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Executives

Bradley E. Larson - Chief Executive Officer and Executive Director

Robert A. DeRuiter - President

Clint Tryon - Chief Financial Officer, Secretary and Treasurer

Analysts

Walter Schenker - Titan Capital

Ted Wagner – BDJ

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Ready Mix, Inc. second quarter conference call. (Operator instructions) I would now like to turn the conference over to Brad Larson, Chief Executive Officer, please go ahead sir.

Brad Larson

Thank you, Operator, and thank you all for joining us this morning for Ready Mix Inc.'s 2008 second quarter results conference call. On the phone with us today is Chief Financial Officer, Clint Tryon and the company's new President, Bob DeRuiter, to whom I will be turning over the call later on.

We'll all be available to answer your questions following our prepared remarks. Please note that this conference call will include forward-looking statements. These statements are based on current expectations, estimates and projections about our business based in part on assumptions made by management.

These statements are not guarantees of future performance and actual results may differ materially. A more detailed discussion of these risks and uncertainties is contained in this morning's press release and Ready Mix Inc.'s various filing with the SEC, including our Annual Report filed on form 10-K for the year ended December 31, 2007.

The statements made during this call are made only as of the date of the call, August 12, 2008 and we undertake no obligations to update these statements.

The decline in residential construction that began nearly two years in our primary Phoenix and Las Vegas markets once again was the main driver in Ready Mix Inc.'s operating performance for the second quarter.

Fortunately, non-residential construction activity has held up better and longer than in previous construction industry cycle, which has worked to offset some, but by no means all of the impact of the decline in housing.

For the three months ended June 30, 2008, revenue decreased 24.1% to 17.1 million compared to revenue of 22.5 million for the second quarter of 2007. Cubic yards of concrete sold decreased 19.1% to this year's second quarter, compared to the same period of 2007, while average unit sales price decreased 6%.

Gross profit decreased to .3 million or 1.7% of revenue, compared to gross profit of 2.4 million or 10.5% of revenue a year earlier. Rising fuel cost during the quarter certainly cut into our profitability.

Reflecting our determination to keep our costs as low as possible, general and administrative expenses decreased 7.7% to about 1 million compared to 1.1 million last year.

The net loss for the second quarter of 2008 was .5 million or $0.12 per basic and diluted share. This compared to net income for the second quarter of 2007 of .8 million or $0.21 per diluted share.

For the first half, revenue decreased 23.3% to 32.9 million compared to revenue of 42.9 million for the first six months of 2007. Cubic yards of concrete sold decreased 18.4% for this year's first half, compared to the same period of 2007, while our average unit sales price decreased 5.6%.

Gross profit decreased to .3 million or 0.9% of revenue, compared to gross profit of 4.5 million or 10.4% of revenue a year earlier. The net loss for the first six months of 2008 was 1.1 million or $0.29 for basic and diluted share.

This compares to net income for the first six months of 2007 of 1.5 million or $0.39 per diluted share. In spite of our diminished earnings, the balance sheet remains in great shape.

At June 30, 2008, Ready Mix, Inc. reported working capital of approximately 10.9 million, including cash and cash equivalents of 7.4 million, a current ratio of approximately 2.3 in total stockholders' equity of 28.2 million or approximately $7.41 for outstanding shares.

At December 31, 2007, Ready Mix, Inc. working capital was approximately 11.8 million, including cash and cash equivalents of 9.2 million. The current ratio was approximately 2.5 and total stockholder's equity was 29.2 million or approximately $7.67 for outstanding shares.

As you may have seen in last week's press release, our former President and the founder of the company, Bob Morris, will be retiring in September. We're all appreciative of his contributions to the company and we wish him well in his retirement.

Bob DeRuiter was named President of the company and was also tabbed to fill the directorship vacancy left by Bob Morris. Bob DeRuiter has been with the company for eight years and was Vice President and General Manager of our Phoenix, Arizona operation.

I would now like to turn the call over to Bob DeRuiter, Ready Mix, Inc.'s new President to add some comments regarding our market and some operational updates.

Robert DeRuiter

Thank you, Brad. Residential construction must still clear several hurdles before a sustainable upswing will get underway. Foreclosures remain very high in our market, as does the inventories of unsold homes and of course the mortgage industry remains troubled.

