Ladies and gentlemen, thank you for standing by, and welcome to the U.S. Concrete Incorporated Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference may be recorded. I would like to hand the conference over to your speaker today Mr. John Kunz, Senior Vice President and Chief Financial Officer. Thank you. Please go ahead.

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

Thank you, John. Good morning, everyone. And thank you for joining our third quarter earnings call. I hope that you and your families are continuing to stay safe and healthy. Today, I'm going to discuss our record-setting results for the quarter and share perspective on how the evolving construction environment is shaping longer-term demand for our products. Building on our excellent second quarter results, we continue this momentum into the third quarter with record-setting financial performance. As we will detail today, we believe our business is well-positioned to continue to deliver strong financial results, both in the near and long term. The transformation we've undertaken over the past several years to reshape our portfolio, and capabilities for growth and improve margins have proven critical in enabling us to respond to the changing dynamics in the current environment. Our diverse portfolio, commitment to innovation, and agile culture have allowed us to respond to the construction demand in the markets that we serve, and position us to deliver meaningful financial results into the future. Our performance reflects the great work our team has accomplished during these challenging times. In particular, I want to commend the hard-working U.S. Concrete team members within all of our operating regions. Their extraordinary efforts in keeping safe, while simultaneously focusing on our operating performances have made it possible for us to continue to meet the demands of our communities, customers, and projects, and I could not be more proud of them. Shifting to the business, we generated $374.2 million of revenue during the third quarter of 2020, as referenced on Slide 3 in our earnings presentation. On a consolidated basis, we saw geographical shift to more normal levels, with each region representing 34% of total revenues for the quarter. The central region was 35% and 31% in the West region, where results were impacted by a constrained cement supply in Northern California. During the quarter, we recorded sequential increases over the second quarter in segments and total sales, as well as increases in segment and total adjusted EBITDA. Consolidated adjusted EBITDA margins were 17.1% for the third quarter as we continue to drive significant margin growth in each of our operating segments. Our execution in the quarter enabled us to exceed our EBITDA expectations. This is in large part due to aggressive management of expenses, asset utilization, and process reengineering of our existing platform, as well as gains from our acquisition of Coram earlier this year. We are pleased to announce the U.S. Concrete aggregate operations had record-setting quarterly revenue of $64 million, which is a 20% increase over last year's third quarter with almost 3.7 million tons sold. Our adjusted EBITDA for aggregates operations was $27 million during the third quarter, as we expanded our adjusted EBITDA margin, net of freight to 54% as compared to 42% for last year's third quarter. Continuing the trend from our second quarter, our aggregate segment generated 37% of total reported segment adjusted EBITDA revenue, volume, and EBITDA for aggregate operations were up in virtually every market year-over-year and quarter-over-quarter as we saw strong demand for our product and a significant increase in production. We continue to increase the internal consumption of aggregates, which increased to 41% on a(last twelve months) basis through September. Our financial performance for our aggregate segment set historical records during the quarter for revenue, adjusted EBITDA, and adjusted EBITDA margins. Strengthening our aggregate portfolio and our operations has been an area of focus for us, and we're seeing the fruits of our labor. Our ready-mix concrete segment delivered 2.2 million cubic yards of concrete during the quarter, generating $313 million of revenue, and $46 million of adjusted EBITDA. Benefiting from the markets in which we operate, our consolidated ready-mix concrete was up sequentially over the second quarter, and up over the third quarter of 2019. Even with the fluctuations in volume across many of our markets, our ready-mix operating teams delivered solid adjusted EBITDA margins of 14.7%, which is 20 basis points higher than last year's third quarter, and up from 14% for the second quarter of 2020. Our robust performance has also helped us to deleverage at a faster pace. As John will outline later, our net leverage ratio decreased to 3.65 times at September 30 due to adjusted free cash flow generated during the quarter. Maintaining reasonable leverage metrics across the cycle is a strategic goal of ours, and we are proud of the growth of our company over the past decade. Taking advantage of an attractive interest rate environment, we refinanced $400 million of our senior unsecured notes in September, which reduced our annual interest expense by 1.25% or $5 million annually. We are committed to long-term growth, which requires strategically investing in our operations, because we remain confident in the long-term outlook of our business. Even during these challenging times, we remain committed to delivering innovation to our customers and their projects. Our growth is rooted in innovation with strategic acquisitions that complement our historical operating portfolio. And we are driving transformation and efficiencies in our business as discussed in detail during our second quarter call. For example, we've applied the proven strategy to Coram, the sand and gravel operation we acquired back in February of this year. To illustrate, we continue to pursue the Blackberry expansion to the back office consolidation efforts of our business, as well as gaining efficiencies with dispatching of concrete with 'Where's my concrete', our proprietary technology application. Our National Research Laboratory was also highlighted this August in a New York Times article about industry innovation, and the adoption of our technology such as carbon cure for producing low-emission concrete with a reduced carbon footprint. I would now like to turn the call over to John for additional financial commentary.

