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REVENUES
9 Months Ended
Sep. 30, 2020
REVENUES [Abstract]  
REVENUES Note 4: revenueS

Revenues are measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Sales and other taxes we collect are excluded from revenues. Costs to obtain and fulfill contracts (primarily asphalt construction paving contracts) are immaterial and are expensed as incurred when the expected amortization period is one year or less.

Our segment total revenues by geographic market for the three and nine month periods ended September 30, 2020 and 2019 are disaggregated as follows:

Three Months Ended September 30, 2020

in thousands

Aggregates

Asphalt

Concrete

Calcium

Total

Total Revenues by Geographic Market 1

East

$     360,985 

$     46,212 

$     73,181 

$              0 

$      480,378 

Gulf Coast

535,215 

55,894 

18,889 

1,354 

611,352 

West

152,762 

133,095 

10,737 

0 

296,594 

Segment sales

$  1,048,962 

$   235,201 

$   102,807 

$       1,354 

$   1,388,324 

Intersegment sales

(78,434)

0 

0 

0 

(78,434)

Total revenues

$     970,528 

$   235,201 

$   102,807 

$       1,354 

$   1,309,890 

Three Months Ended September 30, 2019

in thousands

Aggregates

Asphalt

Concrete

Calcium

Total

Total Revenues by Geographic Market 1

East

$     387,291 

$     59,156 

$     74,446 

$              0 

$      520,893 

Gulf Coast

565,607 

63,803 

18,338 

2,119 

649,867 

West

180,187 

147,278 

20,180 

0 

347,645 

Segment sales

$  1,133,085 

$   270,237 

$   112,964 

$       2,119 

$   1,518,405 

Intersegment sales

(99,647)

0 

0 

0 

(99,647)

Total revenues

$  1,033,438 

$   270,237 

$   112,964 

$       2,119 

$   1,418,758 

Nine Months Ended September 30, 2020

in thousands

Aggregates

Asphalt

Concrete

Calcium

Total

Total Revenues by Geographic Market 1

East

$     951,090 

$    102,053 

$    206,954 

$               0 

$    1,260,097 

Gulf Coast

1,596,321 

140,253 

53,801 

5,269 

1,795,644 

West

440,373 

355,634 

37,500 

0 

833,507 

Segment sales

$  2,987,784 

$    597,940 

$    298,255 

$        5,269 

$    3,889,248 

Intersegment sales

(207,541)

0 

0 

0 

(207,541)

Total revenues

$  2,780,243 

$    597,940 

$    298,255 

$        5,269 

$    3,681,707 

Nine Months Ended September 30, 2019

in thousands

Aggregates

Asphalt

Concrete

Calcium

Total

Total Revenues by Geographic Market 1

East

$     951,543 

$    123,764 

$    200,033 

$               0 

$    1,275,340 

Gulf Coast

1,615,987 

157,581 

49,709 

6,073 

1,829,350 

West

462,581 

368,145 

50,627 

0 

881,353 

Segment sales

$  3,030,111 

$    649,490 

$    300,369 

$        6,073 

$    3,986,043 

Intersegment sales

(243,092)

0 

0 

0 

(243,092)

Total revenues

$  2,787,019 

$    649,490 

$    300,369 

$        6,073 

$    3,742,951 

1

The geographic markets are defined by states/countries as follows:

East market — Arkansas, Delaware, Illinois, Kentucky, Maryland, North Carolina, Pennsylvania, Tennessee, Virginia, and Washington D.C.

Gulf Coast marketAlabama, Florida, Georgia, Louisiana, Mexico, Mississippi, Oklahoma, South Carolina and Texas

West market — Arizona, California and New Mexico

Total revenues are primarily derived from our product sales of aggregates (crushed stone, sand and gravel, sand and other aggregates), asphalt mix and ready-mixed concrete, and include freight & delivery costs that we pass along to our customers to deliver these products. We also generate service revenues from our asphalt construction paving business and service revenues related to our aggregates business, such as landfill tipping fees. Our total service revenues were $63,347,000 and $75,508,000 for the three months ended September 30, 2020 and 2019, respectively, and $160,285,000 and $175,280,000 for the nine months ended September 30, 2020 and 2019, respectively.

