Summit Materials, Inc. Reports Third Quarter 2019 Results

Company Release - 10/30/2019 6:15 AM ET

- Operating income increased 21.0% in third quarter 2019

- Organic aggregates volumes increased 11.4%

- Organic aggregates price increased 6.9%

- Narrowed 2019 Adjusted EBITDA guidance to $440 - $460 million

DENVER--(BUSINESS WIRE)-- Summit Materials, Inc. (NYSE: SUM, “Summit” or the “Company”), a leading vertically integrated construction materials company, today announced results for the third quarter 2019.

For the three months ended September 28, 2019, the Company reported net income attributable to Summit Inc. of $55.8 million, or $0.50 per basic share, compared to net income attributable to Summit Inc. of $71.3 million, or $0.64 per basic share in the comparable prior year period. Although operating income increased in the third quarter to $130.9 million as compared to $108.2 million in the prior year period, net income declined due to an increase in income tax expense related to proposed US tax reform regulations that would limit interest deductibility. Summit reported adjusted diluted net income of $58.2 million, or $0.50 per adjusted diluted share as compared to adjusted diluted net income of $61.9 million, or $0.54 per adjusted diluted share in the prior year period.

Summit's net revenue increased 6.5% in the third quarter of 2019 relative to the comparable 2018 period. Adjusted EBITDA increased 12.4% to $193.3 million in the third quarter 2019 as compared to $172.0 million in 2018.

Tom Hill, CEO of Summit Materials, commented, "We delivered a double-digit percentage increase in third quarter Adjusted EBITDA with organic price increases and higher volumes in all lines of business on strong demand and improved weather conditions relative to a year ago. We experienced a return to volume growth and full utilization in our cement business as shipping traffic began to normalize on the Mississippi River. Levee repair work in Missouri and market conditions in Kansas drove aggregates volumes higher, and although ready-mix volumes were higher in the quarter, we did lose some sales due to Tropical Storm 'Imelda' in the Houston market."

Third quarter 2019 sales volumes increased 12.6% in aggregates, 3.8% in cement, 1.8% in ready-mix concrete and 2.3% in asphalt relative to the year ago quarter. Third quarter 2019 average selling prices increased 6.9% in aggregates, 3.1% in cement, 2.9% in ready-mix concrete, and 7.2% in asphalt relative to the prior year period. Summit's operating margin expanded to 19.7% in the third quarter 2019 from 17.3% in the third quarter 2018.

Hill added, "Our year-to-date performance includes a seasonally strong third quarter and the resumption of normal operations in our cement business that was impacted by shipping constraints during the first half of the year that has begun to normalize. Despite these challenges, our cement volumes were up 2.9% for the nine months ended September 28, 2019. With the exception of our ready-mix business, where volumes were impacted by rainy conditions in Texas, we experienced solid volume growth in our aggregates and asphalt businesses and price growth in all lines of business, which helped us rebound from setbacks in the first half of the year."

On a year-to-date basis through September 28, 2019, Summit's net revenue increased 4.1% over the comparable 2018 period. Adjusted EBITDA increased 8.8% to $340.4 million for the first nine months of 2019 as compared to $312.9 million for the same period in 2018.

Year-to-date through September 28, 2019 sales volumes increased 12.6% in aggregates, 2.9% in cement, and 2.6% in asphalt, while ready-mix concrete volume declined 3.1% relative to the same period last year. Average selling prices for the first nine months of 2019 increased 7.9% in aggregates, 1.4% in cement, 2.3% in ready-mix concrete, and 6.6% in asphalt relative to the prior year period. Summit's operating margin expanded to 10.1% in the first nine months of 2019 from 9.1% in the same period 2018.

Summit narrowed its 2019 full year Adjusted EBITDA guidance to $440 million to $460 million from $430 to $470 million. Hill continued, "Based on our performance year to date and anticipating normal weather conditions, we believe it makes sense to narrow our guidance range for the year."

The Company narrowed its guidance for 2019 capital expenditures to approximately $160 million to $170 million from $160 million to $175 million. Cash paid for capital equipment decreased to $139.8 million in the first nine months of 2019 from $183.8 million in the same period 2018. The Company reiterated its guidance to reduce its leverage ratio by year-end 2019.

Third Quarter 2019 | Results by Line of Business

Aggregates Business: Aggregates net revenues increased by 25.5% to $137.5 million in the third quarter 2019, when compared to the prior year period. Aggregates adjusted cash gross profit margin declined slightly to 68.6% in the third quarter 2019 compared to 69.2% in the prior year period on product mix. Organic aggregates sales volumes increased 11.4% in the third quarter 2019, when compared to the prior-year period on higher organic volume growth in both the East and West segments. Organic average selling prices on aggregates increased 6.9% in the third quarter 2019 when compared to the prior year period due to improvements in prices, particularly in the East segment related to levee repair work in Missouri.

Cement Business: Cement segment net revenues increased 5.3% to $99.0 million in the third quarter 2019, when compared to the prior-year period. Cement adjusted cash gross profit margin decreased to 46.0% in the third quarter, compared to 50.7% in the prior-year period, as the Company incurred increased distribution costs to overcome the lingering effects of shipping delays on the Mississippi River in the first half of the year. Organic sales volume of cement increased 3.8% in the third quarter, when compared to the prior year period. Organic average selling prices on cement increased 3.1% in the third quarter when compared to the prior year period.

