U.S. Concrete, Inc.
Q4 2020 Earnings Call Transcript

Published: 24 Feb 2021

[Operator:]

Ladies and gentlemen, thank you for standing by. And welcome to the U.S. Concrete's Fourth Quarter and Full Year 2020 Earnings Conference Call. I'd now like to hand the call over to , Vice President of Investor Relations. Please go ahead.

[Sharon Alice:]

Thank you, operator. Good morning, and welcome to U.S. 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 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 confirm 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.

[Ronnie Pruitt:]

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 quarter's 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 continued to 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-Mixed 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-Mixed volumes down 10% in 2020, we reported improved operating margins, with our Ready-Mixed 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 are sending rebel facility supporting our Metropolitan New York operations resulted in a better than seven times synergistic multiple we announced last February.

[John Kunz:]

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 Ready-Mixed 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 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. Aggregates volumes were up 8.2% compared to the prior year, fourth quarter with Coram and our Texas operations leading the improvement.

[Ronnie Pruitt:]

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 to benefit all of our stakeholders is complemented by our Horizon 2025 goals which we shared during our recent Investor Day. I announced the 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.

[Operator:]

Our first question comes from Kathryn Thompson with Thompson Research Group.

[KathrynThompson:]

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

[RonniePruitt:]

Good morning, Kathryn. I would say only first topic. I think that the COVID impact is still there. Obviously, we've -- we are following the scientists as well as anyone else. And so I think as the year progresses, the sequential improvements will continue. But that's -- that impact is still there, especially around the hotel. And that type of industry, I think, is still going to struggle. With part two of that, I think was M&A, there were 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 part three, on the cements shortages, I would tell you, if you think about the cement shortages and the impact that 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 truck cement further and do things to get cement 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 talked 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.

[KathrynThompson:]

Yes, 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 ground to 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.

[RonniePruitt:]

Yes, it's a good question. And we've talked to a lot of our suppliers, and you've been familiar with the cement industry for a long time. And 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 weather to go down into the 20s and 30s for times, but not in the zero degrees or negative degrees for long periods of time. So I think there is going to be some challenges to get those plants back up. But the good thing to me is that a lot of the plants do have plinker inventory. And so when you think about the Pyro system versus the grinding, I think they'll have the clinker inventory. But from my 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-Mixed business.

[KathrynThompson:]

Okay and then final question for the day, going into 2020 inflation that didn't seem 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? Thanks very much.

[RonniePruitt:]

Sure. Inflation for us is really on our on the variable side, which we could see some headwinds on fuel costs. 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, 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 in those things are going to be put back in place. And so naturally, we've -- we're going to focus on a margin. I think the technology piece of our business with WMC is really 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.

[Operator:]

Our next question comes from Larry Solow with CJS Securities.

[StefanosCrist:]

Good morning. This is Stefanos Crist calling in for Larry. First, could we talk about Ready-Mixed volumes? Volumes were down. Can you 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?

[RonniePruitt:]

Yes, if you think about what we saw in Q4, I think it was -- it followed similar patterns with what we had seen for the majority of the year, obviously, the New York markets were continued to be trading off other than the rest of our markets. And that was normal with the impact of the pandemic. So nothing surprised us, there were no changes in anything dramatically in Q4, with the trends that we had seen. I think what gives me confidence in my prepared comments, I said the second half of the year being more stronger than the first is, isn't -- 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 in both of those lists are in the pipeline or are in our New York markets, and they're in our San Francisco markets and they are mid rise or 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

[StefanosCrist:]

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 M&A pipeline looks like? Any opportunities that you're seeing in the market? And overall, what you're seeing right now?

[RonniePruitt:]

Yes, I mean, we can -- we continue to be very disciplined in our M&A look, I mean, we look at a lot of things. Again, what we 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's competition out there for everything. So I would say, I think the activity in 2021 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 bolt-on opportunities on the Ready-Mixed side, as well as reserves that we already have on the Aggregates side are 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.

[Operator:]

Our next question comes from Paul Roger with Exane BNP Paribas.

[PaulRoger:]

Hi, good afternoon, gents. Good morning, where you are. Maybe we just start just a bit of a follow up on the demand outlook. You talked about heavy non res obviously being quite strong data centers and the likes. Are you seeing any signs of light in the sort of light non res sort of commercial end of the market? And how difficult is that light now? And then also on demand, clearly there's a lot of talk about people moving out of cities back into the suburbs, could that have a meaningful impact as well?