In spite of these concerns, we are encouraged by recent data which suggests that the new home permits may be stabilizing. For example, the July 14, 2008 edition of the Las Vegas Housing Market Letter reports that "permits have been rising for the last four months."

In the July 24, 2008 edition of the Phoenix Housing Market Letter reports that "new home permits have been essentially flat for 10 months." Data from these same two publications show that new home closings have exceeded new home starts consistently during the first half of the year, which has reduced the builder's inventory of unsold homes.

I would like to emphasize that I am not declaring that housing construction has bottomed out in our market, but at least there are indications that conditions may be improving.

During the second quarter, we substantially completed the installation of the fourth batch plant in Phoenix that we mentioned on our last call for an investment of approximately $.75 million.

Located on a third party sand and gravel site, this new plant allows us to make more efficient use of our existing fleet of Ready Mix trucks and gives us the opportunity to compete in a geographic location we could not compete in before because of the travel distance from our batch plant.

This location also is important for us, because we expect it to be among the first to rebound when the turnaround finally arrives. The plant is now fully operational and we continue to expect the ramping of monthly revenues over the next six months or so, at which time we also expect it to turn profitable.

Operator, we're ready for the first question.

Question-and-Answer Session

Ready Mix Inc. (RMX) Q2 2008 Earnings Call August 12, 2008 10:00 AM ET

Operator

Thank you. (Operator instructions) Our first question comes from the line of Walter Schenker with Titan Capital, please proceed with your question.

Walter Schenker - Titan Capital

Won't we all be surprised if I'm not the only question? Good morning, Brad, a general question relating to the shareholders of Ready Mix. It now appears likely that the majority shareholder is going to probably, my statement, undergo some sort of transaction, which could end its position as a publicly held company.

It is now and you obviously know all of this, but we're now in a period looking for possible alternative bids. If in fact the transaction takes place for Meadow Valley, which does not include the current management team, but somebody else. They may look at the Ready Mix asset as a fairly – anyone should look it as a fairly valuable asset – there is a question coming – fairly valuable asset.

I'm trying to understand what action has been taken, if any, by the board of Ready Mix so that if in fact something does happen at Meadow Valley, which could result in a change of position at Ready Mix in which it was no longer a public company. Alternative for the public shareholders of Ready Mix are basically understood, i.e., has Ready Mix itself looked at possible corporate events or actions or alternatives, in case somebody were to buy Meadow Valley and at the same time try and buy Ready Mix? If that's not a clear question, I'll try it again.

Brad Larson

Please restate the question, yes, that would be helpful, Walter.

Walter Schenker - Titan Capital

Okay, sorry, something's going to happen probably at Meadow Valley. If in fact something happens at Meadow Valley, which is not what's currently on the table, but if something happens at Meadow Valley, which would also include a transaction which could involve Ready Mix, not just owning the majority, but someone comes in and wants to buy Meadow Valley and Ready Mix at the same time.

Does the Board of Ready Mix or has the Board of Ready Mix started or even considered looking to enhancing shareholder value for Ready Mix itself, so that they would understand what alternatives might exist in conjunction with a Meadow Valley transaction?

Not necessarily – not the one that's on the table, but a different one. Want me to try a third time?

Brad Larson

No, no I just –

Walter Schenker - Titan Capital

I mean I'm not being cute, I just – excuse me?

Brad Larson

No, you need not restate the question. I'll try to answer it. The board of Ready Mix, Inc. has always been mindful of shareholder value and however in light to the potential transaction that may take place at Meadow Valley, the board of Ready Mix, Inc. thus far sees it only as a potential change of a shareholder.

And as a result, our actions going forward have all been focused on Ready Mix, Inc. remaining a public company and us taking all actions necessary to maximize shareholder value.

Walter Schenker - Titan Capital

And therefore, if in fact, again I've – no reason to beat around the bush, somebody else walks in and I'm a public company, I want to buy Meadow Valley, I also have no interest in having Ready Mix being a majority owned public entity, it doesn't – the X, Y, Z company and so I want to take out both pieces, since Meadow Valley is going through that possibility at the moment. At that point, the Board of Ready Mix would have to look and see what alternatives might exist beyond that transaction. Nothing's been done to this point to contemplate what might happen then? Actively, I'm sure you've thought about it, I mean actively.

