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US Concrete Inc (NASDAQ:USCR)
Q2 2020 Earnings Call
Aug 4, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. And welcome to the U.S. Concrete Second Quarter 2020 Earnings Conference Call. [Operator Instructions] I would like to turn the call to John Kunz, Senior Vice President and Chief Financial Officer.

John E. Kunz -- Senior Vice President and Chief Financial Officer

Thank you. Good morning and welcome to U.S. Concrete's second quarter 2020 earnings call. Joining me on the call today is Ronnie Pruitt, our President and Chief Executive Officer. We will make some prepared remarks, after which we will open the call to questions. As detailed on Page 2 of our accompanying presentation to facilitate today's discussion, today's call will include forward-looking statements as defined by the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially. Except as legally required, we undertake no obligation to update or conform such statements to actual results or to changes in our expectations. For a list of these factors, please refer to the legal disclaimers and risk factors contained in our filings with the SEC.

Please note that you can find the reconciliations and other information regarding the non-GAAP financial measures that we will discuss on this call, in the Form 8-K which was filed earlier today. Our presentation to facilitate today's discussion is available on the Investor Relations section of our website.

Before I turn the call over to Ronnie, to offer his comments, I will review our financial performance and business' results. Today, we are pleased to present our results for the second quarter. The volume disruptions that began in March, continued into April, especially in the coastal markets we serve. These disruptions resulted in a significant reduction in revenue during the quarter.

As the quarter progressed, we experienced a steady rebound in demand. We achieved substantially higher margins and adjusted EBITDA in the quarter versus the second quarter of 2019, primarily as a result of aggressive cost containment, more efficient utilization of our plants and equipment and the increased use of our proprietary technology. The improvement in our plant and equipment utilization and overall efficiency was achieved through the use of data analytics, greater use of where's my Concrete technology and reductions in cycle times. Our performance since the inception of the pandemic, including the strength of our second quarter result, is a direct result of our team's rapid response to this challenging environment and is testament to the strength of our business model. Our focus on building defensible, vertically integrated market positions with an increasing concentration in aggregates helped us produce the robust second quarter results and demonstrates the strength of our business model during difficult times and market conditions. Our significant investments in aggregates, most notably Polaris and Coram led to record-setting performance of our aggregates business in the second quarter.

During the quarter, the impact of the pandemic, the related shelter-in-place requirements and other restrictions were most acutely felt in our coastal regions. Even though, we were deemed an essential business, many of our customers' projects were subject to disruptions and delays as the various shutdown orders were being rolled-out and implemented. These restrictions impacted demand during the quarter, resulting in revenue of $323 million, a 12% decrease compared to the prior year's second quarter.

Despite the lower volume and revenue, our total adjusted EBITDA was $47.6 million, a 13.3% increase compared to the $42.0 million in last year's second quarter. Our adjusted EBITDA margin was 14.8% during the quarter versus 11.4% in the second quarter of 2019. This improvement was driven by both our aggregates and ready-mix operations.

Our aggregates adjusted EBITDA margin was 39.6%, which was up 1,500 basis point versus the prior year. And our ready-mix adjusted EBITDA margin was 14%, which was an increase of a 190 basis points compared to the prior year. Our material margin was flat at 47.6% compared to the prior year quarter as we were able to recover modest material price increases.

Our EBITDA adjustments for the quarter relate primarily to stock compensation, contingent consideration, realignment initiatives and purchase accounting adjustments for Coram inventory.

For 2020, we expect our adjusted effective tax rate to be approximately 27% and our interest expense to be in the $44 million-$47 million range. Moving on to cash flow and the balance sheet. During the second quarter, we generated $40.1 million of cash provided by our operating activities, more than double the $18.7 million in the prior year quarter.

We generated $33.3 million of adjusted free cash flow during the second quarter, compared to $14.1 million in the prior year quarter. Our operating performance and cost containment efforts during the quarter contributed to this improvement. Our focus and effort with respect to working capital added $7.7 million to these results during the quarter. Our solid cash flow allowed us to pay down debt and reduced our net debt by $22 million as of June 30th, compared to the March 31st quarter-end, resulting in $741.4 million of net debt at the end of the quarter.

The increase in our trailing 12-months EBITDA along with lower net debt position, reduced our leverage at 3.9 times or about a quarter of a turn compared to the March 31st leverage ratio. As of June 30th, we had total liquidity of $335 million, including $17.5 million of cash and cash equivalents, a $137.3 million of availability under our revolver, plus a $180 million of availability under our delayed draw term loan.

During the second quarter of 2020, we invested approximately $6.9 million in capital expenditures, compared to approximately $10.9 million for the same period last year. For the full-year 2020, given the improving business environment and the opportunity to allocate capital to both high-return and high-growth projects, we are planning for capital expenditures within a range of $30 million to $40 million, but we could reduce this amount if circumstances change.

Similar to 2019, we are targeting free cash flow for the full-year to once again be above a $100 million. While we had our share of challenges during the quarter, we are very pleased that our management team and employees rose to the challenge by controlling costs and leveraging our technology, data analytics and asset base, which led to our improved operating performance during the quarter.

With that, I will turn the call over to Ronnie.

Ronnie Pruitt -- President & Chief Executive Officer

Thank you, John. Good morning, everyone and thank you for joining the call. I know this continues to be a challenging time for many people. So, first and foremost, I hope you're all staying healthy and safe. With the onset of COVID-19, we immediately committed ourselves to the following guidance of Global Health Care leaders, with the priority of taking care of our people and continuing to serve our customers.

We continue to monitor government-related mandates and commit to maintaining our focus on these important priorities. The second quarter of 2020 was a very dynamic environment due to the number of COVID cases across the country and government imposed restrictions put in place that affected our business.

