Stock Preacher

U.S. Concrete Inc. (NASDAQ: RMIX)

U.S. Concrete Inc. (RMIX) is a producer of ready-mixed concrete, precast concrete products and concrete-related products in select markets in the United States. The Company operates its business through its ready-mixed concrete and concrete-related products segment, and its precast products concrete segment.

The Ready-Mixed Concrete and Concrete-Related Products segment engages in the formulation, preparation, and delivery of ready-mixed concrete to the job sites of its customers, as well as provides services, including the formulation of mixtures for specific design uses, onsite and lab-based product quality control, and customized delivery programs. This segment also engages in the mining and sale of aggregates and the resale of building materials primarily to its ready-mixed concrete customers. Its products include ready-mixed concrete; stone, sand and gravel aggregates; building materials, such as rebar concrete block, wire mesh, color additives, curing compounds, grouts and wooden forms; concrete masonry; and other products and tools used in the construction industry. The Precast Concrete Products segment produces and sells precast concrete products, including precast concrete structures, such as utility vaults, manholes and other wastewater management products, specialty engineered structures, curb-inlets, catch basins, retaining and other wall systems, custom designed architectural products and other precast concrete products.

As of March 12, 2009, the Company had 132 fixed and 12 portable ready-mixed concrete plants, seven precast concrete plants, one concrete block plant and seven producing aggregates facilities (including 27 fixed ready-mixed concrete plants and one masonry block plant operated by its 60%-owned Michigan subsidiary). The Company principally operates in Texas, California, New Jersey, New York and Michigan. Its customers include contractors in commercial and industrial construction, residential construction, street and highway construction, and other public works and infrastructure. In November 2008, the Company acquired a ready-mixed concrete plant and related inventory in Brooklyn, New York. In January 2008, the Company acquired a ready-mixed concrete operation in Staten Island, New York.

The Company was founded in 1948 and is based in Houston, Texas.

Share Statistics (9-Dec-09)			FY 2007	FY 2008	% Chg	Q3 2008	Q3 2009	% Chg
Symbol	RMIX	Revenue, $Mn	803.8M	754.3M	6.2%	212.8M	153.6M	29.2%
Current price	$1.13	Gross marg.	17.4%	15.2%	12.6%	17.2%	n/a	n/a
52wk Range:	$0.64-4.49	Oper. margin	-5.1%	-17.3%	241.2%	4.4%	n/a	n/a
Avg Vol (3m):	466,245	Net margin	-8.6%	-17.5%	103.5%	0.8%	n/a	n/a
Market Cap.	42.2M
Dil. Shares Outst.	37.3M	EPS, $	-1.67	-3.47	107.8%	0.04	-1.60	4100%

Source: Reuters.com, SEC Filings.

Financial Summary

Revenues in the third quarter of 2009 decreased 27.8% to $153.6 million, compared to $212.8 million in the third quarter of 2008, reflecting lower ready-mixed concrete sales volumes and lower precast concrete products revenue. This decline was the result of the continued decrease in demand for the Company’s products due to the significant slowdown in construction activity in U.S. markets due to the recession. The Company’s ready-mixed concrete and concrete-related products revenues for the third quarter of 2009 were $142.0 million, a decline of 28.4% compared to the third quarter of 2008. Ready-mixed concrete sales volume in the third quarter of 2009 was approximately 1.31 million cubic yards, down 29.1% from 1.85 million cubic yards of ready-mixed concrete sold in the third quarter of 2008. On a same-plant-sales basis, third-quarter 2009 volumes were down approximately 30.3% from the third quarter of 2008, with volume declines in each of the Company’s major markets. The primary reason for the decline in volume continues to be the depressed economic conditions in the U.S. construction industry. The Company’s consolidated average sales price per cubic yard of ready-mixed concrete increased 1.3% during the third quarter of 2009, as compared to the third quarter of 2008. Increased pricing in certain markets was partially offset by lower prices in certain of the Company’s other markets. On a sequential quarter basis, the Company’s average sales price per cubic yard of ready-mixed concrete increased 0.9% in the third quarter of 2009 from the second quarter of 2009. However, the Company began to see some downward pressure on product pricing, in certain markets, beginning in the second quarter of 2009. REMIX anticipates that pricing will continue to be affected by the recessionary conditions for the remainder of 2009 and into 2010. Revenues in the Company’s precast concrete products segment were $15.6 million for the three months ended September 30, 2009, a decrease of $3.6 million, or 18.9%, from the corresponding period in 2008. The Company’s third-quarter 2009 precast concrete products revenues were down as a result of the continued downturn in residential construction in the Company’s Northern California and Phoenix, Arizona markets and lower commercial construction activity in the mid-Atlantic market. Adjusted earnings before interest, income taxes, depreciation and amortization (“EBITDA”) was $12.5 million in the third quarter of 2009, compared to $17.6 million in the third quarter of 2008. As a percentage of revenue, adjusted EBITDA for the third quarter of 2009 was 8.1%, compared to 8.3% in the third quarter of 2008. Adjusted EBITDA for the third quarter of 2009 was lower than the comparable prior-year period, primarily due to reduced profits resulting from lower ready-mixed concrete sales volume and lower precast revenue, partially offset by cost reductions realized by the Company.

