you some talk high to about and I'm curious the Bill. in Can competitors accelerate level if look offset

William Sandbrook

The X% passing backlog we continues get I and our to price increases we're due Well, would work. and it any that measures. we'd X% increases I are cost our think anticipate wind substandard showing through now, our inputs priced that that replacing to -- in with off anticipate higher that we are work inflationary as older

not process year. ending budgeting So, into least this but I'm would at fully our yet, where we dynamics expect similar we improved I not are not -- are pricing from through year next if

Adam Thalhimer

probably hit Do segments. I'm And up assuming, that's mean, guidance the high on you the What one. sequentially my then both the curious think for to volumes you just I think last range, of end QX. in possible? I you're need

John Kunz

midpoint -- $XXX at is look -- million. is you the guidance revenue When our so,

that. see I think certainly revenues the you'll

but to revenue. with it feel the million I $XXX exceed a may we that something little think $XX comfortable and in both we $XX approaching that's million the hit call -- number million, with bit

Adam Thalhimer

million. $XXX Approaching

you've volumes so got [indiscernible]. Okay,

John Kunz

Yes.

Adam Thalhimer

Okay.

really in So come sequentially back that you more really margins see the margins? the versus... It's QX

John Kunz

Yes.

So, try QX. in really the emphasize margins the are what is we to compressed that remember fact

expect we so some had some comp then well in and them QX, costs results. year-over-year, our we year had Atlantic weather And that poor and region improve in as the sequentially we because impacted to last worker

there. then light you're we had compare would of DFW see in we that Atlantic, even meaningful improvement certainly sequentially performance and we've to year-over-year, the going So, the if there improvement expect and in poor in

expect QX as improve that EBITDA So, well. I I versus the number to improve would margins to would and expect

Adam Thalhimer

sense. Okay. makes That perfect

William Sandbrook

September company-wide Let what if prepared weather. October with rate put was all remarks which the X quarters and of my -- in the our me said that XX.X%, had EBITDA in together than you add is significantly I margin impact higher run

we to guidance. quarter in our improved weather, normalized of allow midpoint the are hit expecting us with fourth to our margins So

Operator

comes Our with question next from Stanley Stifel. Elliott

Stanley Elliott

haven't can a for a How kind going Islands that contributor up forward? Quick long you question, ramp be time. and about quickly talked of more of Virgin

William Sandbrook

to production, operation previously up that as ready-mix actions when lowering was were of both had up we both It an hurricanes It we underspent, we and on and by is knew underlying cost and bought and ramping masked third undercapitalized bought significantly operational speak. has the that ramped a the in the we from demand aggregates. we quarter, the their improve that It aspect on that. capabilities that undertaking

X the hurricanes. underlying by a So, actions completely growth which we're significant put profitability improve we to market, and in in place masked the backwards set slow

will drag opposed worst we've as a that overall best and there be the and is and we getting those we've since overall a so up to at of ramping flowing that run and cost it profitability had into breakeven operation has either money we modeled EBITDA that our had getting off significantly Now to more it. growth to that owned we contributor had are anticipated is islands, -- lower production at than we're just and and have we

Stanley Elliott

of table? of Perfect. mean, XX% running, I the more Is running can you're pivot to bit margins, a parse Did And that a that feel M&A the about little I kind of out? plus believe EBITDA to leading kind ready-mix of industry sort business. expensive? on a which is for then you talked about focus? I self-help there leaving like talk more think is color you just the lot you're you help Maybe