We adjusted our operations on a daily basis to serve our customers and their projects that were deemed essential. We witnessed a direct correlation between the number of COVID cases in our markets and the impact and timing of construction projects in those markets, most notably in New York and California. We witnessed a geographical shift in our revenue due to the operating restrictions in our markets, with the West and East regions representing 30% of revenue during the quarter and the Central region comprising the balance of 40%.

Turning to our performance. We generated $322.7 million of revenue during the second quarter of 2020, with revenue increasing from 29% earned in April, 32% earned in May to 39% earned in June. Each month during the quarter we saw a sequential growth in construction activity across our markets, as the definition of essential services evolved in each market and restrictions were modified.

We are pleased to announce that U.S. Concrete's aggregate operations had record setting quarterly revenue of $55 million, with almost 3.2 million tons sold. Our adjusted EBITDA for aggregates operations was $22 million during the second quarter, with an adjusted EBITDA margin net of freight of 51%.

Revenue, production and EBITDA for our Texas Aggregate operations were up year-over-year and quarter-over-quarter. And we saw a significant increase in volume, led by our greenfield investment at MW ranch and the modernization of our plant and mobile equipment at our Amarillo sand and gravel operation.

Both of these strategic investments supported robust construction activity in the regions during the quarter. Our aggregates segment performance was further enhanced by the first full quarter of Coram materials, our sand and gravel operation on Long Island that we acquired in February.

We are very pleased with the integration of Coram, the pull through of volume to support our operations and the external sales to third-party customers in the New York area. In addition to our internal consumption in our New York ready-mix operation, Coram shipped 217,000 tons to external customers during the quarter.

As previously discussed, Coram is on target to achieve a post-synergized multiple of seven times. Our ready-mix concrete segment delivered nearly 2 million cubic yards of concrete during the quarter, generating over $272 million of revenue and $38 million of adjusted EBITDA.

Our ready-mix concrete ASP was up in each of our markets during the quarter, but on a consolidated basis was down slightly due to geographical and product mix. The employees at U.S. Concrete were diligently and efficiently to manage the business and implemented cost cutting measures, all while actively reengineering the business, so that we could respond to the changes in each of our operating environments. Our proprietary technology platform WheresMyConcrete and its CRM provided valuable real-time data and analytics to respond to the changes in our business.

During the second quarter, we generated an adjusted EBITDA margin of 14.8% as compared to 11.4% in the second quarter of 2019. The key to delivering the improvement to our operating margins is twofold, the variable nature of our cost structure, for example in the form of materials, delivery labor and fuel and the agility of our managers showed in each market by resizing and scaling their assets to mirror the market conditions.

Our team continues to be focused on the following initiatives, labor management, improved processes, use of internally sourced aggregates, mix optimization for our concrete, back-office consolidation, higher asset utilization, management of plant cost, converting what were traditionally fixed expenses to semi-variable and delivery efficiency, with a focus on enhanced customer service and yards for driver hour, with our technology platform WheresMyConcrete.

We also benefited from lower fuel cost and lower traffic volumes during the quarter. All of these measures are driving improvements to our cost structure and profitability. Our focus continues to be on operating margins and operating efficiencies. As restrictions were lifted during the quarter, our operating performance also improved, as evidenced by our results, as June's performance was substantially better than April's.

In the future where people live, how they commute to work and what a traditional work environment will be, either remotely or in an office setting, are all still unknown. These trends will impact the residential, commercial and infrastructure markets that we serve. We are fully prepared to pivot within our markets to address changing demand patterns as exhibited by our second quarter performance. While further volatility and restrictions are clearly possible and the pandemic's economic impact is still difficult to quantify, I am certain that all companies are evaluating their business and the changing landscape to assess future demand. Based on what we know today, our view is that business and construction restrictions will be limited, which should result in healthy activity levels in our markets, resulting in an adjusted EBITDA anchored in the 50s for the third quarter.

Looking forward into 2021, a detailed MSA analysis of ConstructConnect's U.S. construction spin for the markets we serve, projects a 17.5% increase in put in place commercial construction spending over 2020. Please refer to Slide 8 in our supplemental presentation provided. As a market leader, we participate in all sectors of the industry and have expertise with materials and mixed designs and have the relationships, the plant locations and the assets to support any type of construction project. We continue to support the very large complex projects that we have consistently discussed. But it is also important to recognize that we have thousands of customers with thousands of diverse projects across our operating platform. This portfolio diversity highlights the capabilities and our versatility to handle dynamic market conditions and a wide variety of commercial and infrastructure projects in large markets with underlying favorable conditions. We have the knowledge, ability and agility to support the projects in end markets for whatever drives aggregates and concrete demand, whether in residential, commercial or infrastructure.

With attractive and desirable locations, our markets represent over 20% of the U.S. population and are seeing increased population growth with rates higher than the national average. Due to the proximity of infrastructure projects to our markets, U.S. Concrete has been and will be well positioned to support these projects. We are even better positioned now to support infrastructure with our aggregates and distribution terminals located near many major markets. This confirms our strategic alignment of aggregates and concrete in attractive markets that are coordinated with our proprietary technology platforms, all of which will be a formidable foundation for any contemplated infrastructure bill.

We continue to be laser focused on our strategy. We have diverse operating assets across major metropolitan regions in the United States and further diversified with our robust aggregates portfolio to provide vertical integration for our ready-mixed assets. Our focus is on maximizing our margins through cost management and operational efficiencies and as exhibited by our second quarter financial results, we have a variable cost structure. Every employee of U.S. Concrete is operating with a sense of purpose to deliver durable, long-term results for all of our stakeholders.