Thanks, Ronnie. As mentioned, we are very pleased with our record-setting financial performance. Our third quarter adjusted EBITDA was $63.9 million, the highest we have ever reported for any quarter, compared to $62 million in the prior year quarter. Our aggregates and ready-mix business continue to show their resiliency during the quarter as demonstrated by their outstanding results in light of the economic climate. Our aggregate volumes were up 17.6% compared to the prior year third quarter, driven primarily by the addition of Coram with our base aggregates business up marginally. Ready-mix volume was off 13.2%, compared to the prior year third quarter, with each of our regions experiencing some reduced levels of demand. Our consolidated revenue for the quarter was $374 million, an 8.5% decline compared to the prior year third quarter. Our cost containment efforts continue to result in adjusted EBITDA margin improvement for both businesses, with aggregates adjusted EBITDA margins improving to 42.1% led by Coram and Polaris, and ready-mix adjusted EBITDA margins improving to 14.7%. These improvements resulted in a consolidated EBITDA margin of 17.1% for the quarter. We were able to achieve higher margins through continued cost containment actions, more efficient utilization of our plants and equipment, and the increasing use of technology-based data-driven decision-making. Our material margin increased by 90 basis points to 48.4%, compared to the prior year quarter. Our EBITDA adjustments for the quarter relate primarily to stock compensation, contingent consideration of pension liability settlement, realignment initiatives, and purchase accounting adjustments for Coram inventory. Our SG&A was 8.6% of revenue for the third quarter of 2020, compared to 7.8% in the prior year quarter. Adjusted SG&A excluding stock compensation, acquisition-related costs, and realignment initiatives was 7.3% of revenue in the third quarter, compared to 6.3% in the prior year quarter, reflecting our cost control efforts offset by higher incentive compensation expense and the impact of lower revenue. Based on the company's strong performance in 2020, it is expected that incentive compensation will be earned at levels above the nominal amounts awarded in 2019, resulting in higher expense during the quarter. We recognized $10.2 million of tax benefits in the quarter relating to the finalization of the interest limitation provisions contained in the Tax Cuts and Jobs Act and the net operating loss carry-back provisions of the CARES Act. For 2020, we expect our adjusted effective tax rate to be approximately 27% and our interest expense to be in the $44 million to $46 million range. As a result of our September notes offering, we expect to see a reduction in our quarterly interest expense of approximately $1.3 million or $5 million annually on a prospective run-rate basis. However, in Q4, our expense will include one-time costs of approximately $12.5 million of fees and unamortized debt issuance costs associated with the October redemption, which are not included in the previously mentioned full-year range. Moving on to our cash flow and balance sheet. During the third quarter, we generated $61.3 million of cash provided by our operating activities, $9.8 million more than in the prior year quarter. We generated $58.6 million of adjusted free cash flow during the third quarter, compared to $41.5 million in the prior year quarter. Our operating performance and cost containment efforts during the quarter contributed to this improvement. Our working capital management activities added $1.2 million to these results during the quarter. For the nine-month period, our free cash flow was $129 million, exceeding our 12-month target of $100 million. Our cash flow performance allowed us to reduce our net debt position by $44.1 million as of September 30, compared to the June quarter end, resulting in $697.3 million of net debt at the end of the quarter. The increase in our trailing 12 months adjusted EBITDA along with the lower net debt position reduced our leverage to 3.65 times or about a quarter turn compared to our June 30 leverage ratio. We are also very proud to report that we have reduced our leverage by half a turn in the six months since the completion of our acquisition of Coram and are back at levels close to where we ended the year. As of September 30, we had total liquidity of $826 million, including $406 million of cash and cash equivalents, $240 million of availability under our revolver plus $179.6 million of availability under our delayed draw term loan. Our liquidity includes $413 million, which was used to pay principal and redemption premiums on our six and three-eighths notes in early October. During the third quarter, we invested approximately $3.3 million in capital expenditures compared to $10.5 million for the same period last year. For the full year 2020, we are planning for capital expenditures around $30 million. While we continue to manage through these challenging times, we are very pleased with our record results. These results would not be possible without the dedication and effort of our employees and management team to control costs and leverage our technology to improve the operating efficiency of the business, leading to outstanding performance in this challenging environment. With that, I will turn the call over to Ronnie.

