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US Concrete Inc (NASDAQ:USCR)
Q4 2020 Earnings Call
Feb 24, 2021, 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 US Concrete Fourth Quarter and Full Year 2020 Earnings Conference Call. I'd now like to hand the call over to Sharon Ellis, Vice President of Investor Relations. Thank you. Please go ahead.

Sharon Ellis -- Vice President of Investor Relations

Thank you, operator. Good morning and welcome to US concrete's Fourth Quarter Earnings Call. Joining me on the call today are Ronnie Pruitt, our President and Chief Executive Officer and; John Kunz, our Senior Vice President and Chief Financial Officer. Ronnie and John will make some prepared remarks, after which we will open the call to questions. As detailed on page two of our company's presentation, today's call will include forward-looking statements as defined by the US 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. A presentation to facilitate today's discussion is available on the Investor Relations section of our website.

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

Ronnie Pruitt -- President and Chief Executive Officer

Thanks, Sharon. Good morning, everyone, and welcome to our fourth quarter earnings conference call. I would like to start the call by extending my thanks to all of our employees for their dedication, which resulted in another strong quarter and to our valued customers, suppliers and financial stakeholders for their partnership with us. I will begin the call with brief comments regarding our 2020 accomplishments. John Kunz will then cover the quarters financial information in greater detail and I will conclude our prepared remarks with our outlook for 2021 and how US Concrete is positioned to continue to succeed in both the current environment and beyond with our strategic growth initiatives as we focus on continued improvement in the near term, as well as the progress we are making toward our Horizon 2025 goals, after which we will open the call to questions.

We have many reasons to celebrate our performance during 2020. Thanks to the dedication, vigilance and discipline of the entire US Concrete team, we were able to successfully navigate through a very challenging year. Our success in 2020 is not only a testament to our team's ability to adapt to the current dynamic environment, but also a reflection of the work we've done to transform our business. The US Concrete team was able to successfully address a number of critical issues in 2020, which included efficiencies and business processes. We improved our operating margins with successful execution of our cost-control measures and operational efficiencies, as well as our continued focus on our customers and stakeholders, while maintaining a long-term strategic focus on our goals and objectives. We continue the successful rollout of Where's My Concrete to our central region and added functionality focused on back office automation and integration with our other enterprise systems. We are progressing on the implementation of WMC in our west region and expect it to go live in spring of this year.

Results and trends, we saw stable and improving ASPs in both aggregates and ready-mix throughout the year. For the year, our aggregates operating segment revenue increased to almost 16% of total reportable segment revenue and aggregates segments Adjusted EBITDA increased to 42% of total company adjusted EBITDA, with the addition of Coram and the expansion of our Texas Aggregate operations at MW ranch and in Amarillo. For the year, our aggregates segment adjusted EBITDA margin, net of freight expanded to almost 48%, an all-time record for our company. Even with ready-mix volumes down 10% in 2020, we reported improved operating margins with our ready-mix segment adjusted EBITDA margin improving to 12.9%, a 60 basis point improvement year-over-year. We are particularly proud of our ability to manage operating leverage in context of pandemic impacted volumes, strategic development to drive value, the successful acquisition and integration of Coram, our sand and gravel facility supporting our metropolitan New York operations resulted in a better than seven times synergistic multiple we announced last February.

Liquidity and cash flow. We ended the year with over $420 million of liquidity in the form of cash and cash equivalents and borrowing capacity, two different lines of credit, which provides us flexibility to pursue strategic opportunities. We generated a record $158.6 million of adjusted free cash flow during 2020, a significant increase of almost $54 million over the prior year. Even with spending $142 million on Coram, which was our second largest acquisition ever, our leverage ratio remained almost unchanged year-over-year, even with the impact of the pandemic on our business. ES&G and our responsibilities as corporate citizens, we continue to meet the demand for low carbon concrete in the Bay Area, including the construction of the new LinkedIn Middlefield Campus in Mountain View, which is highlighted on slide 11 of our earnings presentation. This project, which included CarbonCure and recycled supplementary cementitious materials, known in the industry has SCMs, help LinkedIn meet their aggressive carbon goal for this green building project. We continue to develop and utilize progressive processes for our return concrete, including converting it into recycled aggregates. We were an early adopter introducing CNG or compressed natural gas mixtures to our New York fleet, and now we're operating 47 CNG powered trucks or 15% of our total New York fleet. With these accomplishments as a backdrop, I would now like to turn the call over to John for his financial commentary.

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

Thanks, Ronnie. As Ronnie mentioned, we are very pleased to report another quarter of improved performance despite the ongoing challenges presented by the pandemic. Our consolidated revenue for the quarter was $334 million, a 9.4% decline compared to the prior year fourth quarter. Despite lower revenue, our fourth quarter adjusted EBITDA improved to $47.2 million compared to $45.5 million in the prior year quarter. Our aggregates business continued to show growth in revenue and profitability and our ready-mix business showed improvement in adjusted EBITDA margins on lower volumes. For the year, our performance resulted in adjusted EBITDA growth of almost 5% generating $192.9 million in total adjusted EBITDA. The growth in adjusted EBITDA was driven by a 160 basis point improvement in our adjusted EBITDA margins. Many of the initiatives that contributed to our improved margins are outlined on slide 10 in our presentation materials.