We crossed an important operating milestone in U.S. Concrete's evolution as a company with our second quarter results. We have successfully proven that we can maintain and even improve our operating margins during times of pressure. We have significantly grown the impact of our aggregates business, which represented 36% of total reported segment adjusted EBITDA, generated during the quarter. We have improved our liquidity with the generation of free cash flow. We reduced our leverage to 3.9 times and we recognized stable and even improving pricing of our products, during difficult market conditions over the quarter.

We are a company focused on delivering aggregates. We are a company focused on delivering concrete and we are a company focused on delivering results. If you noticed, I emphasize the word we. This is a team effort. And I want to thank all of our employees for their leadership and dedication. U.S. Concrete's financial results are tangible evidence of their hard work and efforts.

Operator, I would now like to open the call to the questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question is from Paul Roger with Exane BNP Paribas. Please go ahead.

Paul Roger -- Exane BNP Paribas Research -- Analyst

Yeah, good afternoon, from London, guys. Congratulations on the results. And as always, thanks for taking my questions and I'll just start off with two then please. Obviously, the big story today, I guess is about the extra margin performance. Now clearly demands will be whatever it is in the second half, but when we think about those margins, do you think they are sustainable and that's a really stiff level that you will get in the second half? And then my second question is on the ready-mix pricing. Looks like they fell -- I think looks like about 5% sequentially in the quarter. Now you've mentioned mix. So is it possible to tell us what that was on a mix-adjusted basis and how concerned should we be about that? Obviously, the industry typically plays and historically has been quite volatile?

Ronnie Pruitt -- President & Chief Executive Officer

Yeah. Thanks, Paul. Good afternoon, on your side of your of the pond.

Paul Roger -- Exane BNP Paribas Research -- Analyst

Yeah.

Ronnie Pruitt -- President & Chief Executive Officer

So I'll take the first question on margins. So I'll give you a couple of data points to just think about. And I really want to talk about sequential quarter-over-quarter. So if you look at our Q1 volumes we were right at around 2 million yards. My volumes in Q2 were very similar, right at about 2 million yards. So if I look at those comparable on a quarter-over-quarter and then I take -- what I'm going to talk about, is our total plant cost, which is really our labor and our repair and maintenance at our ready-mix operating facilities as well as our total delivery cost. And when I look at those on a total dollar amount, quarter-over-quarter, our total plant cost was down a little over $4 million.

On a percentage basis, if I look at our labor cost at our plants, they were down about 16%. Our repair and maintenance cost was down an additional 16%. On the delivery side, we were down about $11 million in total on a Q-over-Q sequentially. If I take that and I really look at fuel, we had a tailwind on fuel. Obviously, everyone has talked about the tailwind on fuel, but fuel only made up about $2 million of that. And so, when I think about the other things that go into our delivery cost, our delivery labor was down about 14%. Our delivery R&M costs was down 23%. So, those are things that we control. Those are decisions we made. And I just -- I want to emphasize that, yeah, fuel has been a tailwind. Traffic congestion continues to be a tailwind. But we're also really driving with the help of our technology and planning and every Debt Manager out there watching the labor side, to me is where we have the most control over that and we will continue to focus on that. And I'll let John, give you a little insight on the pricing side.

John E. Kunz -- Senior Vice President and Chief Financial Officer

So Paul, with respect to our ASP, the short answer to your question is on a mix-adjusted basis, our ASP is actually up 1.3%. Now, if you think about that just conceptually, obviously the Atlantic region was the hardest hit. They have one of the higher ASPs. So as that volume drops, that's going to obviously pull down the ASP. But when you look across the regions -- our regions and just do them individually, we're really up in every region. We really didn't see a decrease in the quarter for the region. But 1.3% is what we saw on a mix-adjusted basis.

Paul Roger -- Exane BNP Paribas Research -- Analyst

Okay, that's great. I am just going back to Ronnie's answer to the first question. I'm linking it to Use My Concrete and what lines does Use My Concrete really help you address? Is it the delivery down logistics or is it labor? And what proportion of your network is actually using this tool now?

Ronnie Pruitt -- President & Chief Executive Officer

I think you are referring to, Where's My Concrete. Where's My Concrete is our...

Paul Roger -- Exane BNP Paribas Research -- Analyst

Oh, apologies.

Ronnie Pruitt -- President & Chief Executive Officer

No, it's OK. We spend a lot of money getting the name right there, Paul.

Paul Roger -- Exane BNP Paribas Research -- Analyst

Yes.

Ronnie Pruitt -- President & Chief Executive Officer

So Where's My Concrete, our entire Atlantic regions on it and in the first half of the year we rolled out, all of our DFW ready-mix on it. And currently we are installing it in West Texas at our premium ready-mix. The next phase of it will be rolled out into our California footprint. And so if you think about it on, we're a little over probably three quarters of the way done, as far as the number of yards we're running through the system. The thing that the system allows us to do, it's our scheduling, its scheduling of our customers' orders, it's scheduling of our labors, its scheduling of all of our delivery.

And so, when we think about the efficiencies we try to drive and using analytics to do that, it's getting out ahead of us in estimating the impact of what would have historically taken eight trucks to serve a job, now takes four trucks to serve a job, what would historically take in 10 hours to serve a job, it's now taking six hours to serve a job. So the system's ability to predict that and be real-time learning is critical to us, because if we were going back in the old way of doing business, we would have been estimating that on our own and maybe it would have taken several weeks to estimate that. And we didn't know traffic patterns and we didn't know the things that really drive our efficiencies and so that's what the technology allows us to do. On a real-time basis, it's making adjustments to predict demand and predict traffic and predict labor needs. And so, that's what we used it for to -- it also schedules all of our inbound materials.

It has a lot of functions to it, but from the most part, it's really a predictability model that we're trying to be more predictable with our needs and in managing those labor and assets.