Thanks, John. I'd now like to address our perspective on the evolving environment and what we see going forward. While we hope the most acute and severe impact of COVID-19 is behind us, we believe that recent shifts in behavior coupled with macroeconomic trends suggest the residential, commercial, and even the infrastructure markets will be evolving with the changing work and lifestyle trends. During the third quarter, we observed a 6% shift from commercial work to residential work, respectively representing 55% and 27% of our total projects, with infrastructure capturing the balance of 18%. We continue to monitor the efforts in Washington with respect to the federal infrastructure bill, and are also hopeful that one will be passed by Congress. We believe that U.S. Concrete is uniquely positioned in the markets that we serve to benefit from any infrastructure bill and from these work and lifestyle shifts, including the current shift to suburban markets due to our geographical footprint, our portfolio of aggregates and ready-mix assets, our experience, our relationships, and our ability to support the technical standards of the sometimes complex projects. While we’re pleased with our recent performance, we want to emphasize that our focus is on the future market conditions, opportunities, and strategies that are required to optimize performance and shareholder value. Fortunately, the markets we serve provide some natural diversification and hedge on market-specific issues. Naturally, Texas and New York and New Jersey metropolitan areas all have different market fundamentals. Even San Francisco has different attributes when compared to San Jose. Like many other companies, we are consistently analyzing all data, feedback, and information so that we can best assess what is the new normal, especially in our urban markets as you know, opinions vary greatly. And we also must be cognizant that prior to the pandemic, the U.S. economy was well into its near 10-year expansion. At this point, we are cautiously optimistic regarding next year's conditions in each of our markets. Although we do not believe it is possible to offer specific quantifiable judgments for volume of activities, what we are confident in, however, is that based on our success in the past two quarters of unprecedented uncertainty in our country, our team will be able to manage the business effectively and profitably in a range of future scenarios. Our team has proven its ability to adapt to a variety of scenarios in a rapidly changing environment. We continue to see long-term demand for aggregates and concrete, and we will continue to invest in our platform. Our proprietary system 'Where’s my concrete' empowers us to make informed decisions using data, interact with our customers, and gain insights into and manage our pipeline with a CRM. The major lesson for us for 2020 is that significant percentages of our expenses are variable or highly variable. We built our company to take up costs during changes in an economic cycle. Our results and margins over the past two quarters support this thesis, and we believe it is an important dynamic in evaluating our business model. Based on the normal seasonality our industry experiences in the fourth quarter, we're projecting our fourth quarter adjusted EBITDA to be between $40 million and $45 million, with full year 2020 adjusted EBITDA between $186 million and $191 million, which would surpass the $184 million generated in 2019. As discussed last quarter, every employee at U.S. Concrete is operating with a sense of purpose to deliver durable, long-term results for all of our stakeholders. We set many new financial records during the quarter, including record aggregate revenue, record average adjusted EBITDA, record total adjusted EBITDA, and record adjusted free cash flow generated. We have communicated over the last several quarters that we are focused on managing our operating margins, and the results we have reported today highlight that promise and our performance. We're also pleased to announce a virtual Investor Day with a presentation and conference call scheduled for Thursday morning, November 12. We look forward to your participation during that call and hope it provides fresh insights into the company, our financial performance, our management team, and strategies. With that operator, I would like to open the call up for questions.

