U.S. Concrete, Inc. has reported a net income of $6.8 million for the quarter ended June 30, 2007, compared to net income of $7.2 million in the second quarter of 2006.
Net income for the first six months of 2007 was $1.1 million, or $0.03 per diluted share, compared to net income of $4.5 million, or $0.12 per diluted share, for the first six months of 2006.
Revenues in the second quarter of 2007 increased 18.3 percent to $223.2 million, compared to $188.8 million in the second quarter of 2006, reflecting higher sales volumes (including the impact of recently completed acquisitions) and higher ready-mixed concrete average selling prices, partially offset by a decline in precast product sales.
The Company's ready-mixed concrete sales volume in the second quarter of 2007 was approximately 2.01 million cubic yards, up 15.9 percent from 1.73 million cubic yards of ready-mixed concrete sold in the second quarter of 2006. Excluding ready-mixed concrete volumes attributable to the Company's acquired businesses, second quarter 2007 volumes were down approximately 12 percent from the second quarter of 2006. This decline reflects the continued slowdown in residential home construction activity in many of our markets, and the impact of adverse weather conditions, primarily in our north Texas market.
On a same-plant-sales basis, the Company's average sales price per cubic yard of ready-mixed concrete increased approximately 8 percent during the second quarter of 2007, as compared to the second quarter of 2006. Including all volumes, the Company's average sales price per cubic yard of ready-mixed concrete during the second quarter of 2007 was 3.9 percent higher, as compared to the second quarter of 2006, reflecting the impact of the 2006 acquisitions, primarily in its Texas markets, where prices are on average lower than in the Company's other markets. On a sequential quarter basis, the Company's average sales price per cubic yard of ready-mixed concrete increased slightly in the second quarter of 2007.
Revenues in the Company's western precast segment were 11.9% lower in the second quarter of 2007, as compared to the second quarter of 2006, primarily due to the decline in residential construction activity in the Company's northern California and Arizona markets.
Michael W. Harlan, president and chief executive officer of U.S. Concrete, stated, "We were very pleased with our management team's ability to react to very challenging conditions during the second quarter. The severe weather we encountered in our north Texas market, combined with the slowdown in residential construction had a negative impact on our volumes. However, in the face of these pressures, on a year-over-year basis, we were able to realize increases in our average sales price in all of our major markets, and our EBITDA margin expanded approximately 130 basis points over the second quarter of 2006. We remain extremely focused on managing our material spread and improving operating efficiencies for the remainder of the year."
EBITDA was $26.8 million in the second quarter of 2007, up 33.1 percent, compared to EBITDA of $20.1 million in the second quarter of 2006. The Company defines EBITDA as net income (loss) plus the provision (benefit) for income taxes, net interest expense, and noncash goodwill impairments, depreciation, depletion and amortization. EBITDA is a non-GAAP financial measure. For reconciliations of EBITDA, free cash flow and net debt (other non-GAAP financial measures we use in this earnings release) to the most directly comparable GAAP financial measures, please see the attached "Additional Statistics" schedule.
The Company's selling, general and administrative expenses were $17.1 million for the second quarter of 2007, compared to $14.7 million for the second quarter of 2006. As a percentage of revenues, selling, general and administrative expenses were 7.7 percent in the second quarter of 2007, as compared to 7.8 percent in the second quarter of 2006. Selling, general and administrative expenses in the second quarter of 2007 were higher than in the second quarter of 2006, primarily due to higher selling costs and higher professional costs and other administrative costs.
Depreciation, depletion and amortization expense for the second quarter of 2007 was up $3.4 million to $7.9 million, as compared to $4.5 million for the second quarter of 2006, primarily due to additional depreciation and amortization expense related to assets acquired in connection with the Company's recent business acquisitions.
Interest expense for the second quarter of 2007 was up approximately $2.5 million to $7.2 million, compared to $4.7 million for the second quarter of 2006, primarily due to the additional borrowing and assumption of certain indebtedness related to our acquisitions in 2006.
The Company's net cash used by operations for the second quarter of 2007 was $1.4 million, compared to net cash provided by operations of $1.4 million for the second quarter of 2006. The Company's free cash flow (defined as net cash provided by operations less capital expenditures for property, plant and equipment, net of disposals) for the second quarter of 2007 was negative $5.9 million, compared to negative $12.3 million in the second quarter of 2006. Capital expenditures decreased $9.2 million in the second quarter of 2007, as compared to the second quarter of 2006.
The Company's net debt at June 30, 2007 was $313.7 million, up $10.7 million from March 31, 2007. Net debt at June 30, 2007 was comprised of total debt of $321.7 million less, cash and cash equivalents of $8.0 million.
Robert D. Hardy, executive vice president and chief financial officer of U.S. Concrete, states, "Based on our credit facilities that we put into place over the last couple of years, together with the new $25 million credit facility established by our Michigan joint venture this quarter, we should have sufficient liquidity to execute our strategic initiatives going forward, including our existing capital expenditure program and acquiring small to mid-size in-market companies under our acquisition program. As of today, we have over $100 million of availability under our senior secured credit facility and we also expect to generate significant free cash flow in the second half of 2007 based on our outlook for the rest of the year."