Paul Roger -- Exane BNP Paribas Research -- Analyst

That interesting. Thanks a lot.

Operator

Thank you. Our next question comes from Kathryn Thompson with Thompson Research. Please go ahead.

Kathryn Thompson -- Thompson Research Group -- Analyst

Hi, thank you for taking my questions today. Wanted to look more on the concrete side of your business for margins on a go-forward basis. How much of the efficiency, how much of the margin improvement in the quarter was really driven by efficiency or shorten drive times from lower traffic, but also the tools that you have internally, versus cutting other variable costs and along that with the other costs with labor? And could you give more clarity in terms of changes you may have done on the labor front and including cutting back on guarantee times and what does that mean for the future?

Ronnie Pruitt -- President & Chief Executive Officer

Yeah. Good morning Kathryn. Thank you. Going through some of the numbers I've just talked about and breaking those down even further and at a high level, yes. We did reduce guaranteed hours in our non-union footprint here in the Texas market. We implemented that early on in April. And I would tell you, we've talked in the past about how that guaranteed hours was more in-line with our ability to attract consistent labor and we've talked about those pressures in the first quarter call, also in the fourth quarter call of last year.

One of the things we have seen is those pressures on the labor side lifted dramatically during this time. Our driver turnover is really a lot better during this time. But from a cost perspective, when we talk about our delivery labor cost being down 14% sequentially. Again, I think, there's a lot of that that has to do with our predictability, our managing of those driver labor hours.

Now, does traffic helped that? It does. And I would say, the most impacted markets on the congestion is definitely New York and San Francisco. But at the same time, I've had comments that well, you know, those markets are never going to do this or never going to do that, but you're not going to be able to sustain those kind of efficiencies. I guess, my only argument would be, you can't argue that both ways. If they're never going to build another office building in New York then there is not going to be traffic back. If they are going to build those office buildings then there will be traffic back. One way or the other, I can either sustain them for a long time and the market may shift. And like I've said, we've had -- we have the ability to pivot whether that's infrastructure, whether that's commercial, whether that's residential. Whatever concrete demand is, we don't make the demand, but we will meet the demand.

And the -- I think the most positive thing I've taken from these results is our ability of our managers to adapt, to predicting what that labor needs are going to be and really managing down to the daily needs of our labor. And so, in a variable cost model, we flip cost off, are some of those costs are going to come back, it just depends. There's a lot of factors out there that influence that. But I am extremely pleased and where we're at and I'm extremely pleased in our ability to continue to drive the margins that we delivered.

Kathryn Thompson -- Thompson Research Group -- Analyst

It's fair to say that perhaps not all, but there is a decent portion of the margin upside that it could be classified as a more structural change outside of kind of the labor element?

John E. Kunz -- Senior Vice President and Chief Financial Officer

Yes.

Kathryn Thompson -- Thompson Research Group -- Analyst

Okay.

Ronnie Pruitt -- President & Chief Executive Officer

Yeah. I mean, I think, if you look at, I mean and you've pointed it out in the past. As you look at the growth of U.S. Concrete and the acquisitions that we've done over the last eight plus years, I mean, what that did give us the ability to do is manage assets.

And so, if you think about our ability to serve these major metropolitan areas, we have multiple assets in these big markets that ultimately we just, we can take a plant down. I mean, when we take a plant down, our labor cost at that plant it goes to zero and we can serve the market. I mean, if there is less needs, I don't have to operate all my plants. And when I take that plant down, I don't need labor cost there. And really, that's what we saw, especially coming out of April and May and then as we opened those plants back up in June, obviously, that labor cost is going to come back. But we're doing that in a way we're predicting the demand on that plant. And so, we are are looking at this from an asset management standpoint as well, not just as a delivery company, but also as a production company that we're-that we operate these plants in many locations.

Kathryn Thompson -- Thompson Research Group -- Analyst

Okay, that's helpful. Shifting to California. Could you give us an update just between Northern and Southern California because the understanding that Southern California got back a little bit faster than Northern, where are you now just in terms of shelter-in-place routes and where are you in terms of not just volumes now, but kind of what are you seeing in that activity trends in both of those markets?

Ronnie Pruitt -- President & Chief Executive Officer

Yeah. So Southern California, obviously, we're just there with our Long Beach terminal and we supply that from players. I would tell you that our business during the quarter was pretty steady in Southern California, with less or less interruptions because of the type of work that we are on there, we were more of project specific deemed essential. So we saw a very little interruption in Southern California. But obviously a much smaller presence for us and a lot less opportunity to disrupt because we don't have a wide variety of different projects like we are in Northern California.

And Northern California, I think, it was very similar to New York as far as the immediate impacts of early on, with the restrictions that were put in place and then as the market opened back up and those restrictions were lifted, we saw the volumes recover pretty quick and pretty steady.

I would tell you, we're, from a bidding perspective and pipeline and all the different analysis that we do as far as how we look forward in our demand side, we haven't seen a tremendous amount of shift. Residential has been steady. We obviously have a lot of technology spent out there. I think that's the thing in that market that is -- it's tough to predict on a financial model, because there is a lot of liquidity out there. So there is, I mean, we did a MEDPOR downtown San Francisco on an office mix use tower two weeks ago. And so, it's not like, wow, you're just not seeing nothing, everything has come to an end. We're still seeing very good activity. We are still having a lot of interaction with our customers. And I think, there's still a lot of blurriness and a crystal ball to say, how far ahead of it are you willing to get? I think that's why we said, we're confident in what we see for our third quarter. And we'll reevaluate as far as guidance looks after that.