Brad Larson

Well certainly we contemplate all possible outcomes, but since the only offer that is currently on the table is for the shares of Meadow Valley by another party and of course, there's a lot that has yet to happen for that transaction to get to closure, we will – we the Board of Ready Mix Inc will address any other issues as they come and as they materialize. But currently, right now, there's just nothing that has materialized and we feel as though we're prepared to deal with that possibility, but that's all it is right now is a possibility.

Walter Schenker - Titan Capital

Okay and just one more question on operating basis. Given the severity in the downturn that's occurred in the Ready Mix business at this point, what I see as a core structure is probably what we get meaning we've gone through most of the cost cutting and if I want a model, I should look at this as probably the barebones cost structure.

Robert DeRuiter

This is Bob DeRuiter and I'm not sure I understand your question, can you repeat that, please?

Walter Schenker - Titan Capital

The question is as the Ready Mix business and the end markets have declined Ready Mix has cut costs in a number of ways, evidenced by the reduction in SG&A. As I look at the company going forward, we have undergone the vast majority to all of the cost cutting that makes any sense for the company and therefore, I should look at the current cost structure as the likely cost structure going forward and not the there's a lot more that can be done to cut costs.

Robert DeRuiter

Well, I would add – well I wouldn't add, but I would like to say that we continually look at all of our costs and yes, there are areas that we continue to reduce our costs. As we stated earlier, fuel was a significant driver in the second quarter in our costs increases. We've been fortunate to see that going in the other direction of recent, so that's going to have an impact on our profitability. And there are other areas that we continue to make reductions as we see fit.

Walter Schenker - Titan Capital

Okay, thanks a lot.

Operator

Our next question comes from the line of Ted Wagner with BDJ, please proceed with your question.

Ted Wagner – BDJ

Good morning, what, if you guys could break out the declining revenues by unit volumes and price, what would that look like?

Brad Larson

Ted, we did not break it out that way. We just simply give you the percentage decreases in volume and the percentage decrease in unit price.

Ted Wagner – BDJ

Okay, all right, I'm sorry can you – I hear you on volume and you guys gave what, cubic yards down 18.5 call it and price down 5.6, that's fine. What was the impact on gross margin of those two respectively and you guys talk about fuel being a major driver towards the decline in gross margin, can you quantify those aspects?

Brad Larson

I cannot quantify the direct impact to the gross margin, gross profit line from each of those respective areas. I mean we could give you the total dollar of cost increase in fuel, for example, but it's too complex for example to say that just because fuel cost went up X number of dollars from Q2 last year to Q2 of this year.

It's also a function of your average trip distance, it's a function of the volume that is sold. It's a much more complex thing than just saying you know part average cost per cubic yard attributable to fuel is this and it's there and it's at that point because of X, Y and Z.

Ted Wagner – BDJ

Well, I guess maybe just qualitatively then since it's difficult to put an exact number to. If volumes were down 18.5%, my guess is that by and large the number of shipments you guys made were down. Some of that was probably offset, as you said, or maybe offset by distance. So, what was the total increase in freight expense, quarter-over-quarter?

Brad Larson

The cost increase from Q1 to Q2 or Q2 over Q1 was about $.4 million, just in fuel.

Ted Wagner – BDJ

Okay, just in fuel, so a lot of that gross margin decline was probably due more to volume and price declines over a relatively fixed cost structure, given that that, I'm guessing if you said fuel is the main additive and that only took 400,000 away from gross margin that the rest of it is probably due to top line weakness that, is that correct?

Brad Larson

That would be fair to say.

Ted Wagner – BDJ

Okay and so given what were, I think pretty good results, in Meadow Valley and obviously you guys operate that as a separate entity and you guys contract out concrete work to maintain your, you know, your distance and your relationships with other providers of concrete. What are you seeing in terms of mix, no pun intended, between residential and construction, commercial work rather or municipal work that leading to these kinds of volume declines.

Sounds like your Meadow Valley, you know municipal business is doing well. I'm sure some of that's share gains, but you know if you had to look at the market, residential demands versus commercial and municipal demands, how would that break out and what's your mix today, residential versus non-residential, at Ready Mix?

Brad Larson

Well, our mix today, we're currently on the lower end of the spectrum, where we've historically been in terms of residential. We've historically been somewhere between 40 and 55% of our revenue being driven from residential and we're at the lower end of that spectrum right now and have been for quite some time.