Thank you. Our first question comes from Kathryn Thompson with Thompson Research. Your line is now open.

My first focusing on the aggregate segment. What were the primary components for the margin on that side? In particular, how much was driven by lower energy costs versus other structural changes? Really what we're trying to get through is understanding perhaps more one-time and what is more sustainable going forward?

I think Coram was obviously a very big benefit until we're in the margins. When I think about what's sustainable and what's one-time, I think we have lots of benefits around our operating procedures, especially when we think about Coram. It's a very simple process; it's a very easy mining operation. Very similar to Polaris in a way that sand and gravel, it's a low-cost way that we would produce those products. So I think those operating improvements we implemented are very sustainable. Pricing has also been a lift on that, and I think we're just at the front end of what we think our pricing strategies could be, both on the West and East Coast. I'll layer that in with the investments we've made on the central side with MW Ranch, which has been our first full two quarters back-to-back of operating. So, we're still working out the budget for that plant, but that's seen significant improvements in margin as well. All three regions—central, east, and west—contributed to that, so it's not just one area that we've picked up in this one place. So I think those things are very sustainable.

Understanding that California was disrupted by fires and there's a cement shortage in the state due to one plant being down or unable to serve the market. Could you quantify the impact of the California fires on results, even if it's just high level looking at what the top-line impact is, but just the cost of operating? And is that demand just pushed out? And where are you today?

Yes, great question. I think the demand is pushed out. The fires were definitely an impact with rolling power interruptions. But the bigger interruption was the lack of cement supply, which came from one of the plants being shut down permanently. The reaction to that is going to be more imports, and those imports take time. I do think over the next quarter, we'll see a more consistent supply on the cement side, which will help us. On the cost side, other than the unpredictability and pushing out the demand side, I don't think it was a big issue on the cost. But I do think on the demand side, when we said a more normalized distribution of our revenue by region, the West Coast was still impacted by that. So we said 31%—I think normally, we would see a pretty even split of our revenue by region. There is some recovery that we have to do, and I do think those volumes will be pushed into the fourth quarter and first quarter of next year.

And final questions before I hop back in the queue and thank you for answering my questions today. It's just high level, when you look at year-to-date, having the impact of the pandemic on major markets, and you think about in New York, Texas, and California. Where do you see, and they are unable to give specific guidance. But what's the net impact you see to those three regions over, not just next year but say over the next 12 to 24 months?

Yes, great question and we look forward to giving some more insight into that in our Investor Day presentation. But I would say 12 to 24 months out, each region specifically, I think infrastructure plays a big role in all three regions. I think of all the regions that have lacked infrastructure, the Northeast is probably the most dramatic, over the last four to five years of lack of infrastructure spend. Obviously, in Texas, we're seeing a lot of residential and a lot of shift to residential. But we're also seeing infrastructure spending continue, making Texas a more balanced market. In Northern California, the cement shortages have had some impacts, but we've also seen shifts there as well on the residential side and that's where when I talk about the natural hedge of all of our markets, that we have different drivers and our ability to pivot within those markets. I even mentioned that in one quarter we saw a shift from commercial to residential of about a 6% difference. We're a concrete supplier and an aggregate supplier. At the end of the day, whatever the market demand is, we're going to meet that market demand whether that comes as residential, infrastructure, or commercial. We're here to service our market, and we're going to service whatever those demands are. So, I like our footprint and think we're able to pivot to whatever demand there might be.