Products Business: Net revenues were $324.7 million in the third quarter 2019, compared to $315.3 million in the prior year period, which included the sale of a non-core business. Products adjusted cash gross profit margin increased to 24.4% in the third quarter, versus 22.5% in the prior year period, due in part to increased pricing in Kansas, Texas, and Intermountain geographies. Our organic average sales price for ready-mix concrete increased 2.7%, coupled with a 1.3% increase in organic sales volumes of ready-mix concrete. Our organic average sales price for asphalt increased 7.2% while we had a 2.3% increase in asphalt organic sales volumes, primarily driven by growth in Kansas and Missouri.

Third Quarter 2019 | Results By Reporting Segment

Net revenue increased by 6.5% to $665.8 million in the third quarter 2019, versus $625.0 million in the prior year period. The improvement in net revenue was primarily attributable to organic growth. The Company reported operating income of $130.9 million in the third quarter 2019, compared to $108.2 million in the prior year period. Net income decreased to $58.2 million in the third quarter of 2019, compared to $74.0 million in the prior year period, due to a significant increase in income tax expense. Adjusted EBITDA increased 12.4% to $193.3 million in the third quarter of 2019, compared to $172.0 million in the prior year period.

West Segment: The West Segment reported operating income of $58.5 million in the third quarter 2019, compared to $48.2 million in the prior year period. Adjusted EBITDA increased to $81.9 million in the third quarter 2019, compared to $73.9 million in the prior year period. Improvements in operating income and Adjusted EBITDA are due in part to the realization of higher operational efficiencies under improved weather conditions. Aggregates revenue in the third quarter increased 10.6% over the prior year period from a combination of acquisition performance and organic growth, including a 3.5% increase in organic volumes and a 4.1% increase in organic average sales prices, particularly in Texas. Ready-mix concrete revenue in the third quarter 2019 increased 3.6% over the prior year period, as a 1.0% decrease in organic volumes, was offset by a 3.7% increase in organic average sales prices. Asphalt revenue increased by 11.3% in the third quarter 2019 over the prior year period, as our liquid asphalt terminal which had been damaged in Hurricane Harvey was operating in 2019, but not in the comparable period in 2018.

East Segment: The East Segment reported operating income of $55.5 million in the third quarter 2019, compared to $38.0 million in the prior year period. Adjusted EBITDA increased to $76.8 million in the third quarter 2019, compared to $58.3 million in the prior year period. Aggregates revenue increased 28.5% due to increases resulting from a 18.7% and 8.3% increase in organic volumes and average sales prices, respectively, driven by growth in Missouri and Kansas. Ready-mix concrete revenue increased 8.1% due to an increase in organic volumes. Asphalt revenue increased 20.2% as a result of a 9.3% increase in organic volumes and a 6.2% increase in organic average sales prices.

Cement Segment: The Cement Segment reported operating income of $31.5 million in the third quarter 2019, a decrease from $33.5 million in the prior year period Adjusted EBITDA decreased to $42.7 million in the third quarter 2019, compared to $44.3 million in the prior year period, due primarily to the lingering effects of shipping constraints on the Mississippi River. Despite these challenges, the segment reported increases of 3.8% and 3.1% in organic sales volumes and organic average selling prices, respectively, during the third quarter 2019 as compared to the prior year period.

Liquidity and Capital Resources

As of September 28, 2019, the Company had cash on hand of $182.6 million and borrowing capacity under its revolving credit facility of $329.8 million. The borrowing capacity on the revolving credit facility is fully available to the Company within the terms and covenant requirements of its credit agreement. As of September 28, 2019, the Company had $1.9 billion in debt outstanding.

Financial Outlook

For full-year 2019, the Company estimates its Adjusted EBITDA to be in the range of $440 million to $460 million. For full-year 2019, the Company estimates its capital expenditures to be in the range of $160 million to $170 million.

Webcast and Conference Call Information

Summit Materials will conduct a conference call on Wednesday, October 30, 2019, at 11:00 a.m. eastern time (9:00 a.m. mountain time) to review the Company’s third quarter financial results. A webcast of the conference call and accompanying presentation materials will be available in the Investors section of Summit’s website at investors.summit-materials.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.

To participate in the live teleconference:

Domestic Live:

1-877-407-0784

International Live:

1-201-689-8560

Conference ID:

57511368

To listen to a replay of the teleconference, which will be available through November 30, 2019:

Domestic Replay:

1-844-512-2921

International Replay:

1-412-317-6671

Conference ID:

13695880

About Summit Materials

Summit Materials is a leading vertically integrated materials-based company that supplies aggregates, cement, ready-mix concrete and asphalt in the United States and British Columbia, Canada. Summit is a geographically diverse, materials-based business of scale that offers customers a single-source provider of construction materials and related downstream products in the public infrastructure, residential and nonresidential end markets. Summit has a strong track record of successful acquisitions since its founding and continues to pursue growth opportunities in new and existing markets. For more information about Summit Materials, please visit www.summit-materials.com.

