U.S. Concrete, Inc. (Nasdaq:USCR) today reported adjusted EBITDA of $26.2 million in the third quarter of 2014, compared to $18.7 million in the third quarter of 2013. Adjusted EBITDA margin, which is adjusted EBITDA as a percentage of revenue, was 13.2% for the third quarter of 2014, compared to 11.2% in the third quarter of 2013. Net income was $13.0 million, or $0.94 per diluted share, for the third quarter of 2014, compared to net loss of $(7.3) million, or $(0.55) per diluted share, in the third quarter of 2013. William J. Sandbrook, President and Chief Executive Officer of U.S. Concrete, stated "We once again delivered outstanding results, while at the same time, making great progress in the execution of our strategic plan.
Organic growth was strong in all regions and both segments of our business. We continue to demonstrate our ability to stay ahead of raw material price increases as our operating margins showed healthy expansion and our year-to-date EBITDA margin of 11.0 percent is at its highest point in the Company's history through three quarters. In August we purchased the assets of two companies in our West Texas market located in Wichita Falls and Burkburnett, TX. The acquisitions included three ready-mixed concrete plants and 24 ready-mixed concrete mixer trucks which will expand and strengthen our presence in the region.
In October we closed two strategic acquisitions for combined cash consideration of $52.6 million, one that will broaden our platform for growth in Texas ready-mix markets and one that will enhance our operating efficiency through increased aggregates distribution in New York City and Long Island. We are very pleased with our operating results, as well as the progress we continue to make in our development strategy, and will remain focused on building on our momentum through the end of the year."
THIRD QUARTER 2014 RESULTS (all comparisons, unless noted, are with the prior year quarter)
Consolidated revenue increased 18.2% to $197.6 million, compared to $167.2 million in the prior year. Revenue from the ready-mixed concrete segment increased $24.3 million, or 16.1%, driven by both volume and pricing. The Company's ready-mixed concrete sales volume was 1.6 million cubic yards, up 9.1% over prior year.
Ready-mixed concrete average sales price per cubic yard increased $6.68, or 6.4%, to $111.15 compared to $104.47 in the prior year. Aggregate products segment revenue increased $5.6 million, or 49.0%, to $17.1 million due to increased sales volume of 412 thousand tons, an improvement of 38.9% over prior year. Consolidated gross profit increased $8.7 million with a 150 basis point expansion in margin year-over-year. Consolidated adjusted EBITDA of $26.2 million, increased $7.5 million with a 200 basis point expansion in margin year-over-year. Ready-mixed concrete adjusted EBITDA of $26.6 million, increased 37.2% with a 230 basis point expansion in margin and a 140 basis point improvement in raw material spread year-over-year. Aggregate products adjusted EBITDA of $4.0 million, increased 29.6% year-over-year.
Selling, general and administrative ("SG&A") expenses were $15.4 million compared to $14.4 million in the prior year. As a percentage of total revenue, SG&A expenses decreased to 7.8%, compared to 8.6% in the prior year. Excluding non-cash stock compensation, severance and acquisition related legal and professional fees, SG&A was 6.9% of total revenue compared to 7.6% in the prior year. During the third quarter of 2014, the Company recorded a $0.1 million non-cash gain related to derivatives. This non-cash gain was comprised of fair value changes in the Company's warrants. This compares to a non-cash loss of $5.5 million during the third quarter of 2013. These changes were due to the increase in the price and changes in volatility of the Company's stock during the third quarters of 2014 and 2013.
The Company's free cash flow in the third quarter of 2014 was $15.2 million, compared to $11.8 million in the prior year. The increase in free cash flow was due to improved financial performance and related cash flow from operations offset by $4.0 million of increased capital expenditures over the prior year. The increase in capital expenditures was due to higher spending on mixer trucks, an aggregate plant upgrade in New Jersey and ready-mix plant improvements, all to support the growing demand in our markets. The Company's net debt at September 30, 2014 was $125.9 million, up $24.5 million from December 31, 2013. The increase in net debt was due to a reduction in cash and cash equivalents and additional debt incurred during the third quarter of 2014 for the financing of mixer truck purchases.
The decrease in cash and cash equivalents for the nine months ended September 30, 2014 was primarily due to increased capital expenditures, the green-fielding of the Red River sand and gravel operation and the acquisition of five ready-mixed concrete plants in west Texas. In addition, the Company purchased $4.8 million of its common stock in accordance with the share repurchase program authorized during the second quarter of 2014. Cash and cash equivalents increased $7.3 million during the third quarter of 2014. Net debt at September 30, 2014 was comprised of total debt of $220.1 million, less cash and cash equivalents of $94.2 million. Ready-mixed backlog at the end of the third quarter of 2014 was approximately 4.4 million cubic yards, up 16.4% compared to the end of the third quarter of 2013 and up 9.0% since the beginning of the year.
ACQUISITIONS
On October 21, 2014, the Company announced the acquisition of (i) the assets of Custom-Crete and (ii) the equity of New York Sand and Stone, LLC, for combined purchase consideration of $52.6 million in cash. Custom-Crete is the largest volumetric concrete producer in Texas with 11 volumetric ready-mixed concrete facilities and 61 volumetric ready-mixed concrete trucks located in Dallas/Fort Worth, Houston, San Antonio and Austin. The addition of the volumetric ready-mixed concrete locations broadens U.S. Concrete's product line offerings in Texas and expands the Company's presence into all of the major metropolitan markets in Texas. The acquisition of New York Sand and Stone, LLC includes the assignment of leases to operate two existing aggregate distribution terminals on the East River in Brooklyn, New York. Associated with the acquisition, the Company concurrently entered into an exclusive sales and marketing agreement with Inwood Materials Terminal LLC, which includes a dock located in Inwood, New York on the South Shore of western Long Island. These transactions will allow for more efficient delivery of raw materials to the Company's production facilities and ease distribution of aggregate products to the large construction markets of New York City's five boroughs as well as Nassau and Suffolk counties on Long Island. Including these recent announcements, the Company has now completed eight transactions during 2014.