Aggregate volumes were up 8.2% compared to the prior year fourth quarter with Coram in our Texas operations leading the improvement. For the year, aggregate volumes were up 10.8% while ready-mix volumes were off 10.2%. Our continued focus in executing our strategy of vertical integration through aggregates in our cost containment efforts during the year resulted in an improved adjusted EBITDA margins for both business segments. For the fourth quarter, aggregates adjusted EBITDA margins improved to 38.8%. Ready-mix volume was off 11.5% compared to the prior year fourth quarter, with each of our three regions experiencing lower levels of demand. Our material margins increased by 30 basis points, 47.5% compared to the prior year quarter. Despite lower volumes, our ready-mix segment adjusted EBITDA was flat year-over-year at $34 million with 150 basis points improvement in this segment's adjusted EBITDA margin to 12% for the quarter. The improved margins in our aggregates and ready-mixed segments resulted in consolidated EBITDA margins of 14.1%, 180 basis point improvement versus the prior year quarter. Our EBITDA adjustments for the quarter relate to a loss on extinguishment of debt, stock compensation, contingent consideration, acquisition-related cost, realignment initiatives and purchase accounting adjustments. Our SG&A was 8.8% of revenue for the fourth quarter of 2020 compared to 7.2% in the prior year quarter. Adjusted SG&A, excluding stock compensation, acquisition-related cost and realignment initiatives was 7.5% of revenue in the fourth quarter of 2020 compared to 6.5% in the prior year quarter, reflecting the impact of lower revenue in our cost control efforts, offset by higher incentive compensation expense due to our strong financial performance, especially in light of the pandemic.

As a result of our September notes offering and the related redemption of our six and three eighths notes in October, we recognize a loss on the extinguishment of debt of approximately $12.4 million during the quarter. With a lower coupon [Phonetics] on our new notes, we expect our full-year 2021 interest expense to be in the $39 million to $43 million range, and we expect our adjusted effective tax rate to be approximately 27%.

Moving on to our cash flow and balance sheet. During the fourth quarter, we generated $36 million of cash provided by our operating activities, and $30 million of adjusted free cash flow. Our operating performance and cost containment efforts during the quarter contributed to these results. For the full year, our cash flow performance was record setting as we generated a $181 million of cash from operations and $158.6 million of free cash flow. After borrowing under a revolver to pay for our Coram acquisition and to fund premiums on our notes redemption, we ended the year with just over $6 million drawn on our revolving credit facility, resulting in availability of $230 million. That coupled with $179 million of availability under our delayed-draw term loan and cash on hand, resulted in $420 million of liquidity at year-end. Our leverage ended the year at 3.6 times. During the fourth quarter, we spent $7 million on cash capital expenditures related to our plants, property and equipment compared to $14 million for the same period last year.

Looking forward to 2021, we anticipate managing our cash, capital expenditures in the range of $40 million to $50 million. In reflecting on the performance of the company this past year, we were able to achieve many of our strategic objectives despite the economic impacts of the pandemic. We completed our second largest strategic aggregates acquisition with Coram, reduced our cost structure, improved our margins, strengthened our balance sheet with increased liquidity and continued our investment in Where's My Concrete, which allows us to utilize the data for improved decision making, just to name a few. With these achievements and the continued execution of our strategy, we believe the future continues to remain bright for US Concrete.

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

Ronnie Pruitt -- President and Chief Executive Officer

Thanks, John. As we turn to 2021, the lingering effects of the pandemic make the outlook difficult to forecast. However, we are anticipating that the second half of the year will be stronger than the first half, led by robust residential activity across all of our markets, complemented by heavy industrial commercial projects, including warehouses, data centers and other commercial work that supports the development of new neighborhoods.

Our key markets, all expect strong and resilient activity for infrastructure, including freeways roads and streets either with or without the federal infrastructure bill. We are encouraged by the strength and resiliency of the markets that we serve and the fundamentals of our business. As we think about providing guidance, obviously we faced shipping challenges in the first quarter, but we remain cautiously optimistic about our expected performance. For the full year 2021, we expect an improvement over last year with an adjusted EBITDA around $200 million, which represents a 2% to 5% increase over 2020. Regardless of volumes, we expect favorable pricing and we will continue to focus on operating margins in both of our business segments.

Over the long-term, US Concrete is well positioned to support the construction activity in the markets that we serve. As we turn to the future, outlined on slide 13, our continued focus on near-term results and performance that benefit all of our stakeholders is complemented by our Horizon 2025 goals which we shared during our recent Investor Day. I announced a five-year horizon target of $300 million of EBITDA in an effort to increasingly align our messaging to our financial stakeholders with the strategic planning which governs much of our decision making on capital spending, M&A and strategy. While we report earnings on a quarterly basis, our strategy is governed by much longer perspective. I believe that it is healthy and will ultimately create the most value for our stakeholders.

The path to our Horizon 25 is twofold. First, we plan to accomplish this through organizational efficiencies, operational improvements, organic growth, technology advancements and automation with our Where's My Concrete platform. Expansion of our aggregates platform, uplift from our current markets, as well as other measures. In addition, we are making great progress on the strategic initiatives to strengthen and reinforce our existing markets and operating footprint. With that context, we are highly confident in our ability to continue to source strategic growth opportunities at attractive multiples that will bolster our organic initiatives to enhance our horizon targets.

As we begin 2021, we want to share some of our strategic projects. Terminal facilities, we are actively expanding our terminal network for several of the markets that we serve, principally through rail but also water, so that we can better manage our supply chain and access to raw materials. We have an agreement to acquire cementitious distribution terminals in the Bay Area, giving us access to rail and a bulk cement storage facility. With the changing dynamics of cement supply in Northern California in the last year, this terminal gives us more flexibility and the ability to better manage our supply of cementitious material. This transaction is scheduled to close this spring. Black Bear, Black Bear allows us to expand our presence adjacent to the Orca Quarry at Polaris to provide additional course aggregates to the West Coast markets. While leveraging our existing ship loading facility, which has the annual permitted capacity of 8.7 million metric tons, we are currently in the environmental permitting process working with our First Nation partners and are simultaneously developing our mine plan.