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

Yes. Good morning. Thank you for taking my question. So obviously, next week is a big week regarding election action. And this is difficult to know how it's going to pan out. Do you have a view on what the different outcomes could mean for U.S. Concrete in the industry, whether it's President Trump or President Biden? Irrespective of who wins next week, if we get a highway bill, is there a risk that you have this sort of ad hoc hit in early 2021 before anything new kicks in and demand is a little bit lackluster on the infrastructure side?

I don't want to predict the outcome of elections. I think we're well-positioned with either outcome that infrastructure is a big need, and infrastructure is a need for our country throughout all of our regions. I'm confident that infrastructure will be a critical need for stimulus, job creation, and economic growth, and both parties realize that. We just have to take a wait-and-see approach.

I think it's quite interesting. Because obviously, Mr. Biden is proposing quite a green agenda. And I think that within his proposal of $1.3 trillion of infrastructure spending, there is a big emphasis on more sustainable products. U.S. Concrete does have a low CO2 product in California. Do you see a situation where the penetration of this type of product may actually increase if there is more focus on the green agenda? And what could that do to margins and pricing if anything?

Yes. Every region is different. It really comes down to the local specifiers, DOTs, and the push for those greener initiatives. Carbon cure is a great product and we're definitely an early adopter of that, and we're going to roll that out into other regions. Flash is also a great recycled product. There are also flash shortages due to taking down coal-fired power plants, which creates more issues. Slag is another product that we use throughout all of our regions. We have lots of initiatives for recycling and are using more recycled aggregates in all of our operations. However, the local DOTs and the local architects and engineers are responsible for specifying those products, and all have different levels of potential margin improvements. We must meet whatever the market demand is, and we've put the technology in place to adapt quickly to that greener wave that's coming. We believe we will be able to meet that demand, no matter what it is.

Gentlemen, next question comes from Trey Grooms with Stephens. Your line is now open.

Nice results and great job navigating a tough environment, especially on the margins. I guess on the 4Q guide, I think I heard was it $40 million to $45 million, did I hear that right? Are you seeing or are you assuming any change in the demand picture baked into that range there? Or is it more kind of the same on the demand front?

I think we've baked in a lot of different scenarios into that number. First, normal seasonality affects our business, and in our markets, obviously, the Northeast can have a wide variety of winter weather, while Texas can be dry or wet. With California, we're trying to bake in a more normal supply side, and that's been our biggest issue there. It's a combination of what we see in our pipeline, and what we believe a normal weather pattern would contribute to that. We've always seen a drop-off in the first quarter because of those normal weather patterns. As of today, we like what we see and believe those results would deliver a very good year for U.S. Concrete.

John, during your prepared comments, I think you mentioned that each region has seen some declines in demand. So, North Texas has been relatively strong. Did you guys notice any change in that market? Or is there any other color you can give around that?

I'll take that, Trey. Ultimately, we continue to see sequential improvements as restrictions were lifted. We talked about this in the second quarter. In the North Texas market, including the entire Texas region, we had a good quarter. I'm very pleased with our results. I don’t want to use weather as an excuse, but in September, we had nine weather days; last year, we had zero weather days in September. Last year in 2019, we had zero weather in September, impacting our volume significantly. I believe the underlying demand in Texas remains strong, and while we may continue to see shifts in volume, overall, we have confidence in the market.

But there is no change in terms of the underlying demand pattern you’ve been seeing there? Overall, it seems like things are still kind of consistent?

Indeed, we have consistent demand cycles, but it will be formed in different ways due to the shifts in segments. With the current trend heavily leaning toward residential, we will witness shifts from previously dominant sectors. We serve a diverse market; hence we still maintain a robust overall demand.

Got it. Thanks for that. John, this one goes back to you. I think you mentioned an increase in incentive costs for 4Q. Is there any more color you can give us around that?