Financial Strength (9-Dec-2009)	Company	Industry	Sector	S&P 500
Quick Ratio (MRQ)	1.20	0.98	1.04	0.90
Current Ratio (MRQ)	1.50	1.32	1.65	1.06
Long-Term Debt to Equity (MRQ)	520.05	73.50	24.80	125.93
Total Debt to Equity (MRQ)	539.11	114.66	39.16	192.90

Source: Reuters.com, SEC Filings.

Analyst Consensus

Buy

Outperform

Hold

Underperform

Sell

No Opinion

This is the consensus forecast among 6 polled investment analysts. Against the U.S. Concrete Inc. company.

Analyst Detail	Buy	Outperform	Hold	Underperform	Sell	No Opinion
Latest	0	0	5	0	1	0
4 weeks ago	0	0	5	0	1	0
2 months ago	0	0	5	0	1	0
3 months ago	0	0	5	0	1	0
Last year	0	0	3	1	1	0

The one analyst offering a 12-month price target expects RMIX share price to fall to 0.65 in the next year from the last price of 1.19.

Source: www.ft.com

	# of Estimates	Mean	High	Low	1 Year Ago
SALES (in millions)
Quarter Ending Dec-09	4	124.24	125.50	123.20	161.08
Quarter Ending Mar-10	3	100.49	109.60	93.48	–
Year Ending Dec-09	4	535.47	539.00	526.50	677.97
Year Ending Dec-10	4	512.89	533.50	498.40	–
EARNINGS (per share)
Quarter Ending Dec-09	6	-0.29	-0.18	-0.40	-0.07
Quarter Ending Mar-10	5	-0.30	-0.22	-0.44	–
Year Ending Dec-09	6	-1.04	-0.64	-2.26	-0.14
Year Ending Dec-10	6	-0.71	-0.56	-1.15	0.12
LT Growth Rate (%)	1	-42.30	-42.30	-42.30	–

Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=RMIX.W

Investment Highlights

RMIX announced in mid-November that it has won the 2009 GreenSite Award in the Institutional category for outstanding sustainability practices in concrete construction, an award bestowed by The Concrete Producer, a Hanley Wood Business Media Company. The award was for the production of environmentally-friendly concrete in the construction of The California Academy of Sciences building in San Francisco, California. Environmentally-friendly technologies and sustainability are becoming crucial building practices in the competitive world of concrete construction. To recognize innovative contributions to green building, Concrete Construction Magazine and The Concrete Producer Magazine created a new award: GreenSite Project of the Year. The California Academy of Sciences is one of the largest and most renowned institutions of natural history, science and culture in the world. Sustainability and conservation have long been a part of the Academy’s history, and this innovative new building serves as a tangible example of environmentally superior construction at the forefront of sustainability design, receiving Platinum certification under the U.S. Green Building Council’s LEED program. Environmentally-friendly concrete formed an integral part of the building’s construction and ongoing sustainable system. San Francisco-based Central Concrete Supply Co. Inc., a subsidiary of U.S. Concrete Inc., provided approximately 35,000 cubic yards of concrete, utilizing its environmentally-friendly technology (EF Technology™) concrete mixes.