Non-GAAP Financial Measures

The Securities and Exchange Commission (“SEC”) regulates the use of “non-GAAP financial measures,” such as Adjusted Net Income (Loss), Adjusted Diluted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Free Cash Flow, Net Leverage and Net Debt which are derived on the basis of methodologies other than in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). We have provided these measures because, among other things, we believe that they provide investors with additional information to measure our performance, evaluate our ability to service our debt and evaluate certain flexibility under our restrictive covenants. Our Adjusted Net Income (Loss), Adjusted Diluted EPS, Adjusted EBITDA, Further Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Free Cash Flow, Net Leverage and Net Debt may vary from the use of such terms by others and should not be considered as alternatives to or more important than net income (loss), operating income (loss), revenue or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or to cash flows as measures of liquidity.

Adjusted EBITDA, Adjusted EBITDA Margin, and other non-GAAP measures have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP. Some of the limitations of Adjusted EBITDA are that these measures do not reflect: (i) our cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) changes in, or cash requirements for, our working capital needs; (iii) interest expense or cash requirements necessary to service interest and principal payments on our debt; and (iv) income tax payments we are required to make. Because of these limitations, we rely primarily on our U.S. GAAP results and use Adjusted EBITDA, Adjusted EBITDA Margin and other non-GAAP measures on a supplemental basis.

Adjusted EBITDA, Further Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Adjusted Net Income (Loss), Adjusted Diluted EPS, Free Cash Flow, Net Leverage and Net Debt reflect additional ways of viewing aspects of our business that, when viewed with our GAAP results and the accompanying reconciliations to U.S. GAAP financial measures included in the tables attached to this press release, may provide a more complete understanding of factors and trends affecting our business. We strongly encourage investors to review our consolidated financial statements in their entirety and not rely on any single financial measure. Reconciliations of the non-GAAP measures used in this press release are included in the attached tables. Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “trends,” “plans,” “estimates,” “projects” or “anticipates” or similar expressions that concern our strategy, plans, expectations or intentions. All statements made relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, it is very difficult to predict the effect of known factors, and, of course, it is impossible to anticipate all factors that could affect our actual results. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be realized. Important factors could affect our results and could cause results to differ materially from those expressed in our forward-looking statements, including but not limited to the factors discussed in the section entitled “Risk Factors” in Summit Inc.’s Annual Report on Form 10-K for the fiscal year ended December 29, 2018 as filed with the Securities and Exchange Commission (the “SEC”), any factors discussed in the section entitled “Risk Factors” in any of our subsequently filed SEC filings, and the following:

  • our dependence on the construction industry and the strength of the local economies in which we operate;
  • the cyclical nature of our business;
  • risks related to weather and seasonality;
  • risks associated with our capital-intensive business;
  • competition within our local markets;
  • our ability to execute on our acquisition strategy, successfully integrate acquisitions with our existing operations and retain key employees of acquired businesses;
  • our dependence on securing and permitting aggregate reserves in strategically located areas;
  • declines in public infrastructure construction and delays or reductions in governmental funding, including the funding by transportation authorities and other state agencies;
  • environmental, health, safety and climate change laws or governmental requirements or policies concerning zoning and land use;
  • rising prices for commodities, labor and other production and delivery costs as a result of inflation or otherwise;
  • conditions in the credit markets;
  • our ability to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us;
  • material costs and losses as a result of claims that our products do not meet regulatory requirements or contractual specifications;
  • cancellation of a significant number of contracts or our disqualification from bidding for new contracts;
  • special hazards related to our operations that may cause personal injury or property damage not covered by insurance;
  • our substantial current level of indebtedness;
  • our dependence on senior management and other key personnel;
  • supply constraints or significant price fluctuations in the electricity and petroleum-based resources that we use, including diesel and liquid asphalt;
  • climate change and climate change legislation or regulations;
  • unexpected operational difficulties;
  • interruptions in our information technology systems and infrastructure; and
  • potential labor disputes.

All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. Any forward-looking statement that we make herein speaks only as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law.

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

($ in thousands, except share and per share amounts)

 

 

 

Three months ended

 

Nine months ended

 

 

September 28,

 

September 29,

 

September 28,

 

September 29,

 

 

2019

 

2018

 

2019

 

2018

Revenue:

 

 

 

 

 

 

 

 

Product

 

$

554,721

 

 

$

512,822

 

 

$

1,293,999

 

 

$

1,229,596

 

Service

 

111,126

 

 

112,195

 

 

230,389

 

 

234,572

 

Net revenue

 

665,847

 

 

625,017

 

 

1,524,388

 

 

1,464,168

 

Delivery and subcontract revenue

 

66,235

 

 

69,644

 

 

141,224

 

 

145,804

 

Total revenue

 

732,082

 

 

694,661

 

 

1,665,612

 

 

1,609,972

 

Cost of revenue (excluding items shown separately below):

 

 

 

 

 

 

 

 

Product

 

338,119

 

 

321,586

 

 

846,702

 

 

814,166

 

Service

 

78,625

 

 

80,573

 

 

167,550

 

 

170,626

 

Net cost of revenue

 

416,744

 

 

402,159

 

 

1,014,252

 

 

984,792

 

Delivery and subcontract cost

 

66,235

 

 

69,644

 

 

141,224

 

 

145,804

 

Total cost of revenue

 

482,979

 

 

471,803

 

 

1,155,476

 

 

1,130,596

 

General and administrative expenses

 

62,344

 

 

59,457

 

 

190,915

 

 

190,975

 

Depreciation, depletion, amortization and accretion

 

55,127

 

 

53,974

 

 

164,140

 

 

150,663

 

Transaction costs

 