William Sandbrook

last ready-mix table. very, we're been think good very, will sizable don't in is have be very Golden Amarillo I acquisition the leaving accretive. and Spread Sure. -- on anything very a our of And acquisition

our available to Subsequent York we to our to was the technology of as in butter the watch going smaller there couple to early those anyway. acquisitions working all -- end balance drive initiatives from billing the on. that good accretive a doesn't we integrated interfacing we've logistics improvement to and the there that for There haven't a be reduce my near here to integrate, on was harvest doing here internally, the be in believe And which a our opportunities whole and a and point sheet absence ready-mix the and underlying tuck-in our margins. need somewhat lot in but have February in New that we're light been dispatch here bread plants or are cash, in some of continue I to space. and me that March. make transportation our is that, on our of some customer want finding leverage far self-help are our acquisitions, there, to the and there and in in one-off continue and of That significant fully no that in we term completely systems February, -- that that even desire of preclude I operations opportunities time somewhat able do and -- over and conservative think maximization synergy in customer sure blockbuster slowdown light M&A, and As

Stanley Elliott

revenue, in growth then Q&A meaningful mentioned had And you kind of XXXX. part the EBITDA before Perfect. about

kind which have them about there, that, work, a really steady not ramp the base? visibility more pretty into are that's function -- about business. state does contractors markets a in it's upon You're more you We're right? needing employee right labor contractor talking talking and now, to the Your out need a of up tight of accommodate existing base the that based of

William Sandbrook

of year characterize harvest earlier but third the year fully have There resources effort financial in been contingent have that's in have we've growing will we've a been XXXX. sure not trucks capital for the making times are and place renewed and of hinder would opportunities the in that both now last and amount much to had effort And times there. full and into make quarter, sitting and yes. a so not a I sure put not us lot that taking drivers that of and and that human resources from resourced to we've we out there that as significant drivers

Operator

Instructions]. [Operator

Schrier next Citi. with question Scott Our comes from

Roresa Mojo

private And earlier in rate and some lower projects. boroughs know Jersey market talking a pricing. answer your really know of the assuming seems comments, lot how you're I with you strategy higher some maybe have I'm price you're the outer would volumes the your a you're where comments need York and projects more where on [Indiscernible] projects you're about going push at being a to public that's on get of that competition, it because take an in the on where and that lot private it trade from really be I priced with some expanding seems to like the would selective lower an have your to into would question City, New maybe earlier to priced a leverage just you competition you competition your more like about where competitive, there. growing and backlog market a

curious, So, strategy how the York that I'm in particular? market overall fits into New just City

William Sandbrook

have Sure. Scott, it. you

kind a You've it's its end concrete market. expanding in boroughs, outlined lower i.e., more it non-union the of essence in market that a into market, competitive specified the

that need competitive only that, lower York out rates you have efficient cost rounds sure much can trade-off those driver. you rate projects So, five ready-mix, of difficulty wage a lower largest the labor ready-mix get and in offset, Not price because day structurally. to much out higher, a that utilization can the cost X drivers drivers your structurally get cost the commoditized that's more and being the cost i.e., of lower in you in the a price in in labor. it's is to on the York Texas dynamics, New you New lower for concrete where lower the whereas versus truck in make concrete driver, a of rounds X impactful Competitive the prices than are to delivering and burdened

bring handful our to Jersey. we par material our sand our a get competitors in own in as stone well from Marietta expansion, Center. margin quality are Thus, same -- X, players our able margins ability concrete the Canada additional There's at that number non-union York our cement kind Martin in being well our seem less competitive, compete that can necessary. to somewhat New When at City impacted have self-consume non-union volume than advantage on a produce on volume that, accretive that have sand us and lower LaGuardia cost allow masks in A-rate in our over thus to and significant of compete New low specifically cost competitors end end competitors competitors, raw advantages because we higher there's that those we because we average quarries for Trade lower saving own time as of labor our our our on that in service because the when be of by you of aggregate the drivers and World X, customers have with as internal that see margin Airport also structure allowing materials a projects margins we to lower do the pull-through a the a cement only purchasing through significantly can, and of on our of concrete it or to addition, like acceptable that as is our to cost prices own selling them lot as the purchase market getting price. ability to docks well as In is make cheaper, of our use

York our same strategies, of City. materials New coming in of same separate two have we cost plants both So with out the

it's dovetail a bifurcated and strategy that one So, support another.