So the bulk of our business, well not the bulk – the bulk of our business continues to be driven by residential. But is has been bolstered by the strength of the non-residential market, which as I said, have been longer and much healthier than in past cycles and we're grateful for that. So there's still a lot of activity in the non-residential sector both what you'd call building and non-building.

We are concerned, as we've said before that typically, non-residential construction will lag residential construction and we are concerned that non-residential has not yet begun to decline and if it declines before housing begins to rebound, we could be in for more pain.

Ted Wagner - BDJ

So, if you had to say resident, you know cubic yards in your market sold the residential were down X percent, what would that be?

Brad Larson

I'll let Bob answer that question.

Robert DeRuiter

Based on the numbers from the peak of 2005, 2006, overall the market's down probably close to 60% in the residential market.

Ted Wagner – BDJ

Okay, so the – and what about commercial?

Robert DeRuiter

I would have to say commercial has been up, it's what helped carry the market and to put a specific number on it, because it would be difficulty with when you start taking into consideration all the non-residential types of construction that are out there. But, it's definitely been carrying the market over the last two years.

Ted Wagner – BDJ

And how about municipal or government [inaudible]?

Robert DeRuiter

Same as commercial; it would be difficult, but I would say both those have to be up in the 15 to 20% range.

Ted Wagner – BDJ

Okay and what if – and just broad you know broadly speaking, you said a little bit, you know, look. You kind of took a little bit of cost pressure because of fuel. Have you guys – are you seeing any stability in pricing that would allow you to recoup some of that dollar gross margin going forward or is it just a pricing free fall right now?

Brad Larson

Right now you know we had the peak in June and July and we've seen prices falling recent, but it's hard to – you can't guarantee fuel prices more than the last load you bought and so we're kind of at the mercy of the markets there.

Ted Wagner – BDJ

So if you guys, you know, had a probably one of the bigger fuel run-ups in recent memory hit your gross margin by 400,000 and gross profit by 400,000, you know, you probably would have still been, you know, 3.5 to 3.8 below where you were at this time last year. What other I guess steps are you guys taking to right size the dollar gross margin in this lower sales environment going forward?

Clint Tryon

This is Clint Tryon. I just want to interject one thing with you there. You got to understand we gave you an actual dollar on the fuel cost increase and you've also got to understand that our volume or our yards or our number of deliveries are down significantly from where they were one year ago today. So therefore, the 400,000 actual dollar value change is not representative of an actual comparison, apples to apples, to the previous period again. We gave you an actual dollar amount in fuel take. You know, if the quantity of delivery, the cost per yard would have been something that has changed and it's gone up approximately cost per yard about 37%.

Ted Wagner – BDJ

So taking that cost per yard change on your reduced volume would kind of get me to where a real cost – a real apples to apples comparison should be?

Clint Tryon

Yes.

Ted Wagner – BDJ

Okay and then so I guess then the question still stands, what else are you guys doing to cut costs to make sure that this gross margin grows over the next couple of quarters?

Robert DeRuiter

This is Bob DeRuiter. There is absolutely nothing safe within our company as far as what we're doing to reduce cost. We've had reduction in hours. We're watching our overtime. We're going back to our material suppliers getting cost reductions there, wherever possible. Trying to operate our business even more efficiently than we have and we've always done a very good job of doing that. Wherever we can squeeze anything is where we're going, so there's nothing that hasn't been on the table and we continue to make reductions where we need to.

Ted Wagner – BDJ

And will, I guess, Brad, if you are going with the proposed Meadow Valley transaction, will you have any involvement going forward in Ready Mix either through the board or through day to day management?

Brad Larson

We don't expect there to be any change in the governing body of Ready Mix, Inc., neither in its officers or directors.

Ted Wagner – BDJ

So new majority owners of Meadow Valley, Inc. won't expect to take board seats as Ready Mix even though they're majority owners of Ready Mix?

Brad Larson

That is yet to be determined. That annual meeting would be sometime during 2009 and if that happens, then it will certainly be evident in the proxy material that will go out.

Ted Wagner – BDJ

Okay, thank you very much

Brad Larson

You're welcome, thank you.

Operator

(Operator instructions) There are no further questions at this time. I'll turn the call back over to you.

Brad Larson

Thank you, operator, and thank you all for joining us. We will talk to you next quarter, thanks.

Operator

Ladies and gentlemen, that does conclude the conference call for today. We ask that you please disconnect your line.

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