751

 

 

1,260

 

 

1,449

 

 

3,817

 

Operating income

 

130,881

 

 

108,167

 

 

153,632

 

 

133,921

 

Interest expense

 

28,917

 

 

28,889

 

 

88,423

 

 

86,616

 

Loss on debt financings

 

 

 

 

 

14,565

 

 

149

 

Gain on sale of business

 

 

 

(12,108

)

 

 

 

(12,108

)

Other income, net

 

(1,875

)

 

(3,371

)

 

(8,354

)

 

(11,942

)

Income from operations before taxes

 

103,839

 

 

94,757

 

 

58,998

 

 

71,206

 

Income tax expense

 

45,602

 

 

20,765

 

 

34,272

 

 

16,249

 

Net income

 

58,237

 

 

73,992

 

 

24,726

 

 

54,957

 

Net income attributable to Summit Holdings (1)

 

2,480

 

 

2,703

 

 

1,331

 

 

1,888

 

Net income attributable to Summit Inc.

 

$

55,757

 

 

$

71,289

 

 

$

23,395

 

 

$

53,069

 

Earnings per share of Class A common stock:

 

 

 

 

 

 

 

 

Basic

 

$

0.50

 

 

$

0.64

 

 

$

0.21

 

 

$

0.48

 

Diluted

 

$

0.48

 

 

$

0.64

 

 

$

0.21

 

 

$

0.47

 

Weighted average shares of Class A common stock:

 

 

 

 

 

 

 

 

Basic

 

112,179,137

 

 

111,641,344

 

 

112,020,275

 

 

111,288,211

 

Diluted

 

115,505,122

 

 

111,940,067

 

 

112,497,610

 

 

112,472,724

 

________________________________________________________
(1) Represents portion of business owned by pre-IPO investors rather than by Summit.

 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

($ in thousands, except share and per share amounts)

 

 

 

September 28,

 

December 29,

 

 

2019

 

2018

 

 

(unaudited)

 

(audited)

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

182,589

 

 

$

128,508

 

Accounts receivable, net

 

337,060

 

 

214,518

 

Costs and estimated earnings in excess of billings

 

49,715

 

 

18,602

 

Inventories

 

197,015

 

 

213,851

 

Other current assets

 

12,037

 

 

16,061

 

Total current assets

 

778,416

 

 

591,540

 

Property, plant and equipment, less accumulated depreciation, depletion and amortization (September 28, 2019 - $923,439 and December 29, 2018 - $794,251)

 

1,762,307

 

 

1,780,132

 

Goodwill

 

1,198,496

 

 

1,192,028

 

Intangible assets, less accumulated amortization (September 28, 2019 - $9,666 and December 29, 2018 - $8,247)

 

24,446

 

 

18,460

 

Deferred tax assets, less valuation allowance (September 28, 2019 - $29,472 and December 29, 2018 - $19,366)

 

193,632

 

 

225,397

 

Operating lease right-of-use assets

 

33,045

 

 

 

Other assets

 

51,772

 

 

50,084

 

Total assets

 

$

4,042,114

 

 

$

3,857,641

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities:

 

 

 

 

Current portion of debt

 

$

6,354

 

 

$

6,354

 

Current portion of acquisition-related liabilities

 

34,398

 

 

34,270

 

Accounts payable

 

152,232

 

 

107,702

 

Accrued expenses

 

118,003

 

 

100,491

 

Current operating lease liabilities

 

8,609

 

 

 

Billings in excess of costs and estimated earnings

 

12,476

 

 

11,840

 

Total current liabilities

 

332,072

 

 

260,657

 

Long-term debt

 

1,853,414

 

 

1,807,502

 

Acquisition-related liabilities

 

40,662

 

 

49,468

 

Tax receivable agreement liability

 

310,098

 

 

309,674

 

Noncurrent operating lease liabilities

 

25,329

 

 

 

Other noncurrent liabilities

 

93,761

 

 

88,195

 

Total liabilities

 

2,655,336

 

 

2,515,496

 

Stockholders’ equity:

 

 

 

 

Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 112,275,998 and 111,658,927 shares issued and outstanding as of September 28, 2019 and December 29, 2018, respectively

 

1,124

 

 

1,117

 

Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 99 shares issued and outstanding as of September 28, 2019 and December 29, 2018

 

 

 

 

Additional paid-in capital

 

1,212,240

 

 

1,194,204

 

Accumulated earnings

 

153,134

 

 

129,739

 

Accumulated other comprehensive income

 

4,938

 

 

2,681

 

Stockholders’ equity

 

1,371,436

 

 

1,327,741

 

Noncontrolling interest in Summit Holdings

 

15,342

 

 

14,404

 

Total stockholders’ equity

 

1,386,778

 

 

1,342,145

 

Total liabilities and stockholders’ equity

 

$

4,042,114

 

 

$

3,857,641

 

 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

($ in thousands)

 

 

 

Nine months ended

 

 

September 28,

 

September 29,

 

 

2019

 

2018

Cash flow from operating activities:

 

 

 

 

Net income

 

$

24,726

 

 

$

54,957

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation, depletion, amortization and accretion

 

166,997

 

 

152,829

 

Share-based compensation expense

 

15,424

 

 

19,833

 

Net gain on asset disposals

 

(8,030

)

 

(27,261

)

Non-cash loss on debt financings

 