It is anticipated that we will maximize this permitting capacity with upgrades to our production facilities and conveyor system with approximately 400 million tons of both measured and indicated incremental and inferred Black Bear reserves. Black Bear's course aggregates are a natural complement to Orca's Sand Ridge reserves. We are targeting the Black Bear will be operational later in 2023, with revenue generated early in 2024. Aggregates are in limited supply into the California market and the supply of Orca's high quality sand and course materials, when enhanced with the addition of Black Bear's course aggregate reserves, will not only benefit US Concrete operations but will provide much needed resources to aggregate consumers, including hot mix producers, as well as other construction materials, markets outside of the normal concrete producing customers.

Additionally, we are meeting the demand of aggregates in the Northern and Southern California markets by water, which is an environmentally friendly method of transportation and provides EPD's and lead certification compliance with these materials, Greenfield and market developments in an expanding Dallas-Fort Worth market. According to Dodge Data, the Dallas-Fort Worth market saw a remarkable $24 billion in construction starts for the residential and commercial projects in 2020 even with the pandemic, and over 150 companies have announced that they will be moving their headquarters to this area. We are in the process of optimizing our operational footprint to be able to service this ever expanding market. While growth can certainly take the form of M&A, there are significant advantages to leveraging our key markets to efficiently deploy further capital investment as bolt-ons to drive expansion. Shut [Phonetics] aggregate reserves, we added strategic aggregate reserves to our Atlantic region during the fourth quarter through the acquisition of land, adjacent to our wanted facility with an estimated 10 million tons of reserves. While we can't specifically address the capital investment of these projects, they average six times multiple and provide operating synergies and incredible value to our existing operating footprint.

In addition to the strategic projects we shared with you this morning, our team is actively reviewing and analyzing many other initiatives to enhance and strengthen our company focusing on continuous improvement across our platform with an emphasis on operational efficiencies, back office consolidation, rolling out Where's My Concrete and cost management opportunities. While 2020 was a year of overcoming obstacles, our outlook for 2021 is promising and we expect to continue to strengthen our business segments, our team, our markets and our operating margin profile to deliver excellent results to all of our stakeholders.

Operator, I would now like to turn the call over for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from Kathryn Thompson with Thompson Research Group. Your line is open.

Kathryn Ingram Thompson -- Thompson Research Group -- Analyst

Hi, thank you for taking my questions today. A couple of clarifications on guidance, and you did provide some color in your prepared commentary. So, thank you. How should we think about the cadence of 2021 taking into account three main buckets; the COVID, cadence acquisitions, and then, there are one-offs that impacted the quarter, including Q3 with cement availability in California? Thank you.

Ronnie Pruitt -- President and Chief Executive Officer

Good morning, Kathryn. I would say on the first topic, I think the COVID impact is still there. Obviously, we're following the scientists [Phonetics] as well as anyone else. And so, I think as the year progresses, the sequential improvements will continue, but that impact is still there. Especially around the hotel and that type of industry, I think it's still going to struggle.

With part two of that, I think it was M&A. There was no M&A assumptions in our guidance, so we're not assuming any M&A at all in that guidance. And if we do M&A during the year, that would be on top of that guidance. And then, part three, on the summit's shortages. I would tell you, if you think about the cement shortages and the impact it had on our business. Obviously, when they initially happened, we saw some restrictions in actual supply. We overcame that. But I think the biggest impact was really on our material margin. We were having to truck cement further and do things to get some it to the market. That has subsided and we see a more normal material margin today. Any impact that we saw on volumes, I think it was just delayed and pushed into Q1 now. So, we've seen a more normal cadence on the supply side, which is also as we talk about the agreement that we've put in place to buy a facility there in the Bay Area. We're trying to address that longer term, that we're going to be in better control of our cement supply.

Kathryn Ingram Thompson -- Thompson Research Group -- Analyst

Yeah. Helpful. Just in the near term, and hopefully you guys have thought out a bit from last week's snowmageddon in Texas but it's our understanding that cement plants, chemical plants were shut down which by virtue means that everything came to grant [Phonetics] a halt, how realistic is it to ramp up operations? You may be ready to go, but how about your suppliers? And how should we just think about that from a realistic standpoint as remodeling for this quarter? Thank you.

Ronnie Pruitt -- President and Chief Executive Officer

Yeah, it's a good question. And we've talked to a lot of our suppliers and you've been from here -- with the cement industry for a long time. The weather was extreme, no question, and we faced a lot of challenges both personally and in our business, but at the same time it's February. It's a typical slower quarter anyway. A lot of outages at these plants were planned in the winter. But I would tell you that from my experience, especially plants that are in Texas, they're built for whether to go down into the 20s and 30s for times, but not in the zero degrees or negative degrees for a long period of time. So, I think there is going to be some challenges to get those plants back up. The good thing to me is that a lot of the plants do have clinker inventory. And so, when you think about the power system versus the grinding, I think they will have the clinker inventory. But from our experience, and you've seen this for a long time as well, Kathryn, cement shortages can be a good thing if they're managed properly. And so, if cement does get short, I think it's an opportunity for us to even focus more on margin improvement in our ready-mix business.

Kathryn Ingram Thompson -- Thompson Research Group -- Analyst

Okay. And then, final question for the day. Going into 2020 inflation has been a theme for us just really across the construction value chain, and it's definitely has picked up in a wide variety of categories, how are you managing inflation and what are the bigger areas that you're managing it? Thanks very much.