[RonniePruitt:]

Yes, Paul. So on the commercial side and yes, your comments were spot on, we continued 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 the comments we made about the second half of the year being probably 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 of the mid rise, affordability, and the New Jersey market continues to have a lot of strong pipeline opportunities. On the infrastructure side, even though we haven't got an infrastructure bill yet with the outlook of SB1in California, we still have really good funding their tech start is extremely healthy. And we are expecting a very good year out of tech start 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 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 commercial and the infrastructure.

[PaulRoger:]

And also just based on the slight structural trend of people, people moving out of cities, and looking in the rural areas or suburbs, so anything like that, it's not see, it's something that you're seeing an impact of, and now yes, how meaningful could that be?

[RonniePruitt:]

Yes, Paul, I mean we are 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 office is a -- 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 reach the suburbs. And when 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. And 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 and the plant locations, we can capture value on either side of that.

[PaulRoger:]

Yes, that's very clear. So my second question was on co2, obviously, President Biden and some others 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 independent concrete providers. Because obviously, it's harder to work on some product solutions, like cement mixes or novel clinkers and things like that. How well positioned do you think you are if co2 really does get introduced co2 taxes?

[RonniePruitt:]

So Paul, we've been an early adopter of what we talked about with carbon cure, 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 CMS, we've - flash has been one, slag mixes has been another; ground glass, we're using ground glass and mixes I think with our national research lab and 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 I, 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've -- we were an early adopter, and we're going to continue to focus on it.

[Operator:]

Our next question comes from Adam Thalhimer with Thompson Davis & Co.

[AdamThalhimer:]

Hey, good morning, guys. Congrats on a solid Q4. I wanted to dig into the 202 outlook a little bit, is the -- you talked about Ready-Mixed volumes last year down double digits, Aggregates up double digits, is that trend going to continue but in a less dramatic way, I guess you would say maybe low single digits versus teens?

[RonniePruitt:]

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 on my phone that I can click on and look at all of our volumes across all of our footprint. And what today's February the 24th, I clicked on the app this morning. And I do it every morning. And if I would have not known it was February, the 24th, I would have thought it was a May or June, type of volume today. Now a lot of that's 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'd 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 no 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. What was happening in March when the pandemic hit what's shut down? And so I still see the opportunity there that I think we can see single digit improvement in volumes on Ready-Mixed for the year, and I'm still confident enough.

[AdamThalhimer:]

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 above flat segment level margins is what I'm kind of coming up with, which possibly makes sense and Ready-Mixed. I'm not sure about that. But then in Aggregates you guys had 100 basis points of EBITDA margin improvement in 2020. How do you see that shaken out in 2021?

[RonniePruitt:]

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 February of last year, higher ASP, 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 little lift last year, which was a very good comp force last year, this year will be a full year of Coram and as we start copying that to 10 or 11 months, 10 months, comp last year, it'll be more normalized. I would say there's 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 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 are opportunities there that we'll be able to capture the value of that. Material margin, I think it's an opportunity as well. We talked about cement could be a challenge. If cement is a challenge, I think that'll be an opportunity to increase our ASP on the Ready-Mixed 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, you comps against in our space.

[Operator:]

Our next question comes from Trey Grooms with Stephens.

[TreyGrooms:]

Hey, good morning. So really a few for me here just well, first, I want to touch on maybe, again, kind of on the guide. Would that to that kind of ballpark of $200 million and EBITDA. John, I mean as 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?

[JohnKunz:]

Yes. 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 benefit for us as well. And then CapEx, our CapEx came in at about $24 million, our guide is higher, and it's in the $40 million to 50 million ranges. So with that said you're going to see a little bit of a pullback from that 158 number in light of those factors.

[TreyGrooms:]

Okay. Yes. And thank you for bringing up the tax, the cash tax difference. That's important than something I was in 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?

[RonniePruitt:]

As far as volume goes?

[TreyGrooms:]

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

[RonniePruitt:]

I would that in the quarter, obviously, as great as operation is 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 there was a more of an impact on our Texas operations. We had a 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 in our Texas Aggregates in Amarillo, along with our existing Ag grid operations, I would say Texas had a greater influence on that. But Coram still, obviously, with any shipment that 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.

[TreyGrooms:]

All right, that's helpful. Thanks, Ronnie. And then I guess the 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 percent of sales last year with some of the moving pieces. And as far as looking out into 2021, John is there a good run rate we should be thinking about there?

[JohnKunz:]

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

[Operator:]

Our next question comes from Stanley Elliott with Stifel.

[StanleyElliott:]

Hey, good morning, guys. Thank you all for taking the question and nice finish to a challenging year for sure. 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 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?