Kathryn Thompson -- Thompson Research Group -- Analyst

Okay, very helpful. And just final point, once again looking at a key geographic market for you for Texas. Your thoughts that, in that market, you're a little bit more supposed to kind of private side so resi, and non-res to some extent. What are you seeing in terms of trends in that market and what are your thoughts, specifically on the resi-end market in terms of bid activity? Thank you very much.

Ronnie Pruitt -- President & Chief Executive Officer

Yeah. Thank you. Yeah. As far as Texas goes, we've seen the resi side, pretty much just stay really consistent. I would say, the most impact was early on. And some of that impact was mixed with both COVID and weather. And so we had some early on weather and so it was really hard to to distinguish on the resi side because a lot of the customers we have, told us that all the houses that were under construction, were going to continue and they initially were not going to start any new and then that got flipped pretty quick. So we've seen very consistent results on the resi side.

On the non-resi side, I think we continue to see the same trends. We have not really seen anything as far as the word, major cancellations. We've seen words like delay, words like pushed out, but we're also seeing jobs that are bidding on a daily and weekly basis. And so I think that's going to be the the piece to me that we're in the right markets. And so where the people are matters. When you look at per capita consumption and that equation is based on where population is. And so I would much rather be where I'm at today, then in the middle of nowhere hoping that they're going to build something. And my ability to pivot again, whether that's infrastructure, whether that's commercial or whether that is residential, is extremely easy for me, extremely easy. I mean our assets are in the right place. We've got the expertise. So whatever the demand is, we're in a position to meet.

Kathryn Thompson -- Thompson Research Group -- Analyst

Thank you very much.

Operator

Thank you. Our next question comes from Trey Grooms with Stephens. Please go ahead.

Trey Grooms -- Stephens Inc. -- Analyst

Hey, good morning.

Ronnie Pruitt -- President & Chief Executive Officer

Hey, Trey.

Trey Grooms -- Stephens Inc. -- Analyst

And congrats on the quarter. Nice work, especially on the margins. And I know that's been touched on quite a bit, but on the aggregate side, it seems like a lot of the things that we're talking about was on the ready-mix side. But on aggregates, massive increase there in the gross margin. Can you talk a little bit more about that, specifically on the aggregate side and how much of that is due to Coram coming on and how much of that is more just kind of structural changes that you've made there would be my first question.

Ronnie Pruitt -- President & Chief Executive Officer

Yeah, Trey. I think definitely a benefit from Coram, definitely continued benefit from Polaris and also, as I called out MW Ranch, our greenfield investment that was really fully online at the first of the year, but really maximizing that through the quarter was also a very big tailwind for us on the margin side. I guess the way I would look at it, Trey, and when we talk about net of freight 51% margins on our aggregate side, I think the lack of credit, we get is, people look at sand and gravel as kind of a stepchild to hard rock. Hard rock is good. Hard rock is necessary. We have hard rock quarries in New Jersey. But if you look at yard

And concrete, there is also fine aggregates needed. In every single yard, there is fine aggregates needed. And when you look at the operations, I have today, with Coram, with MW ranch, with Rainbow, with Red River, which Chatfield, with Polaris and then go on down the list of sand and gravel plants that I have, my cost structure there is just so much different. I don't have drill and blasting. I have very, very little quarry cost. It's extremely efficient and how we mine the sand. And if you look at the ASPs for our aggregates, I mean they're just really steady. And so as we continue to put those improvements in our operations, we continue to invest in mobile equipment, it also has a really good payback for our efficiencies, I just think we're in a really good position with our aggregate strategy and what we've done.

And we talked about from a location matters and so everything we've done has been coordinated around our pull through strategy. And so what we did at Polaris is the exact same thing we talked about at Coram. And Coram is another example that we buy it, we integrate it and we can pull through and control it. We did the hard work on the downstream assets. Once you have the downstream assets, the rest of the work is a lot, lot easier. And that's the story, we continue to try to tell and I think that's the story that we continue to not get credit for.

So hopefully, these results, we can continue to deliver and people will give us credit for what we've done in aggregates. It's a tough business but I believe we are in the right place, with the right locations and definitely have the right operating teams and I'm very proud of what our teams did.

Trey Grooms -- Stephens Inc. -- Analyst

And seeing aggregates now 36% of EBITDA in the quarter is definitely worth noting. And I guess to follow-up, still just kind of sticking with aggregates just for a second. Coram, you closed on that and then right out of the gate you had COVID hit. So I don't -- clearly, I don't think we've seen its full potential. So how are you thinking about that aggregate mix as a portion of your total EBITDA as we go forward?

Ronnie Pruitt -- President & Chief Executive Officer

Yeah, I think that 36% is, as we see the interruptions in COVID, it interrupted both sides. So it did interrupt the concrete side too. So as we've continued to see the markets month-over-month sequentially improve, we've continued to see both sides of it improve. I would tell you on a margin side and an EBITDA side, obviously the aggregates is going to have a much greater influence. On a revenue side, the Coram is a lot of FOB sales and so it's really, really clean operation that has just a lot of FOB customers.

The other side of that, is that one of the benefits of being vertically integrated in that market is just the visibility it gives us into the entire market. It is just a really good fit for us with a pure pull-through into that New York market. So it not only supports our own internal operations, but we have a lot of really good third party customers there, that are also diversified in other markets there. And so it really diversifies us in all those other markets and residential and smaller commercial stuff and infrastructure as well. So I think it gives us a better cushion around any volatility in that New York market as well.

Trey Grooms -- Stephens Inc. -- Analyst

Got it. And then switching gears to the -- you had a little bit of commentary around 3Q. Just to make sure I heard you right, it sounded like adjusted EBITDA in in the 50s range. I was having some technical difficulties and it was breaking up around that time. I want to make sure I heard that right, first off. And secondly, if you can maybe give a little bit more color about kind of what's your -- what you're seeing that drives you to that number and kind of what's baked into that, I guess?