Roresa Mojo

bit some California I aggregates and want to pretty little about talk pricing made a on you encouraging there. comments

you've going do at flow it's whether about is added little just then significant, Columbia? really you about in costs, you mentioned incremental in costs margins we Long business on I think First, Beach more as quarry think about as to there have more after the as British when the Cemex, see be do through to how negotiations then, startup the strong look with Polaris. relates volume bit with broadly, pretty expanding we volumes to and that it for -- pricing it associated volumes expect -- there, and your is price just there to we the have we that you've a and thinking more as looks also whether you that your so And like some versus the conversation labor thoughts guess, or -- start

William Sandbrook

Yes.

pricing with flow more year, whatever fourth point. it'd will that of depending place our obviously there, April negotiations the be the at our start next because quarter, of whether you more and actually You'll X market completion flow Jan or significant through Cemex into in for through see goes and when seeing support X,

-- in and the So year would significant at say I and latest, flowing first the in year the the next at this quarter latest fourth next second quarter year. first of through flow of some of quarter

ramp-up as incurred costs, Polaris -- the us $X billion. startup at costs the get to into the already far As been they've of excess

this of have so, just those some all weeks have third that's costs at a is into have those costs into already implemented fully been and results, now -- six Polaris online been embedded been absorbed in first year's the shift of or and incurred. in have their last we operations absorbed that costs but the So those come already all already

Operator

Instructions]. [Operator

Our next question Bibb comes Securities. CJS from Craig with

Your line is now open.

Craig Bibb

margins Bill, started Dallas? opportunity opportunities, opportunities sand but greenfield understood I through self-help you talking when you isn't and talking self-help greenfield gravel there another about for and you're are about

William Sandbrook

markets. Texas do We in of now right projects a greenfield our underway number have

so... Some next A will and of new support that west be Fort Worth our a operational significant a that West a greenfield aggregate our new our does Dallas Amarillo our of markets. little brand year, Texas operation, -- will West operations. support our markets bit That's of enhancement greenfield just Texas West Eastern and

Craig Bibb

sand or and ready-mix that Is gravel?

William Sandbrook

there's and both in the to this expanding in And from those on which of, meaningful neither are -- of going two in online generated segment, that gravel, nonetheless. our which entering pointing point, that's is percentage at year. Polaris, greenfields, one we'll next besides quarter and I obviously out sand speak are that Nothing for in of That's have of being first of our our results them of core the thank you second results aggregates coming of but because again And be EBITDA really but been our strategies. those be next our year.

Craig Bibb

or then Okay. opportunities port Polaris? about terminal how And for

William Sandbrook

start develop are our Black and at will hitting tons year of that to of -- at now around be of there limits Polaris said to we in Well, now permitting we we're choosing our demand up -- in send now. next well. in doing Bear port this But end far year is to as go were excess as X the but our which and middle to The we Then next going towards strong where we the we'll operational year game we and budgeting, and any we're with permit Long meaningful that picking as be material $X million the going That year, from starting quarry, so increased right next start, opportunities, until develop won't Beach. which we way. up million. additional

of will and in million Portland be that ton the category, Bear Seattle, get having expand a won't of that out up Black opportunities that we're Bay X Hawaii that's in that without north or end in customers' years. we year, business the as do on on into business for the basis operation the and capacity next high against entire which be and east, but Our the look to we shores long-term Area, happening both in west, opportunities to strength our our going bumping

Operator

would Bill questions at no I'm turn showing closing Sandbrook for further call to I to time. comments. now like the over this

William Sandbrook

you, we in and participating discussing this support again. U.S. Lindsey, you continued and for you, forward look This concludes call Thanks, February. with of right, the All full and to results Concrete. thank thank morning everyone our year for fourth call quarter in our and your

Operator

wonderful conference. today's and this day. Thank have your Ladies concludes participation you gentlemen, a for and

disconnect. may You now

U.S. Concrete (USCR) 1 Nov 182018 Q3 Earnings call transcript