Ronnie Pruitt -- President and Chief Executive Officer

Sure. Inflation for us is really on the variable side, which we could see some headwinds on fuel cost. The good thing is we've talked about, in many years past, when fuel -- we have fuel surcharges in place. Those fuel surcharges have always been in place and they kick in at certain levels when fuel hits certain prices. We have those triggers in place. So, we protect ourselves naturally on the fuel side with those surcharges. I think you're going to continue to see increases in all of our markets and increases from a pricing standpoint. That's got to cover the basis for this because a lot of people froze salaries, they froze different other compensation methods during the pandemic, and those things are going to be put back in place. And so, naturally, we're going to focus on our margins. I think the technology piece of our business with WMC, the visibility we have, our CRM. All of those things, obviously, we're using to the greatest extent to not only control but also improve margins. And I think we're just going to have to maximize on the visibility we have in the business.

Kathryn Ingram Thompson -- Thompson Research Group -- Analyst

Okay, great. Thank you so much.

Ronnie Pruitt -- President and Chief Executive Officer

Thanks, Kathryn.

Operator

Thank you. Our next question comes from Larry Solow with CJS Securities. Your line is open.

Lawrence Scott Solow -- CJS Securities -- Analyst

Good morning. This is Stephanos Chris calling in for Larry. Thank you. First, can we talk about ready-mix volumes? Volumes were down, can you maybe break that out by region if possible, where it was most impacted? And then, where we'll see the most opportunity for growth in 2021?

Ronnie Pruitt -- President and Chief Executive Officer

Yeah, if you think about what we saw in Q4, I think it followed similar patterns with what we had seen for the majority of the year. Obviously, the New York markets were continue to be trading off further than the rest of our markets and that was normal with the impact of the pandemic. So, nothing surprised us. There was no changes on anything dramatically in Q4 with the trends that we had seen.

I think what gives me confidence, and in my prepared comments I said the second half of the year being more stronger than the first, is we not only have in our pipeline current projects that are continuing to go, but we've also added quite a few new projects even between the fourth quarter of 2020, and even, presently now, in the first quarter. And both of those lists are in the pipeline, are in our New York markets, and they are in our San Francisco markets, and they're mid-rise, they're high rise, they're data centers. And so, my confidence is that all of these markets that we participate in are still solid fundamentals. And as the pandemic continues to drift to a place of a cure being in place and people getting confidence of their own personal safety, I think the markets that we're in are still going to have very good fundamentals for population growth, as well as commercial infrastructure and residential spend.

Lawrence Scott Solow -- CJS Securities -- Analyst

Got it. Thank you. And just one more and I'll jump back in the queue. You briefly talked about M&A. Should we talk about what the M&A pipeline looks like? Any opportunities that you're seeing in the market? And yes, overall, what are you seeing right now?

Ronnie Pruitt -- President and Chief Executive Officer

Yeah, I mean we can -- we continue to be very discipline in our M&A look. I mean, we look at a lot of things. Again, what we've said is we've got to continue to be a company that's very strategic from a standpoint of multiples that we can afford to pay. And so, we said in our prepared remarks, the things we're looking at will be sub-seven times opportunities. And those things just don't fall in your lap because there is there is competition out there for everything. So, I would say the -- I think the activity in '21 will pick up, but what you will see out of us is continued discipline around multiples that we can afford to pay if we choose to. I think our organic opportunities that I laid out are much more enticing for us, because strategically we've got footprints in place. So, those bolt-on opportunities on the ready-mix side, as well as reserve that we already have on the aggregate side, is where our focus is. And if there happens to be external opportunities that come up with good multiples, then we definitely have the liquidity to do that, but we're going to be very disciplined.

Lawrence Scott Solow -- CJS Securities -- Analyst

Perfect. Thank you.

Ronnie Pruitt -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Paul Roger with Exane PNB Paribas. Your line is open.

Paul Barry Roger -- Exane BNP Paribas -- Analyst

Yeah, good afternoon, gents, or good morning, wherever you are.

Ronnie Pruitt -- President and Chief Executive Officer

Good afternoon to you.

Paul Barry Roger -- Exane BNP Paribas -- Analyst

Maybe we just start, just a bit of a follow-up on the demand outlook. You talked about having non-ves obviously being quite strong, data centers and the likes. Are you seeing any signs of light in the sort of light non-ves sort of commercial end of the market and how difficult is that right now?

And then, also on demand, clearly, there's a lot of talk about people moving out of the cities back into the suburbs, could that have a meaningful impact as well?

Ronnie Pruitt -- President and Chief Executive Officer

Yeah, Paul. So, on the commercial side, and yes, your comments were spot on, we continue to see very strong demand on residential. In all of our markets, residential has continued to be very strong. On the commercial side, we are seeing a lot of visibility in our pipeline with a lot of projects being brought to market and discussed. And that's what gives us confidence in the comments we made about the second half of the year being probably, excuse me, stronger than the first. And I would say those are variety. I mean, when we talk about data centers and the support of that. We're seeing data centers in Northern California, that really over the last two to three years, that market outside of the San Jose area has become a really strong data center area. Obviously, we see lots of distribution type warehouses in the Texas area. We're seeing that in our DC markets as well. With both data centers in Virginia, as well as distribution centers there. In New York, we continue to see a shift off to mid-rise affordability. The New Jersey market continues to have a lot of strong pipeline opportunities on the infrastructure side, even though we haven't done an infrastructure bill yet. With the outlook of SB 1 in California, we still have really good funding there. TxDot is extremely healthy. And we are expecting a very good year out of TxDot here in Texas. And also Governor Cuomo has released a very good spending opportunity in New York.

And I think all of those markets, again, as I look at infrastructure, fundamentally, the demand has -- it has to be done. I mean the roads, the bridges the tunnels, it has to be addressed. And so, whether that's in the form of the big large federal one or the States having to take more control of that. I think that's what gives us confidence in all three legs of our market; the residential to the commercial and the infrastructure.