Ronnie Pruitt -- President & Chief Executive Officer

Yeah, Trey, you did hear we said anchored in the 50s and so we're trying to get a little range there. And I would tell you what we see and what gives us confidence in that, is one, on the margin side, the variability side, the things I've talked about, the things we've put in place to manage this business through the pressures that we see. And two, the continued sequential month-over-month over month improvements. And so I think we're far enough into the Q3, that we can have that visibility. I mean, I think we're going to be really patient around getting too far out ahead of that. I can tell you that we're confident in our ability to manage the business and we're not trying to get out and predict the demand side. But we will absolutely maximize our assets and absolutely be in a position that whatever drives concrete demand and aggregate demand, that we can meet that demand.

Trey Grooms -- Stephens Inc. -- Analyst

Understood, thanks for the color.

Operator

Thank you. Our next question is from Stanley Elliott with Stifel.

Stanley Elliott -- Stifel, Nicolaus & Company, Inc. -- Analyst

Hey, good morning, everybody. Congratulations on the nice quarter. I apologize if you mentioned this. I have been juggling a bunch of calls this morning. Did you guys provide any commentary on trends in July? I heard the $50 million plus for EBITDA, but I was just curious, kind of, if you had said anything about July?

Ronnie Pruitt -- President & Chief Executive Officer

No, we did not. I think, Stanley, what we have said is, we just continue to see sequential improvements in our business. So as markets have stabilized and opened back up, we continue to see the same trends that we did as I gave you the example of the difference in April, the difference in May, the difference in June. We've continued to see just a small steady increase in how the markets look more stable as we've gotten into July.

Stanley Elliott -- Stifel, Nicolaus & Company, Inc. -- Analyst

Perfect. Did you guys provide any contribution from acquisitions in the quarter, in terms of that nice ramp, on the aggregates piece?

Ronnie Pruitt -- President & Chief Executive Officer

No, I mean we called out, kind of a, on what the external influence on Coram was and we called out where we believe Coram is exactly in line with where we had originally said, even through COVID, even through the timing of announcing that at the end of February and all the difficulties that everybody said we were going to have. We are absolutely on pace on a post-synergy of seven times multiple net acquisition. So I would -- you can model that however we would like. But I think that's absolutely, we're confident.

Stanley Elliott -- Stifel, Nicolaus & Company, Inc. -- Analyst

And lastly, you did such a nice job on the cost side and delivery cost. Is it pretty well split between kind of your union and non-union markets, just curious kind of how those costs trended and if there were any difference between those two?

Ronnie Pruitt -- President & Chief Executive Officer

Yeah. I would say, it's using, from a modeling perspective, what we said was, there was a shift regionally from 30% of our revenues came in the East, 30% West and 40% in our Central. So I would say, from a volume perspective, cost perspective those kind of things. That's a pretty good model to use. Obviously, there is some higher labor cost on our union contracts and things like that. But I think if you use that kind of model in the quarter, most of that will wash-out.

Stanley Elliott -- Stifel, Nicolaus & Company, Inc. -- Analyst

Perfect. Guys, thanks for the time. Appreciate it. Best of luck.

Ronnie Pruitt -- President & Chief Executive Officer

You, Stanley.

Operator

Thank you. Our next question is from Adam Thalhimer with Thompson Davis. Please go ahead.

Adam Thalhimer -- Thompson Davis & Co. -- Analyst

Very good morning, guys, congrats.

Ronnie Pruitt -- President & Chief Executive Officer

Hey Adam.

John E. Kunz -- Senior Vice President and Chief Financial Officer

Hey Adam.

Adam Thalhimer -- Thompson Davis & Co. -- Analyst

Hi. Just curious like on the visibility front, I know a couple of months ago, it was hard to have faith in kind of your concrete schedules just with clients kind of moving things around during the pandemic. Has that improved at all, just your visibility in general?

Ronnie Pruitt -- President & Chief Executive Officer

I think our visibility from a standpoint of, we have a, the CRM system that we use, that we, that is part of WheresMyConcrete Technology that we developed. And the CRM, we've actually rolled that out everywhere. We put the CRM in-place ahead of just by technology. And what the CRM does, is it allows us to be way more specific down to the customer level. So we track a lot of things on customer trends, because at the end of the day, our customers are the ones that we see the biggest impact as far as inflows and outflows of jobs.

And so, when we really start predicting year-over-year customer trends, I mean, I think we have a real pretty good visibility into where they're at. And if there's shifts in the market, because we have customers segmented in residential, customers segmented in commercial and customers segmented in infrastructure. So, we're just trying to get so far away from the typical backlog that people talk about, because backlog to us was stone age. And people that still want to talk about backlog, there is a lot more data out there that we can use. And we think we can be smarter around planning our assets, planning our labor, planning our investment, planning our capex, planning those things around more visibility into what forward-looking things are going to look like.

And so, I would tell you again. I mean, we -- what we are going to be disciplined in is our pricing side. We do not create demand on our product with pricing, it never has and it never will. So whatever demand is going to look like, we're prepared to supply that. But I would say, in the ConstructConnect information we gave you, even if you think about the way a lot of, whether it's ConstructConnect, whether it's -- a lot of these guys are reporting. We're always going to be a lag, because a lot of those projects get reported right upfront. And then, we may be pulling on the job, three, four, five more months. But we're also a lag on the front end, so it kind of balances out.

But I would tell you, I think from our perspective, we feel good on continuing to see the sequential improvements that we've seen. It's really starting from mid-May when a lot of the restrictions were lifted.