RMIX in early November announced that its board of directors has adopted a Section 382 Stockholder Rights Plan designed to protect stockholder value by preserving the value of certain deferred tax assets of the Company primarily associated with new operating loss carryforwards under Section 382 of the Internal Revenue Code.

The Company’s ability to use its net operating losses and other tax benefits could be substantially reduced if an “ownership change” under Section 382 were to occur. An “ownership change” would occur if stockholders that own (or are deemed to own) at least 5% or more of the Company’s outstanding stock increase their cumulative ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. The Rights Plan was adopted to reduce the likelihood of an unintended “ownership change” occurring as a result of ordinary buying and selling of the Company’s common shares.

Similar plans have been adopted by a number of companies in the construction and homebuilding industry over the past year. RMIX believes the Rights Plan serves the interests of its stockholders by attempting to protect the Company’s ability to use its deferred tax assets to offset tax liabilities in the future. The Rights Plan was not adopted as an anti-takeover measure and, once the deferred tax assets have been substantially realized, the board of directors intends to terminate the Rights Plan.

The Plan entails a dividend of one Right for each outstanding share of the Company’s Common Stock. Each Right will entitle the holder to buy one one-hundredth of a share of a new Series A Junior Participating Preferred Stock, for an exercise price of $10.00. Each one one-hundredth of a share of such preferred stock would be essentially the economic equivalent of a share of the Company’s Common Stock. The Rights will trade with the Company’s Common Stock until exercisable. The Rights will not be exercisable until 10 days following a public announcement that a person or group has acquired 4.9% of the Company’s Common Stock or until ten business days after a person or group begins a tender offer that would result in ownership of 4.9% of the Company’s Common Stock, subject to certain extensions by the Board.

Source: http://www.us-concrete.com/default.asp

Technical Analysis

Source: http://stockcharts.com

RMIX is below its 50-day moving average. This bearish sign is even more significant because the moving average is also trending lower.

RMIX’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, RMIX is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.

RMIX’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below 0, which suggests that the underlying moving averages are bearish.

Comparative Analysis

Company Name	Ticker	Price per	Mrkt. Cap.	P/E		P/S
Dec-09-2009	symbol	Share, $	$ Mn	2009	2010	2009	2010
CEMEX, S.A.B. de C.V	CX	10.79	10.36B	n/a	n/a	0.59	n/a
Texas Industries Inc.	TXI	34.11	946.11M	n/a	n/a	1.43	n/a
Eagle Materials Inc.	EXP	26.98	1.18B	33.31	n/a	2.59	n/a
Raw Materials Median			4.16B	n/a	n/a	1.53	n/a
U.S. Concrete Inc.	RMIX	1.13	42.2M	n/a	n/a	0.08	n/a

Source: Thomson Financial

Insider Trading Activity

NET SHARES PURCHASE ACTIVITY Inside Purchases – Last 6 Months
	Shares	Transaction
Purchases	n/a	0
Sales	n/a	0
Net Shares Purchased (Sold)	n/a	0
Total Insider Shares Held	6.33M	n/a
% Net Shares Purchased (Sold)	0.0%	n/a

Net Institutional Purchases — Prior Qtr to Latest Qtr
	Shares
Net Shares Purchased (Sold)	(7,224,890)
% Change in Institutional Shares Held	(65.7%)

Source: Yahoo Finance

Report Disclaimer

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority.  We are neither licensed nor qualified to provide investment advice.

The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice.  The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities.  We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company.  An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report.  Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

Any individual who chooses to invest in any securities should do so with caution.  Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested.  Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.  Subscribers are cautioned not to place undue reliance upon these forward looking statements.  These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated.  Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC.  You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

We are committed to providing factual information on the companies that are profiled.  However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions.  We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so.  Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.

Popularity: 1% [?]