Yes, last year, the incentive compensation numbers paid out were relatively nominal for the year. Our expectation is we will have a payout this year associated with them, requiring us to accrue a higher number of a couple million dollars in expense, more so than what we recognized last year. I can't provide a specific full-year estimate as it will depend on our performance in Q4. Though, I will note that last year’s number was significantly lower than what is anticipated for this year. This situation may also continue as we enter Q4 if we perform well.

I got it. That makes sense. And last one for me, you guys did a great job on free cash flow exceeding your targets. How are you thinking about free cash flow generation going forward, in 4Q and beyond?

Sure. The guidance on Q4 adjusted EBITDA is in the $40 million to $45 million range. Our CapEx guidance is around $30 million, so you have the delta between year-to-date and that guidance as one factor. Additionally, we need to pay premiums on the notes redemption, amounting to an incremental $12 million. We will also have the normal interest expense and that $12 million related to the redemption. You can do the math around that to derive your cash flow number.

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

Nice work in a very tough environment. Could you talk a little bit about some of the things you're learning from the 'Where's my concrete?' application? Any best practices or metrics you can share, whether it’s about job locations or internal improvements derived from the insights gained?

Yes, good morning, Stanley. Great question. As we look at the full integration of 'Where's my concrete?' alongside our CRM and driver app, we're measuring numerous metrics today—job times, in-plant times, and check-in times for drivers. We are capturing a wealth of information that was previously unheard of. More critically, we’re inputting that information into our CRM, enhancing how our sales force quotes jobs in the future. We are now able to quote jobs based on real customer behavior and previous performance metrics, resulting in higher confidence levels in our margin forecasts. We're transitioning from merely focusing on material margin to more complex data-driven decisions ensuring better price setting and scheduling. I’ve noted this in past quarters: We are a very good company at reacting, but we aim to become excellent at predicting. Anticipating future needs will improve our margins and overall business performance.

Then switching gears a bit on the pricing on the ready-mix side. Apologies if you mentioned it, but with California down, Texas doing well, New York sounding good, too. How much of the improvement was due to regional mix? And does the strong residential outlook potentially pose any negatives in terms of your reported price or margin as we look forward?

Certainly, there could be a mix impact. However, I want to emphasize that we implemented pricing increases across all markets. Our pricing has improved in regions, even with the drop in volume in higher-priced markets. We’re witnessing a disciplined pricing environment now, unlike previous years when it was quite erratic. Technology plays a vital role here. Pricing is executed on a daily basis for concrete jobs, allowing us to optimize pricing effectively. Despite fluctuations in regional market dynamics, our material margin and overall EBITDA margins showcase how effectively we are managing. We will continue to push pricing aggressively wherever feasible. Ultimately, our tracked metrics will align better with how our operational strategies yield stronger performance.

Our next question comes from Rohit Seth with Truist Securities. Your line is now open.

I just want to talk a little bit about the shift from urban to suburban. For past cycles, there has been much focus on your urban footprint and a significant amount of your production capacity is in the New York and San Francisco region. How do you position your strategy to run the business in this cycle where there might be a secular trend moving in the opposite direction? Given the capacities you already have, is that enough to sustain the earnings level right now?

That's an excellent point. A lot of our production capacity is mobile, which gives us the flexibility to adapt. For instance, the rural areas surrounding our New Jersey and New York markets remain active. We continue to pour concrete in Manhattan, even with assumptions about shutdowns. Regarding the San Francisco/San Jose market, the past projects have been unpredictable, but we still see plenty of opportunities in the pipeline and residential markets. Our mobile nature allows us to adjust operations accordingly. We still have plenty of plant capacity, and the ability to shift resources allows us to meet demand effectively. I believe we will cover the QT opportunities going forward. I plan to provide further insights into our strategies during our investor day on November 12.

Yet, I still assume you must have your own plant network, correct? Because trucks can only handle a certain distance before concrete goes out of spec?

Exactly, there are transportation limitations. However, considering the distance our plants are from the urban centers, we can easily pivot outward into the suburbs. We are capable of traveling significant distances to fulfill our obligations. Today, our trucks are equipped with technology that allows for modifications on the fly—manipulating mix substances—enabling us to meet customer specifications even during transit. We're doing things dramatically differently than the traditional read-mix industry did even a few years ago. I will detail these operational benefits further at our investor presentation on November 12.