Adam Thalhimer -- Thompson Davis & Co. -- Analyst

Yeah, OK. That's my key point. Like, as the restrictions were lifted, how would you characterize kind of customer behavior? I mean, as we sit here in July, are you seeing customers saying and you alluded to this in San Francisco. But saying, hey, rates are well, I've got to move on this stuff.

Ronnie Pruitt -- President & Chief Executive Officer

Yeah, I think it's been a combination of both. I think some of them were more impacted by restrictions depending on what type of work they were. So some of them immediately started back to work on jobs that they already had and they hit the ground running. I mean it was full speed ahead. The hole was already dug, whatever dirt work was done. And then, we've seen a certain amount of customers that said, we don't know what's going to happen. And then, two weeks later, jobs came back that they thought were going to be delayed for a long time. And so, there's market-by-market, segment-by-segment residential has been very consistent. And I wouldn't say, I don't want to use the words of records or bla, bla, bla, but it's been very consistent.

And I think that's the ability for us to continue to push the efficiencies that we've built in. And controlling our cost is, it's a consistent model that we can get ahead of and really manage that labor as well as the R&M and the things like that that we said we control during the quarter.

Adam Thalhimer -- Thompson Davis & Co. -- Analyst

Okay. And then, just from a sense of like, your guys on the ground, the activity they are seeing, the bids they're seeing, maybe the easiest thing to do is just be kind of rank your big geographies New York, San Fran, Dallas, kind of where you feel the most confident in the next kind of six to 12 months and maybe where you see it least?

Ronnie Pruitt -- President & Chief Executive Officer

Yeah, I would say from a confidence standpoint, we've talked about in the past. Texas is very diverse. Texas has a lot of growth. Texas has a lot of land and affordability is obviously a big piece of that. And so, I think, Texas is one that probably can pivot the most to whatever demand that there is and whatever economic factors influences it.

I would say from a standpoint of both New York and San Francisco and New Jersey and DC and Philadelphia, that I mean, the positive thing is there's so much infrastructure demand and it's not infrastructure from the standpoint of how we're going to pay for or what's it going to bla, bla, bla. There is a lot of that political stuff that's going to still happen.

From a demand perspective, those markets have been starved for infrastructure dollars. And when you think about our footprint, I mean it's worth the infrastructure dollars are needed. And I don't care, we talk about, well, there's going to be a transition out to the suburbs from the city. We can reach the suburbs.

We're in Westchester, we're in New Jersey. We can reach those markets and it's not like, oh well, everything leaves that city and you're done there. No, we can pivot and go to the suburbs too and we've got really good assets to fit that. And so, I'm confident in all of our markets, all of them will look different. All of them are going to have different demand drivers. And again, I think, location matters and where people are matters. And I just feel very confident and we picked the right locations, because population and per capita is a very big driver of what concrete and aggregate demand is.

Adam Thalhimer -- Thompson Davis & Co. -- Analyst

Okay, great. Thank you, Ronnie.

Ronnie Pruitt -- President & Chief Executive Officer

Bye, buddy.

Operator

Thank you. Our next question is from Larry Solow with CJS Securities.

Brendan Popson -- CJS Securities -- Analyst

Good morning. This is a Brendan on for Larry. Just wanted to ask about, looking at the aggregates margins year-over-year, how much -- could you speak to how much Coram attributed to that benefit?

Ronnie Pruitt -- President & Chief Executive Officer

I don't -- we don't break-out Coram. I would tell you Coram's aggregate results are similar to our other sand and gravel results. I mean, I think they were all very good from a production side. They were all very good from a sales price being consistent and movement on that. And so, looking at Coram, it's just another really, really good aggregate play for us, that has really, really good pull-through. And obviously, as we put more volume through it, those margins are going to just improve.

Brendan Popson -- CJS Securities -- Analyst

Okay. And then, just looking at your pipeline that you've talked about sand that, you've seen it a steady, fairly quickly. Looking beyond I guess, price you're working on now, I mean, how are customers approaching future or large projects? Are you having similar amounts of conversations with customers about stuff that's I guess not necessarily backlog, but at the time looking more out that's like potential backlog or people are just kind of sitting and waiting, are you still have in those projects conversations?

Ronnie Pruitt -- President & Chief Executive Officer

No, we're having lots of project conversations and and the same amount of planning that goes into these complex projects are still haven't changed. Even though those may be virtual planning meetings now instead of in person, the planning still goes into that and I would tell you that I think our customers are taking the same approach we are. They're pleasantly surprised by the amount of work that has come back and they're being cautiously optimistic about what's to come. They have their relationships, just like we have our relationships with developers, with owners, with key projects and and I think so, depending on which segment you are in and which markets you're in, those customers levels of confidence, they're going to vary, but I would say overall the tone is pretty positive.

Brendan Popson -- CJS Securities -- Analyst

Okay, great. Thank you.

Ronnie Pruitt -- President & Chief Executive Officer

All right.

Operator

Thank you. Our next question comes from Zane Karimi with D.A. Davidson Companies, your line is open.

Zane Karimi -- D.A. Davidson Companies -- Analyst

Hey. Good morning, guys, congrats on the quarter and hope everyone is staying healthy and well.

Ronnie Pruitt -- President & Chief Executive Officer

Thanks, Zane.

Zane Karimi -- D.A. Davidson Companies -- Analyst

So first off, I think this is off of Kathryn's question earlier but to what degree have you guys been able to get employees back to job sites in New York City in the Bay Area and how much of a recovery should we assume into 3Q?