Paul Barry Roger -- Exane BNP Paribas -- Analyst

And also just on this slight structural trend of people moving out of cities. I mean looking in at little areas or suburbs or anything like that, is that something that you all see an impact on? So, yeah, how meaningful could that be?

Ronnie Pruitt -- President and Chief Executive Officer

Yeah, Paul, we're seeing the same trends that everybody else sees, but at the end of the day, I think the -- fundamentally, the markets are going to -- at some point people are going to come back to work. And I think the virtual offices was a good stop gap. I still think collaboration, personal interaction and those things are going to be valued in the future. And so, when we look at the suburbs, we reached the suburbs. I mean we are -- even though we have plans that can reach the cities, we also reach the suburbs. So, when we look at these, what we define as mega regions, if you're talking about 30 to 40 miles is considered suburbs in both directions, we reach that.

And so, we see that in our residential demand and we're participating in that every day. And so, I think strategically with our distribution system in the plant locations, we can capture value on either side of that.

Paul Barry Roger -- Exane BNP Paribas -- Analyst

Yeah, that's very clear. So, my second question was on CO2. Obviously, President Biden and some of us talking about maybe CO2 taxes. You mentioned in your prepared remarks a few things you're doing on that front. It's interesting because if I reflect back to when this happened in Europe in 2005, it was perceived as a bit of a disadvantage for independence concrete providers because obviously it's harder to work on some product solutions like cement mixes or novel clean, things like that. How well positioned do you think you are if CO2 really does get into CO2 taxes?

Ronnie Pruitt -- President and Chief Executive Officer

So, Paul, we've been an early adopter of what we've talked about with CarbonCure and we were one of the first companies to adopt that process in California. We're rolling that out to all of our regions. We've been an early adopter of a lot of the SCMs. Fly ash has been one, slag mix has been another. Ground glass, we're using ground glass in mixes. I think with our national research lab, and I have to give them a lot of credit, we have a national research lab that is located in California. So, it's right in the middle of the most forward thinking market that we participate in when it comes to really looking at environmentally friendly solutions to an industry that's not been considered as an environmentally friendly industry. And that lab that we have operated by our folks there, is constantly testing many different forms of not just recycled, but also looking at how do you reduce the amount of cement in the mixes that ultimately can net-net reduce the carbon. And so, we embrace this. We think it's a great opportunity we're seeing more and more of the developers, the owners, especially on the technology side, but also just normal developers that are now putting in specifications for this, that we feel like we can have a competitive advantage on because we were an early adopter and we're going to continue to focus on it.

Paul Barry Roger -- Exane BNP Paribas -- Analyst

Yeah, that's great. Thank you.

Ronnie Pruitt -- President and Chief Executive Officer

Thank you, Paul.

Operator

Thank you. Our next question comes from Adam Thalhimer with Thompson Davis. Your line is open.

Adam Thalhimer -- Thompson Davis & Co -- Analyst

Hey, good morning, guys. Congrats on a solid Q4.

Ronnie Pruitt -- President and Chief Executive Officer

Thank you, Adam.

Adam Thalhimer -- Thompson Davis & Co -- Analyst

Wanted to dig into the '21 outlook a little bit. You talked about ready-mix volumes last year down double-digits, aggregates up double digits, is the trend going to continue, but in a less dramatic way? I guess you would say, maybe low single digits versus teens?

Ronnie Pruitt -- President and Chief Executive Officer

It's hard to put a number on that right now, Adam. And especially, coming through the last two weeks. I would tell you, today, with our WMC, I have an app in my phone that I can click on and look at all of our volumes across all of our footprint. And today's February 24. I clicked on the app this morning and I do it every morning. And if I would have not known it was February 24, I would have thought it was a May or a June type of volume today. Now, a lot of that recovery from the last two weeks of experiences we've had in all of our markets with not only wet weather in California and cold in Texas and cold in New York, but all three of those markets I see the bounce back that we normally see in normal markets when we have weather effects. We call it pent-up demand and the bounce back in the next couple of days. I'm seeing that now. And it's very exciting to me to see that when we do have these weather events, which isn't going to be normal. And I want to make it clear, these are -- even though Texas was a 100 year event, winter is going to happen and we're prepared for that. And so, at the end of the day, I'm just very optimistic that we will continue to see sequential recovery. And as I really start thinking about trying to do comps versus 2020, then I got to put myself back in, what was happening back then, and what was happening in March when the pandemic hit, what shut down. And so, I still see the opportunity there that I think we can see single-digit improvement in volumes on ready-mix for the year and I'm still confident in that.

Adam Thalhimer -- Thompson Davis & Co -- Analyst

Okay. And then, I think -- I don't know. The way it's working out from my model, I feel like you're guiding to about flat segment level margins, is what I'm kind of coming up with, which possibly make sense and ready-mix. I'm not sure about that. But then in aggregates, you guys had 100 basis points of EBITDA margin improvement in '20, how do you see that shaking out in '21?

Ronnie Pruitt -- President and Chief Executive Officer

Well, if you think about the way we're -- the comp, I mean we layered in and we talked about Coram. I mean Coram was a big impact to us on the ASP side because we layered that in in February of last year, higher ASPs, because we talked about it being so close to the market that it serves, that there was not a lot of freight involved there. So, we saw that lift last year which was a very good comp for us last year. This year will be a full year of Coram and as we start comping that to a 10 months, 11 months -- 10 months of comp last year, it will be more normalized, I would say there is still opportunities.