2,850

 

 

 

Change in deferred tax asset, net

 

32,736

 

 

12,577

 

Other

 

(1,609

)

 

873

 

(Increase) decrease in operating assets, net of acquisitions and dispositions:

 

 

 

 

Accounts receivable, net

 

(121,196

)

 

(90,481

)

Inventories

 

16,296

 

 

(26,027

)

Costs and estimated earnings in excess of billings

 

(31,085

)

 

(37,643

)

Other current assets

 

5,635

 

 

(6,819

)

Other assets

 

4,992

 

 

(1,217

)

(Decrease) increase in operating liabilities, net of acquisitions and dispositions:

 

 

 

 

Accounts payable

 

52,423

 

 

24,978

 

Accrued expenses

 

8,447

 

 

(2,197

)

Billings in excess of costs and estimated earnings

 

618

 

 

(3,850

)

Tax receivable agreement liability

 

424

 

 

1,812

 

Other liabilities

 

(5,805

)

 

(1,807

)

Net cash provided by operating activities

 

163,843

 

 

70,557

 

Cash flow from investing activities:

 

 

 

 

Acquisitions, net of cash acquired

 

(2,842

)

 

(210,894

)

Purchases of property, plant and equipment

 

(139,762

)

 

(183,752

)

Proceeds from the sale of property, plant and equipment

 

13,035

 

 

18,426

 

Proceeds from sale of business

 

 

 

21,564

 

Other

 

(207

)

 

2,660

 

Net cash used for investing activities

 

(129,776

)

 

(351,996

)

Cash flow from financing activities:

 

 

 

 

Proceeds from debt issuances

 

300,000

 

 

64,500

 

Debt issuance costs

 

(6,312

)

 

(550

)

Payments on debt

 

(264,906

)

 

(79,027

)

Payments on acquisition-related liabilities

 

(11,000

)

 

(35,321

)

Distributions from partnership

 

 

 

(69

)

Proceeds from stock option exercises

 

2,559

 

 

15,615

 

Other

 

(501

)

 

(1,913

)

Net cash provided by (used in) financing activities

 

19,840

 

 

(36,765

)

Impact of foreign currency on cash

 

174

 

 

(422

)

Net increase (decrease) in cash

 

54,081

 

 

(318,626

)

Cash and cash equivalents—beginning of period

 

128,508

 

 

383,556

 

Cash and cash equivalents—end of period

 

$

182,589

 

 

$

64,930

 

 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Revenue Data by Segment and Line of Business

($ in thousands)

 

 

 

Three months ended

 

Nine months ended

 

 

September 28,

 

September 29,

 

September 28,

 

September 29,

 

 

2019

 

2018

 

2019

 

2018

Segment Net Revenue:

 

 

 

 

 

 

 

 

West

 

$

331,501

 

 

$

329,346

 

 

$

773,036

 

 

$

791,975

 

East

 

235,355

 

 

201,699

 

 

530,508

 

 

458,829

 

Cement

 

98,991

 

 

93,972

 

 

220,844

 

 

213,364

 

Net Revenue

 

$

665,847

 

 

$

625,017

 

 

$

1,524,388

 

 

$

1,464,168

 

 

 

 

 

 

 

 

 

 

Line of Business - Net Revenue:

 

 

 

 

 

 

 

 

Materials

 

 

 

 

 

 

 

 

Aggregates

 

$

137,528

 

 

$

109,621

 

 

$

354,050

 

 

$

280,761

 

Cement (1)

 

92,482

 

 

87,909

 

 

202,780

 

 

197,439

 

Products

 

324,711

 

 

315,292

 

 

737,169

 

 

751,396

 

Total Materials and Products

 

554,721

 

 

512,822

 

 

1,293,999

 

 

1,229,596

 

Services

 

111,126

 

 

112,195

 

 

230,389

 

 

234,572

 

Net Revenue

 

$

665,847

 

 

$

625,017

 

 

$

1,524,388

 

 

$

1,464,168

 

 

 

 

 

 

 

 

 

 

Line of Business - Net Cost of Revenue:

 

 

 

 

 

 

 

 

Materials

 

 

 

 

 

 

 

 

Aggregates

 

$

43,156

 

 

$

33,793

 

 

$

142,698

 

 

$

109,747

 

Cement

 

46,960

 

 

40,294

 

 

117,423

 

 

104,441

 

Products

 

245,396

 

 

244,410

 

 

579,286

 

 

593,862

 

Total Materials and Products

 

335,512

 

 

318,497

 

 

839,407

 

 

808,050

 

Services

 

81,232

 

 

83,662

 

 

174,845

 

 

176,742

 

Net Cost of Revenue

 

$

416,744

 

 

$

402,159

 

 

$

1,014,252

 

 

$

984,792

 

 

 

 

 

 

 

 

 

 

Line of Business - Adjusted Cash Gross Profit (2):

 

 

 

 

 

 

 

 

Materials

 

 

 

 

 

 

 

 

Aggregates

 

$

94,372

 

 

$

75,828

 

 

$

211,352

 

 

$

171,014

 

Cement (3)

 

45,522

 

 

47,615

 

 

85,357

 

 

92,998

 

Products

 

79,315

 

 

70,882

 

 

157,883

 

 

157,534

 

Total Materials and Products

 

219,209

 

 

194,325

 

 

454,592

 

 