Given all these advancements, do you believe you can effectively compete with smaller operators in neighboring regions? Regarding Polaris, can you provide an update on your expansion plans for Blackbeard and what is expected in 2021 concerning capital expenses required?

Yes, I aim to shed light on our strategic development ahead during the Investor Day on November 12, which I would like to reserve for now. Though, I can re-iterate that our leadership in prior segments continues to open doors to future mergers and acquisitions. We're optimistic about our positioning in the marketplace, and our focus remains directed on these avenues of growth.

Our next question comes from D.A. Davidson. Your line is now open.

I'm working with Brent Thielman today. Question for you about your Coram aggregates business. I'm wondering how your expectations for that company have changed since you acquired it in February.

I don't think our expectations have changed at all. When we acquired that company, it was right at the beginning of the anticipated pandemic. We had done business with that company for a long time. The operation has been critical to New York for a long time, and our expectations were absolutely that it was a very strategic purchase. Nothing throughout this process has changed other than that it's probably been even more strategic through this interruption in different pandemic-related factors. Long term, it’s meeting or exceeding all of our goals.

And then, I'm wondering, are you cultivating a pipeline of potential acquisition candidates right now? Have you observed any more willing sellers since your last earnings call in August?

I would say we will provide in-depth details about our long-term strategy on our November 12 call with investors. However, I do not believe we're actively pursuing cultivation; we are not cold-calling to see if people want to sell. We are presenting our investors with long-term strategic value and maintaining a disciplined approach about future acquisitions. There are numerous opportunities, and we will go into more detail during the upcoming call.

I look forward to that call in a couple of weeks here.

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

Great, thanks. Good morning, Ronnie and John. Congrats on the quarter and your ability to navigate through a tough environment. Can you maybe just break down a little more on the pricing on the aggregate side, nearing 13% increase? What drove this, specifically with Coram? Can you help us?

Yes, Larry, great question. Coram obviously helps greatly, as it is a close supplier. Closer proximity typically leads to higher FOB prices, so Coram has indeed contributed. Additionally, for the first time ever, we exceeded over a million tons of shipments through our Long Beach terminal from Coram, benefiting Southern California pricing as well. The Texas market remains strong, and though Coram has a big contribution, we’ve seen great momentum from all markets. I’m pleased with where we’re at across all regions. As we pursue growth on the aggregate side, this is an expectation that our investors have and aggregates are more disciplined and reliable throughout various economic cycles. Our performance proves that sustainability.

Right, okay. Great. Then similarly, on the ready-mix side. I assume mix mix may have actually impacted your pricing, but you still were able to achieve a 2% year-over-year gain. Was pricing up in all your markets?

Yes, it was up across the board. The headwinds we faced should typically influence ready-mix negatively, but we've avoided it by showing strong pricing improvements in all markets. The discipline within pricing strategies has evolved over the years; the industry has taken strides towards better pricing discipline compared to previous downturns. The integration of technological tools allows us to make smart pricing decisions. So despite regional fluctuations, we continue to manage pricing advantageously.

Anecdotally, can you share any changes in pipeline levels or bidding activity as we look out? While I don't want you to issue specific guidance, has there been any notable changes over the last few months?

It’s interesting; we’re continuously tracking various data points within our pipeline. Our bidding activities are still strong, combined with residential interests booming. However, the transition from bidding to actual business can be slower than expected. We must navigate upcoming months cautiously, particularly amid the pending election outcomes, and see how markets respond moving forward.

Thank you, and I show no further questions in the queue at this time. I'd like to turn the call back to Ronnie Pruitt, President and Chief Executive Officer for any closing remarks.

Thank you for joining our earnings call today. We look forward to your participation in our Investor Day on November 12. Until then, stay safe and be well.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude your program, and you may now disconnect.