I think when you talk about a flat margin on concrete, I still say at the end of the day, we got a lot of things we've put back in place that we took out, whether that's our employees and the structure of their salaries and other benefits that we froze that we're going to put back in. So, we have some initial headwinds on that, but I still think there's opportunities there that we'll be able to capture the value of that. Material margin I think is an opportunity as well. We talked about cement, could be a challenge. If cement is a challenge, I think that will be an opportunity to increase our ASPs on the ready-mix side. So, I'm excited about the margins we had in 2020. I'm excited about the visibility we have with our technology. And I think we're going to continue to capture very, very strong margins when it comes to the comps you comp us against in our space.

Adam Thalhimer -- Thompson Davis & Co -- Analyst

Okay, good detail. Thank you. Ronnie.

Ronnie Pruitt -- President and Chief Executive Officer

Thanks, Adam.

Operator

Thank you. Our next question comes from Trey Grooms with Stephens. Your line is open.

Trey Grooms -- Stephens -- Analyst

Hey, good morning.

Ronnie Pruitt -- President and Chief Executive Officer

Hey, Trey.

Trey Grooms -- Stephens -- Analyst

So, really a few for me here just -- well, first, I want to touch on maybe again kind of on the guide. With that kind of ballpark of $200 million and EBITDA -- John, I mean we're looking at the free cash flow or the cash flow from operations at least. You guys had great flow through last year. And then, you gave us a few of the moving pieces there; tax and interest expenses, is there any reason why we shouldn't see a similar if not as good kind of flow through there to cash flow?

Ronnie Pruitt -- President and Chief Executive Officer

Yeah. So, when you look at our results in 2020, obviously, we benefited from a few things that supported that cash flow, one was tax. Obviously, we were not a cash taxpayer in 2020. I do expect to be a cash taxpayer in 2021. We had some working capital tailwind. We took out working capital and that provided a benefit for us as well. And then, capex, our capex came in at about $24 million. Our guide is higher. It's in the $40 million to $50 million range. So, with that said, you're going to see a little bit of a pull back from that 158 number in light of those factors.

Trey Grooms -- Stephens -- Analyst

Okay. Yeah. And it was -- thank you for bringing up the tax, the cash tax difference. That's important and something I wasn't accounting for. Okay. And then, shifting gears a little bit. In the quarter, and it might be tough to parse this out right now, but given that -- the integration and everything, but is there any way for us to think about what Coram contributed to the quarter as far as volume?

Ronnie Pruitt -- President and Chief Executive Officer

As far as volume goes?

Trey Grooms -- Stephens -- Analyst

Yeah, just how much of that 8% increase in aggregate volume was Coram is what I am really trying to get at.

Ronnie Pruitt -- President and Chief Executive Officer

I would say that it in the quarter, obviously, as great as operation as Coram has been, as strategic as it has been for us, it's still located in a market that is affected by winter months. And so, in the quarter, I would say it was a more of an impact on our Texas operations. We had really solid weather quarter in Texas. And we also had really solid demand in Texas. And so, I think that's the balance we have and the good thing about it is that, with the investment we did with MW ranch and our Texas aggregates in Amarillo, along with our existing aggregate operations, I would say Texas had a greater influence on that. But Coram still, obviously, with any shipments, it was better on a comp basis. So, I think it was a -- it's probably an equal split between something with what Coram did versus our Texas aggregates actually being up as well.

Trey Grooms -- Stephens -- Analyst

All right. That's helpful. Thanks, Ronnie. And then, I guess last one for me is here again a little bit of housekeeping on the SG&A, you had a little bit higher SG&A as a percent of sales last year with some of the moving pieces. And as far as looking out into '21, John, is there a good run rate we should be thinking about there.

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

Sure. I mean, the biggest differential between 2020 and 2019, and if you recall the incentive compensation in 2019 was much lower than what it is expected to be in 2020. What has sort of baked into our Q4 number is something where that's more around a normal type level incentive comp, what I would expect on a run rate going forward. So, I think that Q4 number is probably a good number for a run rate as far as SG&A going forward. I have also got to look at it in light of our overall volume declines or revenue that's -- what's sort of driving it up, that percent of revenue, or revenues down. I mean we did take out cost. As Ronnie already mentioned, we took out meaningful cost but were somewhat offset by that.

Trey Grooms -- Stephens -- Analyst

That's good color. Thanks, guys. Good luck.

Ronnie Pruitt -- President and Chief Executive Officer

Thanks, Trey.

Operator

Thank you. And our next question comes from Stanley Elliott with Stifel. Your line is now open.

Stanley Elliott -- Stifel -- Analyst

Hey, good morning guys. Thank you all for taking the question and nice finish to a challenging year for sure. Hey, could you all talk about -- it sounds like that the M&A pipeline is very full, and you've got, leverage is very manageable, free cash flow is accelerating, 3/6 is certainly doable for you guys, how are you all thinking about leverage targets near term, this year, maybe even into next year just given the number of opportunities you see on the horizon?

Ronnie Pruitt -- President and Chief Executive Officer

Yeah, good question. And as we've said throughout the year and we're going to continue to be disciplined in the way we look at it.

I'm not afraid of leveraging up if we see a quick path. I mean it's just like what we saw with Coram; financing that through our ABL and literally ending the year with the same leverage. I mean, if those opportunities are there, we're going to take advantage of that. And again, I think when it comes to our focus on aggregates, it's -- I mean you know this market, and you know it's hard to find those kind of opportunities. That's why we're focused on the things that we can control internally, whether that be Black Bear. We talked about Shot Meyer. We were able to successfully get approvals at Hamburg. We added reserves at our other New Jersey quarry at Hamburg. So, we're spending. We're investing money in those type of operations for the long term.