421,546

 

Services

 

29,894

 

 

28,533

 

 

55,544

 

 

57,830

 

Adjusted Cash Gross Profit

 

$

249,103

 

 

$

222,858

 

 

$

510,136

 

 

$

479,376

 

 

 

 

 

 

 

 

 

 

Adjusted Cash Gross Profit Margin (2)

 

 

 

 

 

 

 

 

Materials

 

 

 

 

 

 

 

 

Aggregates

 

68.6

%

 

69.2

%

 

59.7

%

 

60.9

%

Cement (3)

 

46.0

%

 

50.7

%

 

38.7

%

 

43.6

%

Products

 

24.4

%

 

22.5

%

 

21.4

%

 

21.0

%

Services

 

26.9

%

 

25.4

%

 

24.1

%

 

24.7

%

Total Adjusted Cash Gross Profit Margin

 

37.4

%

 

35.7

%

 

33.5

%

 

32.7

%

________________________________________________________
(1) Net revenue for the cement line of business excludes revenue associated with hazardous and non-hazardous waste, which is processed into fuel and used in the cement plants and is included in services net revenue. Additionally, net revenue from cement swaps and other cement-related products are included in products net revenue.
(2) Adjusted cash gross profit is calculated as net revenue by line of business less net cost of revenue by line of business. Adjusted cash gross profit margin is defined as adjusted cash gross profit divided by net revenue.
(3) The cement adjusted cash gross profit includes the earnings from the waste processing operations, cement swaps and other products. Cement line of business adjusted cash gross profit margin is defined as cement adjusted cash gross profit divided by cement segment net revenue.

 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Volume and Price Statistics

(Units in thousands)

 

 

Three months ended

 

Nine months ended

Total Volume

 

September 28,
2019

 

September 29,
2018

 

September 28,
2019

 

September 29,
2018

Aggregates (tons)

 

15,895

 

 

14,116

 

 

40,630

 

 

36,081

 

Cement (tons)

 

826

 

 

796

 

 

1,821

 

 

1,770

 

Ready-mix concrete (cubic yards)

 

1,546

 

 

1,519

 

 

4,035

 

 

4,164

 

Asphalt (tons)

 

2,263

 

 

2,212

 

 

4,280

 

 

4,173

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

Pricing

 

September 28,
2019

 

September 29,
2018

 

September 28,
2019

 

September 29,
2018

Aggregates (per ton)

 

$

11.13

 

 

$

10.41

 

 

$

11.01

 

 

$

10.20

 

Cement (per ton)

 

115.54

 

 

112.03

 

 

114.95

 

 

113.37

 

Ready-mix concrete (per cubic yards)

 

111.94

 

 

108.75

 

 

110.22

 

 

107.69

 

Asphalt (per ton)

 

60.40

 

 

56.34

 

 

59.00

 

 

55.35

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

Percentage Change in

 

Percentage Change in

Year over Year Comparison

 

Volume

 

Pricing

 

Volume

 

Pricing

Aggregates (per ton)

 

12.6

%

 

6.9

%

 

12.6

%

 

7.9

%

Cement (per ton)

 

3.8

%

 

3.1

%

 

2.9

%

 

1.4

%

Ready-mix concrete (per cubic yards)

 

1.8

%

 

2.9

%

 

(3.1

)%

 

2.3

%

Asphalt (per ton)

 

2.3

%

 

7.2

%

 

2.6

%

 

6.6

%

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

 

Percentage Change in

 

Percentage Change in

Year over Year Comparison (Excluding acquisitions)

 

Volume

 

Pricing

 

Volume

 

Pricing

Aggregates (per ton)

 

11.4

%

 

6.9

%

 

7.7

%

 

7.3

%

Cement (per ton)

 

3.8

%

 

3.1

%

 

2.9

%

 

1.4

%

Ready-mix concrete (per cubic yards)

 

1.3

%

 

2.7

%

 

(3.7

)%

 

2.2

%

Asphalt (per ton)

 

2.3

%

 

7.2

%

 

2.0

%

 

6.8

%

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Reconciliations of Gross Revenue to Net Revenue by Line of Business

($ and Units in thousands, except pricing information)

 

 

 

Three months ended September 28, 2019

 

 

 

 

 

 

Gross Revenue

 

Intercompany

 

Net

 

 

Volumes

 

Pricing

 

by Product

 

Elimination/Delivery

 

Revenue

Aggregates

 

15,895

 

 

$

11.13

 

 

$

176,929

 

 

$

(39,401

)

 

$

137,528

 

Cement

 

826

 

 

115.54

 

 

95,487

 

 

(3,005

)

 

92,482

 

Materials

 

 

 

 

 

$

272,416

 

 

$

(42,406

)

 

$

230,010

 

Ready-mix concrete

 

1,546

 

 

111.94

 

 

173,035

 

 

(277

)

 

172,758

 

Asphalt

 

2,263

 

 

60.40

 

 

136,712

 

 

(37

)

 

136,675

 

Other Products

 

 

 

 

 

118,228

 

 

(102,950

)

 

15,278

 

Products

 

 

 

 

 

$

427,975

 

 

$

(103,264

)

 

$

324,711

 

 

 

Nine months ended September 28, 2019

 

 

 

 

 

 

Gross Revenue

 

Intercompany

 

Net

 

 

Volumes

 

Pricing

 

by Product

 