[RonniePruitt:]

Yes, 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 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 the, our focus on Aggregates, it's, I mean you know this market, and 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 Shotmeyer we were able to successfully get approvals at Hamburg, we added reserves that are other New Jersey, Kori 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-Mixed 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 that Northern California market, those opportunities we'll continue to look at. But I wouldn't 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.

[StanleyElliott:]

And would you think about the past energy markets 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 have tried to poach some of your drivers to chip in, you guys have been supporting for all of this period? Just curious how you're thinking about the labor component?

[RonniePruitt:]

Yes, it's a great question. And we're talking 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, drivers like the consistency, 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, we're going to continue to focus on taking care of them. And as long as we do that, I think 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 for -- I'll trade that for the demand that energy lifts our markets as well.

[Operator:]

Our next question comes from Julio Romero with Sidoti & Company.

[JulioRomero:]

Good morning, Ronnie and John. Could you break out the Ready-Mixed volume by end market for the quarter with respect to resi versus infrastructure and C&I?

[JohnKunz:]

Yes, so for the quarter when you look at the breakdown that we have, I think we were around a 58% for our commercial, what we call our commercial and an industrial. We were on 25% for residential and the remainder was that infrastructure bucket.

[JulioRomero:]

Okay, so about more or less in line with the full year breakout.

[JohnKunz:]

Yes, I said we saw strength coming in that commercial sector in the fourth quarter, but yes, that's correct.

[JulioRomero:]

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-Mixed pie in 2021. Can you just maybe speak to the impact on the margin in any way in regards to the recipe or mixture of the product, or to the complexity of those projects in which you'd be shipping product?

[RonniePruitt:]

Yes Julio, definitely the some of the green projects, some of the complicated projects to drive a higher material margin. We also -- we've talked about in the past, and which we will continue as we see ebbs and flows in our markets, obviously, higher ASP is a 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 residence, I mean, some of the residential projects that we do even though they're lower PSI targets. There are some really interesting things we're doing with both our technology as well as some of the chemical make ups that we do for more exposed concrete. So a lot of homes here, they have exposed concrete, they want concrete floors, so what do they -- 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 and the material margin and the way we value add, so on the chemical side of our business.

[JulioRomero:]

Okay. And I wanted to ask about the infrastructure outlook for Texas, it sounds like funding is solid and healthy. And funds for current projects are tagged for many years out. But tax revenues could very well be down in 2021. And I got to imagine that has an impact eventually. So could you help us understand maybe how and when potentially lower tax revenues could flow through to funding of projects and more specifically, US Concrete?

[RonniePruitt:]

Yes 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 force. When those infrastructure projects come to those smaller areas, obviously, we participate very heavily in that. I think the interesting thing here is as you look at the Metroplex, the growth, there's so many different funding ways. And so, historically, again, we've talked about tech start, the Rainy Day Fund and Rainy Day Fund still sitting at above $10 billion. And so we've got a lot of visibility and confidence in this year's tax budgets. But it's really to me more of the alternative ways that tech start 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 are other projects here that are a combination of tools and public private. So again, I think tech start is a 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 talked about infrastructure is 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 thing, we need to focus on big interstate or big state highways, it's the cities, the counties and the local governments also saying, man, we got so many people moving to Frisco or McKinney or Plano or 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.

[Operator:]

Our next question comes from Zane Karimi with DA Davidson.

[ZaneKarimi:]

Hey, good morning gentlemen. This is Zane on for Brent Thielman. 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-Mixed, but how much of your business do you think is shifted towards more of these horizontal build out data centers warehouses commercial lines, residential build out, versus a less vertically focused project base.

[RonniePruitt:]

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 and for data centers there, versus a high rise you'd 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 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 they 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 a data center play. And so we like that trend, and we want to take advantage of them.

[ZaneKarimi:]

Okay, thank you and 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? And do you need to find some other outlets for that volume beyond what you currently have?

[RonniePruitt:]

Yes, great question. And at the end of the day I don't think we need to find other markets, we will. And we 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 coarse. So it's really meeting the demand of a high needed coarse aggregate in two very large aggregate consuming markets. And I talked about in my prepared comments opening up the hot mix side of the markets for us that we don't currently participate in base products, other things that Orca can't do, because Orca is 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.

[ZaneKarimi:]

Okay, thank you. Last one for me real quick. Did you have comment on the backlog? Anything regarding Ready-Mixed there?

[RonniePruitt:]

Yes, 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 future projects. We were really trying to get ahead of just a normal everyday backlog because we think that you just make so many mistakes when you're just measuring things off a backlog, but with our pipeline we are 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 yes, 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.

[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:]

Thank you, Norma. Thank you for your interest in 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:]

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.