And I say long-term because at the end of the day without buying these reserves and without adding the long-term permitting processes that we go through, I just want to make sure that the investment community understands that we're looking at this as long-term sustained values. And I think those values are going to be more -- the credit we will get for that is way more credible on the aggregate side. And so, we're going to continue to focus on that. On the ready-mix side, I would just tell you we're going to be extremely disciplined. And if things make sense like Sugar City, we did Sugar City in the fourth quarter. It was a great strategic opportunity for us. It was a very attractive multiple and it filled in a large gap of our service area in the Northern California market. Those opportunities we'll continue to look at, but I would anticipate us levering up for a heavily concrete contributing business, unless strategically, we had a lot of pull-through with aggregates or some other benefit there.

Stanley Elliott -- Stifel -- Analyst

Would you think about -- the past energy market had always been a big competitor for drivers. And look, commodity prices are starting to pick back up, we'll see what happens with activity levels, but is that a concern that some of the energy firms try to poach some of your drivers to tip in, you guys have been supporting for all of this period, just curious how you're thinking about the labor component?

Ronnie Pruitt -- President and Chief Executive Officer

Yeah, it's a great question and we've talked about labor in the past. It's interesting to me because one of the markets, obviously our West Texas market is probably our direct impact of energy as West Texas ramps up and down. And overall, West Texas has our lowest turnover rate. And I think a lot of that is that our drivers there are long-term. Our drivers like the consistency. Our drivers like being home every night. And so, I think, overall, we have to take care of our employees the way we've taken care of them, and we're going to continue to focus on taking care of them. And as long as we do that, I think are our problems take care of themselves. There's going to be ebbs and flows in it. So, the positive side of that is when energy is good, demand usually goes up. And then, we might have to fight some labor issues. But I'm willing to do that. I'll trade that for the demand that energy lifts our markets as well.

Stanley Elliott -- Stifel -- Analyst

Yeah, fair enough. Thanks guys. Appreciate it. Best of luck.

Ronnie Pruitt -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Julio Romero with Sidoti & Company. Your line is open.

Julio Romero -- Sidoti & Company -- Analyst

Good morning, Ronnie and John.

Ronnie Pruitt -- President and Chief Executive Officer

Good morning, Julio.

Julio Romero -- Sidoti & Company -- Analyst

Could you break out the ready-mix volume by end market for the quarter with respect to Resi versus infrastructure and C&I?

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

Yeah. So, for the quarter, when you look at the breakdown that we have, I think we are around a 58% for our commercial, what we call our commercial and industrial. We were around 25% for residential and the remainder was that infrastructure. Okay?

Julio Romero -- Sidoti & Company -- Analyst

Okay. So, about more or less in line with the full year break out?

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

Yeah, if we saw strength coming in the commercial sector in the fourth quarter, but, yes, that's correct.

Julio Romero -- Sidoti & Company -- Analyst

Okay. And I guess if -- it sounds like based on your commentary, you do have a good outlook for residential and infrastructure, and if that comprises a greater portion of the overall ready-mix pie in 2021, can you just maybe speak to the impact on the margin in any way in regards to recipe or mixture of the product or to the complexity of those projects in which you'd be shipping product?

Ronnie Pruitt -- President and Chief Executive Officer

Yes, Julio, definitely the -- some of the green projects, some of the complicated projects do drive a higher material margin.

We also -- we've talked about it in the past and which we'll continue as we see ebbs and flows in our markets. Obviously, higher ASPs and mature margins and on our coast, both East and West Coast compared to Texas. And so, as we continue to see the demand in Texas really, really strong, we will see some mix there. But I do think whether it's infrastructure or commercial and even resident. I mean even some of the residential projects that we do, even though they're lower PSI targets, there is some really interesting things we're doing with both our technology as well as some of the chemical makeups that we do for -- more exposed kind. So, a lot of homes here, they have exposed concrete. They want concrete floor. So, what do they want? They don't want cracks. And so, when we put crack resistance and these chemicals, we get a lot of value for that. And so, even the residential side. I continue to have a lot of really good momentum on the margin side, on the material margin, and the way we value add, sell, on the chemical side of our business.

Julio Romero -- Sidoti & Company -- Analyst

Okay. And I wanted to ask about the infrastructure outlook for Texas. It sounds like funding for TxDot is solid and healthy and funds for current projects are tagged for many years out. The tax revenues could very well be down in '21 and I got to imagine that that has an impact eventually. So, could you help us understand maybe how and when potentially lower tax revenues could flow through to the funding of projects and more specifically US Concrete?

Ronnie Pruitt -- President and Chief Executive Officer

Yeah, I guess, as John broke out, I mean, infrastructure has not been a big piece of our focus here. The DFW market, which is really when we talk about Texas, it's really heavily focused on the DFW. West Texas is even not a huge infrastructure market for us. And when those infrastructure projects come to those small areas, obviously, we participate very heavily in that.

I think the interesting thing here is as you look at the Metroplex, the growth, there is so many different funding ways. And so, historically, again we've talked about TxDot, the rainy day fund. The rainy day fund is still sitting at above $10 billion. And so, we've got a lot of visibility and confidence in this year's TxDot budgets. But it's really to me more of the alternative ways TxDot looks at financing things, whether that's through toll roads, whether that's through PPPs, I mean the 635 project, there's a lot of private money in that. There is other projects here that are a combination of tolls and public-private. So, again, I think TxDot is very creative. I give them a lot of kudos for meeting the extraordinary population growth that we've experienced here in all these markets. And really when you look at a lot of the infrastructure type work that we do, there's also a lot of that that's controlled by counties and cities and local governments that they've grown so much that the -- and we talk about infrastructures, streets and roads, but you're also talking about utilities and pipelines and more cell towers and all those things that come with that. And at the end of the day, all those things need concrete as well.