Elimination/Delivery

 

Revenue

Aggregates

 

40,630

 

 

$

11.01

 

 

$

447,159

 

 

$

(93,109

)

 

$

354,050

 

Cement

 

1,821

 

 

114.95

 

 

209,335

 

 

(6,555

)

 

202,780

 

Materials

 

 

 

 

 

$

656,494

 

 

$

(99,664

)

 

$

556,830

 

Ready-mix concrete

 

4,035

 

 

110.22

 

 

444,702

 

 

(444

)

 

444,258

 

Asphalt

 

4,280

 

 

59.00

 

 

252,511

 

 

(145

)

 

252,366

 

Other Products

 

 

 

 

 

286,605

 

 

(246,060

)

 

40,545

 

Products

 

 

 

 

 

$

983,818

 

 

$

(246,649

)

 

$

737,169

 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Reconciliations of Non-GAAP Financial Measures
($ in thousands, except share and per share amounts)

The tables below reconcile our net income (loss) to Adjusted EBITDA by segment for the three and nine months ended September 28, 2019 and September 29, 2018.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

 

Three months ended September 28, 2019

by Segment

 

West

 

East

 

Cement

 

Corporate

 

Consolidated

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

56,829

 

 

$

56,640

 

 

$

34,303

 

 

$

(89,535

)

 

$

58,237

 

Interest expense (income)

 

411

 

 

182

 

 

(2,731

)

 

31,055

 

 

28,917

 

Income tax expense

 

1,144

 

 

26

 

 

 

 

44,432

 

 

45,602

 

Depreciation, depletion and amortization

 

23,171

 

 

19,406

 

 

10,957

 

 

1,041

 

 

54,575

 

EBITDA

 

$

81,555

 

 

$

76,254

 

 

$

42,529

 

 

$

(13,007

)

 

$

187,331

 

Accretion

 

136

 

 

262

 

 

154

 

 

 

 

552

 

Transaction costs

 

1

 

 

 

 

 

 

750

 

 

751

 

Non-cash compensation

 

 

 

 

 

 

 

4,819

 

 

4,819

 

Other

 

244

 

 

309

 

 

 

 

(689

)

 

(136

)

Adjusted EBITDA (1)

 

$

81,936

 

 

$

76,825

 

 

$

42,683

 

 

$

(8,127

)

 

$

193,317

 

Adjusted EBITDA Margin (1)

 

24.7

%

 

32.6

%

 

43.1

%

 

 

 

29.0

%

Reconciliation of Net Income (Loss) to Adjusted EBITDA

 

Three months ended September 29, 2018

by Segment

 

West

 

East

 

Cement

 

Corporate

 

Consolidated

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

61,021

 

 

$

37,351

 

 

$

35,326

 

 

$

(59,706

)

 

$

73,992

 

Interest expense (income)

 

1,380

 

 

844

 

 

(1,709

)

 

28,374

 

 

28,889

 

Income tax expense

 

567

 

 

275

 

 

 

 

19,923

 

 

20,765

 

Depreciation, depletion and amortization

 

23,144

 

 

19,154

 

 

10,622

 

 

574

 

 

53,494

 

EBITDA

 

$

86,112

 

 

$

57,624

 

 

$

44,239

 

 

$

(10,835

)

 

$

177,140

 

Accretion

 

145

 

 

275

 

 

60

 

 

 

 

480

 

Gain on sale of business

 

(12,108

)

 

 

 

 

 

 

 

(12,108

)

Transaction costs

 

2

 

 

 

 

 

 

1,258

 

 

1,260

 

Non-cash compensation

 

 

 

 

 

 

 

5,643

 

 

5,643

 

Other

 

(235

)

 

406

 

 

 

 

(580

)

 

(409

)

Adjusted EBITDA (1)

 

$

73,916

 

 

$

58,305

 

 

$

44,299

 

 

$

(4,514

)

 

$

172,006

 

Adjusted EBITDA Margin (1)

 

22.4

%

 

28.9

%

 

47.1

%

 

 

 

27.5

%

Reconciliation of Net Income (Loss) to Adjusted EBITDA

 

Nine months ended September 28, 2019

by Segment

 

West

 

East

 

Cement

 

Corporate

 

Consolidated

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

78,016

 

 

$

73,448

 

 

$

51,652

 

 

$

(178,390

)

 

$

24,726

 

Interest expense (income)

 

1,905

 

 

2,237

 

 

(7,395

)

 

91,676

 

 

88,423

 

Income tax expense (benefit)

 

1,478

 

 

144

 

 

 

 

32,650

 

 

34,272

 

Depreciation, depletion and amortization

 

69,751

 

 

58,851

 

 

30,830

 

 

2,985

 

 

162,417

 

EBITDA

 

$

151,150

 

 

$

134,680

 

 

$

75,087

 

 

$

(51,079

)

 

$

309,838

 

Accretion

 

405

 

 

868

 

 

450

 

 

 

 

1,723

 

Loss on debt financings

 

 

 

 

 

 

 

14,565

 

 

14,565

 

Transaction costs

 

12

 

 

 

 

 

 

1,437

 

 

1,449

 

Non-cash compensation

 

 

 

 

 

 

 

15,424

 

 

15,424

 

Other (2)

 

(513

)

 

(1,069

)

 

 

 

(1,046

)

 

(2,628

)