Our products typically are sold to private industry and not directly to governmental entities. Although approximately 45% to 55% of our aggregates shipments have historically been used in publicly-funded construction, such as highways, airports and government buildings, relatively insignificant sales are made directly to federal, state, county or municipal governments/agencies. Therefore, although reductions in state and federal funding can curtail publicly-funded construction, the vast majority of our aggregates business is not directly subject to renegotiation of profits or termination of contracts with state or federal governments.

PRODUCT REVENUES

Revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally this occurs at a point in time when our aggregates, asphalt mix and ready-mixed concrete are shipped/delivered and control passes to the customer. Revenue for our products is recorded at the fixed invoice amount and payment is due by the 15th day of the following monthwe do not offer discounts for early payment.

Freight & delivery generally represents pass-through transportation we incur (including our administrative costs) and pay to third-party carriers to deliver our products to customers and are accounted for as a fulfillment activity. Likewise, the costs related to freight & delivery are included in cost of revenues.

Freight & delivery revenues are as follows:

Three Months Ended

Nine Months Ended

September 30

September 30

in thousands

2020

2019

2020

2019

Freight & Delivery Revenues

Total revenues

$  1,309,890 

$  1,418,758 

$  3,681,707 

$  3,742,951 

Freight & delivery revenues 1

(187,562)

(206,929)

(566,785)

(566,330)

Total revenues excluding freight & delivery

$  1,122,328 

$  1,211,829 

$  3,114,922 

$  3,176,621 

1

Includes freight & delivery to remote distribution sites.

CONSTRUCTION PAVING SERVICE REVENUES

Revenue from our asphalt construction paving business is recognized over time using the percentage-of-completion method under the cost approach. The percentage of completion is determined by costs incurred to date as a percentage of total costs estimated for the project. Under this approach, recognized contract revenue equals the total estimated contract revenue multiplied by the percentage of completion. Our construction contracts are unit priced, and an account receivable is recorded for amounts invoiced based on actual units produced. Contract assets for estimated earnings in excess of billings, contract assets related to retainage provisions and contract liabilities for billings in excess of costs are immaterial. Variable consideration in our construction paving contracts is immaterial and consists of incentives and penalties based on the quality of work performed. Our construction paving contracts may contain warranty provisions covering defects in equipment, materials, design or workmanship that generally run from nine months to one year after project completion. Due to the nature of our construction paving projects, including contract owner inspections of the work during construction and prior to acceptance, we have not experienced material warranty costs for these short-term warranties.

VOLUMETRIC PRODUCTION PAYMENT DEFERRED REVENUES

In 2013 and 2012, we sold a percentage interest in certain future aggregates production for net cash proceeds of $226,926,000. These transactions, structured as volumetric production payments (VPPs):

relate to eight quarries in Georgia and South Carolina

provide the purchaser solely with a nonoperating percentage interest in the subject quarries’ future aggregates production

contain no minimum annual or cumulative guarantees by us for production or sales volume, nor minimum sales price

are both volume and time limited (we expect the transactions will last approximately 25 years, limited by volume rather than time)

We are the exclusive sales agent for, and transmit quarterly to the purchaser the proceeds from the sale of, the purchaser’s share of aggregates production. Our consolidated total revenues exclude the revenue from the sale of the purchaser’s share of aggregates.

The proceeds we received from the sale of the percentage interest were recorded as deferred revenue on the balance sheet. We recognize revenue on a unit-of-sales basis (as we sell the purchaser’s share of production) relative to the volume limitations of the transactions. Given the nature of the risks and potential rewards assumed by the buyer, the transactions do not reflect financing activities.

Reconciliation of the VPP deferred revenue balances (current and noncurrent) is as follows:

Three Months Ended

Nine Months Ended

September 30

September 30

in thousands

2020

2019

2020

2019

Deferred Revenue

Balance at beginning of period

$     181,963 

$     189,052 

$     185,339 

$     192,783 

Revenue recognized from deferred revenue

(2,046)

(2,125)

(5,422)

(5,856)

Balance at end of period

$     179,917 

$     186,927 

$     179,917 

$     186,927 

Based on expected sales from the specified quarries, we expect to recognize $7,500,000 of VPP deferred revenue as income during the 12-month period ending September 30, 2021 (reflected in other current liabilities in our September 30, 2020 Condensed Consolidated Balance Sheet).