And so, I look at this as multiple segments. It's not just the state plan. We need to focus on big interstate or big state highways. It's the cities, the counties, and the local government also saying, ''Man, we got so many people move into the Frisco or McKinney or Plano.'' We got a lot of infrastructure locally that we have to do just to keep up with the traffic demand. And so, it's multiple ways of looking at it. And I'm very confident that the state will continue to find ways to fund the infrastructure

Julio Romero -- Sidoti & Company -- Analyst

Okay. Thanks for taking the questions and best of luck in '21.

Ronnie Pruitt -- President and Chief Executive Officer

Thanks, Buddy.

Operator

[Operator Instructions] Our next question comes from Brent Thielman with DA Davidson. Your line is open.

Brent Thielman -- DA Davidson -- Analyst

Hey, good morning, gentlemen. This is James on for Brent Thielman.

Ronnie Pruitt -- President and Chief Executive Officer

Hey, James.

Brent Thielman -- DA Davidson -- Analyst

So, first off, this question was asked a little earlier. I just wanted a little more clarity on it with regards to more than just ready-mix, but how much of your business do you think has shifted toward more of these horizontal build outs; data centers, warehouses, commercial lines and residential build outs versus a less vertically focused project base?

Ronnie Pruitt -- President and Chief Executive Officer

It's hard to say as we break out what we look at as commercial and those things are bucketed into our commercial. But I would say, at the end of the day, I mean, when you look at the concrete factor of the intensity of these large horizontal footprints, whether that be data centers or distribution centers or things of that like, there's just a lot of concrete consumed in those type of projects.

And so, when I look at a project that's -- what we did with Facebook in Fort Worth for data centers there versus a high-rise, you have to probably duplicate seven high rises to equal one of these large data centers. And so, we continue to see that. And I think from a standpoint of the growth in that industry, and when we look at the tech side, there's is going to be greater demand for data centers. And we love that business. It's very not only high volume demand, but it's also very high specification because they have to have moisture targets and they have to have all kinds of different specifications that go into those buildings. So, we not only like the volume but we love the margin potential as well. And they're really now in every one of our markets. I mean it used to be, there were subsets of -- data centers were places that were not as apt to weather events or earthquakes or anything like that. And now we're seeing data centers and every single one of our markets has the data center in play. And so, we like that trend and we want to take advantage of that.

Brent Thielman -- DA Davidson -- Analyst

Okay, thank you. Switching gears a little bit here. But as you guys bring on Black Bear in the next couple of years, are you seeing it more critical to add additional West Coast markets to the platform to support that additional available volume? You need to find some other outlets for that volume beyond what you currently have.

Ronnie Pruitt -- President and Chief Executive Officer

Yeah, great question. At the end of the day, I don't think we need to find other markets. We will, and we've talked about our terminal network and we will need to add some terminal capacity. But when we talk about the between the Northern and Southern California market, and really we're talking about Black Bear being a whole different product mix. And so, when you talk about Black Bear being really almost the opposite of Orca. Where Orca is 80 plus percent fine, Black Bear is going to be 80 plus percent core. So, it's really meeting the demand of a highly needed course aggregate in two very large aggregate consuming markets. And I talked about it in my prepared comments, opening up the hot mixed side of the markets for us that we don't currently participate in; base products, other things that Orca can't do because Orca's so focused on the concrete sand side that it gives us more downstream opportunities to broaden the markets from a consumer side, but we talked about last year. We expanded our Long Beach terminal. And so, we've got capacity there to serve the Southern California market. And then, we'll continue to look at and we're strategically looking at things in Northern California as well. But I think from a demand side when we're talking about maximizing the shipload out, which we talked about with 8.7 million metric tons, no, we don't have to go look at other markets to do that.

Brent Thielman -- DA Davidson -- Analyst

Okay, thank you. And last one for me real quick. Did you ever comment on the backlog? Anything regarding ready-mix there?

Ronnie Pruitt -- President and Chief Executive Officer

Yeah. We stopped really talking about backlog. We do talk about our pipeline because with our WMC, CRM, we're measuring so many more things than just backlog because we look at bidding activity with the future projects. We're really trying to get ahead of just a normal everyday backlog because we think that's just -- you just make so many mistakes when you're just measuring things off a backlog. But with our pipeline, we're seeing, and like I said, that's what gives us confidence in the second half. If I was talking about backlog today, I would be saying, yeah, first quarter, second quarter, but what we're seeing is, what we're preparing for is the visibility we have with the pipeline of opportunities coming. That gives us a lot of confidence in the second half of 2020 and continue to meet the margin targets that we've set for the first half.

Brent Thielman -- DA Davidson -- Analyst

Okay, thank you gentlemen.

Ronnie Pruitt -- President and Chief Executive Officer

Thank you.

Operator

Thank you. And I'm currently showing no further questions. I'd like to hand the call back over to Mr. Ronnie Pruitt for closing remarks.

Ronnie Pruitt -- President and Chief Executive Officer

Thank you, Norma. Thank you for your interest in the US Concrete today and we look forward to updating you in May timeframe on our first quarter results. Everybody stay safe and have a great day. Thank you.

Operator

[Operator Closing Remarks].

Duration: 17 minutes

Call participants:

Sharon Ellis -- Vice President of Investor Relations

Ronnie Pruitt -- President and Chief Executive Officer

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

Kathryn Ingram Thompson -- Thompson Research Group -- Analyst

Lawrence Scott Solow -- CJS Securities -- Analyst

Paul Barry Roger -- Exane BNP Paribas -- Analyst

Adam Thalhimer -- Thompson Davis & Co -- Analyst

Trey Grooms -- Stephens -- Analyst

Stanley Elliott -- Stifel -- Analyst

Julio Romero -- Sidoti & Company -- Analyst

Brent Thielman -- DA Davidson -- Analyst

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