BUSINESS COMBINATION

3 Months Ended

Mar. 31, 2020

On February 24, 2020, we acquired all of the equity of Coram Materials Corp. and certain of its affiliates (collectively, "Coram Materials"). Coram Materials is a sand and gravel products provider located on Long Island, New York. This acquisition increased the vertical integration of our New York City operations.

The acquisition of all of the equity of Coram Materials (the "Coram Acquisition") was accounted for as a business combination. We funded the initial cash purchase consideration through borrowings under our Revolving Facility (as defined in Note 7). The combined assets acquired through the Coram Acquisition included an aggregates facility and 330 acres of land, including 180 mining acres with approximately 41.9 million tons of in-place, proven and permitted aggregate reserves and approximately 7.5 million tons of in-place, proven, but unpermitted reserves. To effect this transaction, we incurred $0.5 million of transaction costs, which were included in selling and general administrative expenses in our condensed consolidated statements of operations for the three months ended March 31, 2020.

Our accounting for the Coram Acquisition is preliminary. We expect to record adjustments as we accumulate information needed to estimate the fair value of assets acquired and liabilities assumed, including working capital balances and estimated fair value of property, plant and equipment.

The following table presents the total consideration for the Coram Acquisition and the amounts related to the assets acquired and liabilities assumed based on the estimated fair values as of the acquisition date:



($ in millions)	Coram Materials
Accounts receivable	$	2.0
Inventory	10.0
Other current assets	0.3
Property, plant and equipment	130.9
Total assets acquired	143.2
Current liabilities	0.1
Other long-term liabilities	0.2
Total liabilities assumed	0.3
Total consideration (fair value)⁽¹⁾	$	142.9

(1) Includes $140.2 million in cash for the initial purchase consideration, fair value deferred consideration of $1.7 million, a trade working capital payable of $1.6 million, less a $0.6 million settlement of accounts payable owed by the Company to Coram Materials at the acquisition date. The maximum amount of deferred consideration is $2.0 million, payable over 2 years.

Impact of Coram Acquisition

Following the acquisition date and during the three months ended March 31, 2020, we recorded revenue of $1.6 million and an operating loss of $0.2 million in our condensed consolidated statement of operations for the operations associated with the Coram Acquisition. Included in the operating loss was $1.6 million of costs related to the fair value increase in inventory on hand acquired at the acquisition date.

The information presented below reflects the unaudited pro forma combined financial results for the Company, which include and represent our estimate of the first quarter 2020 results of operations as if the Coram Acquisition had been completed on January 1, 2019.



	Three Months Ended March 31,
($ in millions except per share)	2020			2019
Revenue	$	336.5		$	337.0
Net loss attributable to U.S. Concrete	$	(1.6	)	$	(2.6	)

Net loss per share attributable to U.S. Concrete - basic	$	(0.10	)	$	(0.16	)
Net loss per share attributable to U.S. Concrete - diluted	$	(0.10	)	$	(0.16	)

The above pro forma results are unaudited and were prepared based on the historical U.S. GAAP results of the Company and the historical results of Coram Materials, based on data provided by the former owners. These results are not necessarily indicative of what the Company's actual results would have been had the acquisition occurred on January 1, 2019 and do not reflect any operational efficiencies or potential cost savings that may occur as a result of consolidation of the operations.

The unaudited pro forma amounts above reflect the following adjustments:



	Three Months Ended March 31,
($ in millions)	2020			2019
Decrease (increase) in cost of goods sold related to fair value increase in inventory	$	1.6		$	(0.8	)
Increase in depreciation, depletion and amortization expense	(0.9		)	(0.9		)
Exclusion of buyer transaction costs	0.5			—
Exclusion of seller transaction costs	0.3			—
Increase in interest expense	(0.8		)	(1.0		)
Increase in income tax expense	(1.1		)	(0.2		)