Ronnie Pruitt -- President & Chief Executive Officer

So as far as job sites and restrictions, we have no restrictions as far as government imposed or local restrictions on job sites in New York or in San Francisco. So the restrictions have been lifted. I mean we have a lot of safety things we're doing with our own internal employees and then we have safety things that are also being done by our customers on job sites. So there's a lot of things that we're doing from a safety perspective, but as far as restrictions, as part of being on jobs, we don't have any of those right now on either market. So I would say that from a natural progression of the jobs recovering, it's just all about now the customers and the job and what our ability is to actually start those jobs back. So it's nothing that is from a governance perspective being restricted.

Zane Karimi -- D.A. Davidson Companies -- Analyst

Thank you, then. How much longer can you guys sustain capex at these levels. I think it is below DD&A and can you remind us of the true maintenance capex run rate?

John E. Kunz -- Senior Vice President and Chief Financial Officer

Yeah. So for our capex, that $30 million to $40 million range isn't too far below our depreciation. Okay. As you referred to that, there is depletion and amortization in there as well. So depreciation that was probably in the mid 60s. So our forecast is a little bit lower than that. We think that we can sustain and obviously for the remainder of the year and then as we go into next year, it will evaluate how we, how we think about it. But we do want to allocate capital to the high growth, high-return projects going forward. So it's something that certainly can be managed.

Zane Karimi -- D.A. Davidson Companies -- Analyst

Okay, well, thank you, guys, very much.

Ronnie Pruitt -- President & Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] Our next question is from Julio Romero with Sidoti & Company.

Julio Romero -- Sidoti & Compnay, LLC -- Analyst

Hey, good morning. Hope you all are well.

Ronnie Pruitt -- President & Chief Executive Officer

Thanks, Julio.

Julio Romero -- Sidoti & Compnay, LLC -- Analyst

I guess my first question is on ready-mix pricing. John, I appreciate you calling out the mix adjusted price being up 1.3% in the quarter. Can you just talk about pricing trends you're maybe seeing today and are your geographic markets still holding price on a stand-alone year-over-year basis?

Ronnie Pruitt -- President & Chief Executive Officer

Yeah, I would tell you what we're seeing today is very little pressure on pricing. Very little pressure on what a normal economic downturn would look like and I think as you think about that Julio, the markets have changed. I mean, we did a lot of consolidation. There has been other consolidation help and there has been a focus over the past eight to 10 years, ever since, Bill started the strategy of rolling up a lot of these assets that in the investment community, the -- all sides of it hammered on us about how the importance of pricing was.

And so when you look at the PPI and when you go back over the last five years and you can look at it currently, ready-mix pricing is holding really well, really strong and there is a very, very strong correlation between ready-mix pricing and aggregate pricing and cement pricing. And I've told you in the past and I'll reiterate it, I am in position that I'm not trying to beat up suppliers every day. I've told you I'm not going to give up material margins and I'm not willing to give up material margins, but I'm going to support those increases. I am in the aggregate business. I don't do any good trying to to find one source of beating someone up and then it all gets given away. And so our role as a leader in our markets is continue to do the things we do and pricing being stable is one of the things we've said in the past, that was our focus and it's going to continue to be a focus.

And I'm not saying, there won't be ups and downs, but strategically with the systems we have, the analytics we're using, with our CRM tool, with our WMC tool, we're going to make the right decisions from a profitability standpoint with pricing and if we have to walk away, we walk away. But we're just not, again, we're not going to create concrete demand with the price of concrete.

Julio Romero -- Sidoti & Compnay, LLC -- Analyst

Thank you. I appreciate the color. And I guess that dovetails and so just my follow-up question is, you do have some healthy share in the Northeastern California and you've got some defensible positions in those markets. Have you -- do you think you maybe have gained any share or seen any broader changes in that competitive landscape, just given the volatility in the quarter in those markets? Thank you.

Ronnie Pruitt -- President & Chief Executive Officer

Yeah, I don't think in the quarter and I think because of the restrictions, because of the type of work, because of the choppiness and how those jobs open back up and were down that there were really hard to get visibility into what market share was because it just really depended on what job you had going into it and how that job was affected. So I think it's too early to say you're going to go out and really think that someone gave up or took market share. As the market stabilize and as we continue to see consistency in the markets, we evaluate that normally. It's not something we overreact to because it can ebb and flow with large projects and if you lose a large project for whatever reason or you get a large project for whatever reason, your market share could really take a big jump. It's not something that I measure from a standpoint of being aggressive or being more on the pricing side because it's just too many moving parts.

Julio Romero -- Sidoti & Compnay, LLC -- Analyst

Understood. Thanks for taking the questions. Appreciate it.

Ronnie Pruitt -- President & Chief Executive Officer

All right.

Operator

Thank you. And ladies and gentlemen, this concludes our Q&A session for today. I would like to turn this call to Ronnie Pruitt for his final remarks.

Ronnie Pruitt -- President & Chief Executive Officer

Thank you, Cameron. From all of us at U.S. Concrete, thank you for joining our second quarter call. We will continue to navigate these challenging times and deliver excellent operating margins to drive shareholder value. We look forward to sharing our third quarter financial results in a few months, until then stay safe and be well.

Operator

[Operator Closing Remarks]

Duration: 60 minutes

Call participants:

John E. Kunz -- Senior Vice President and Chief Financial Officer

Ronnie Pruitt -- President & Chief Executive Officer

Paul Roger -- Exane BNP Paribas Research -- Analyst

Kathryn Thompson -- Thompson Research Group -- Analyst

Trey Grooms -- Stephens Inc. -- Analyst

Stanley Elliott -- Stifel, Nicolaus & Company, Inc. -- Analyst

Adam Thalhimer -- Thompson Davis & Co. -- Analyst

Brendan Popson -- CJS Securities -- Analyst

Zane Karimi -- D.A. Davidson Companies -- Analyst

Julio Romero -- Sidoti & Compnay, LLC -- Analyst

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