Adjusted EBITDA

 

$

151,054

 

 

$

134,479

 

 

$

75,537

 

 

$

(20,699

)

 

$

340,371

 

Adjusted EBITDA Margin (1)

 

19.5

%

 

25.3

%

 

34.2

%

 

 

 

22.3

%

Reconciliation of Net Income (Loss) to Adjusted EBITDA

 

Nine months ended September 29, 2018

by Segment

 

West

 

East

 

Cement

 

Corporate

 

Consolidated

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

97,625

 

 

$

42,128

 

 

$

61,687

 

 

$

(146,483

)

 

$

54,957

 

Interest expense (income)

 

4,114

 

 

2,397

 

 

(4,794

)

 

84,899

 

 

86,616

 

Income tax expense

 

616

 

 

5

 

 

 

 

15,628

 

 

16,249

 

Depreciation, depletion and amortization

 

67,597

 

 

54,272

 

 

25,651

 

 

1,919

 

 

149,439

 

EBITDA

 

$

169,952

 

 

$

98,802

 

 

$

82,544

 

 

$

(44,037

)

 

$

307,261

 

Accretion

 

432

 

 

710

 

 

82

 

 

 

 

1,224

 

Loss on debt financings

 

 

 

 

 

 

 

149

 

 

149

 

Gain on sale of business

 

(12,108

)

 

 

 

 

 

 

 

(12,108

)

Transaction costs

 

(4

)

 

 

 

 

 

3,821

 

 

3,817

 

Non-cash compensation

 

 

 

 

 

 

 

19,833

 

 

19,833

 

Other (2)

 

(6,956

)

 

985

 

 

 

 

(1,345

)

 

(7,316

)

Adjusted EBITDA

 

$

151,316

 

 

$

100,497

 

 

$

82,626

 

 

$

(21,579

)

 

$

312,860

 

Adjusted EBITDA Margin (1)

 

19.1

%

 

21.9

%

 

38.7

%

 

 

 

21.4

%

_______________________________________________________
(1) Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of net revenue.
(2) In the nine months ended September 28, 2019, we negotiated a $2.0 million reduction in the amount of a contingent liability from one of our acquisitions. In the nine months ended September 29, 2018, we negotiated a $6.9 million reduction in the amount of a contingent liability from one of our acquisitions. As we had passed the period to revise the opening balance sheet for this acquisition, the adjustment was recorded in the respective period as other income.

The table below reconciles our net income per share attributable to Summit Materials, Inc. to adjusted diluted net income per share for the three and nine months ended September 28, 2019 and September 29, 2018. The per share amount of the net income attributable to Summit Materials, Inc. presented in the table is calculated using the total equity interests for the purpose of reconciling to adjusted diluted net income per share.

 

 

Three months ended

 

Nine months ended

 

 

September 28, 2019

 

September 29, 2018

 

September 28, 2019

 

September 29, 2018

Reconciliation of Net Income Per Share to Adjusted Diluted EPS

 

Net
Income

 

Per Equity
Unit

 

Net
Income

 

Per Equity
Unit

 

Net
Income

 

Per Equity
Unit

 

Net
Income

 

Per Equity
Unit

Net income attributable to Summit Materials, Inc.

 

$

55,757

 

 

$

0.48

 

 

$

71,289

 

 

$

0.62

 

 

$

23,395

 

 

$

0.20

 

 

$

53,069

 

 

$

0.46

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interest

 

2,480

 

 

0.02

 

 

2,703

 

 

0.03

 

 

1,331

 

 

0.01

 

 

1,888

 

 

0.02

 

Adjustment to acquisition deferred liability

 

 

 

 

 

 

 

 

 

(2,000

)

 

(0.02

)

 

(6,947

)

 

(0.06

)

Gain on sale of business

 

 

 

 

 

(12,108

)

 

(0.11

)

 

 

 

 

 

(12,108

)

 

(0.11

)

Loss on debt financings

 

 

 

 

 

 

 

 

 

14,565

 

 

0.13

 

 

149

 

 

 

Adjusted diluted net income

 

$

58,237

 

 

$

0.50

 

 

$

61,884

 

 

$

0.54

 

 

$

37,291

 

 

$

0.32

 

 

$

36,051

 

 

$

0.31

 

Weighted-average shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Class A common stock

 

112,179,137

 

 

 

 

111,641,344

 

 

 

 

112,020,275

 

 

 

 

111,288,211

 

 

 

LP Units outstanding

 

3,368,058

 

 

 

 

3,448,343

 

 

 

 

3,404,231

 

 

 

 

3,538,385

 

 

 

Total equity units

 

115,547,195

 

 

 

 

115,089,687

 

 

 

 

115,424,506

 

 

 

 

114,826,596

 

 

 

The following table reconciles operating income to Adjusted Cash Gross Profit and Adjusted Cash Gross Profit Margin for the three and nine months ended September 28, 2019 and September 29, 2018.

 

 

Three months ended

 

Nine months ended

 

 

September 28,

 

September 29,

 

September 28,

 

September 29,

Reconciliation of Operating Income to Adjusted Cash Gross Profit

 

2019

 

2018

 

2019

 

2018

($ in thousands)

 

 

 

 

 

 

 

 

Operating income

 

$

130,881

 

 

$

108,167

 

 

$

153,632

 

 

$

133,921

 

General and administrative expenses

 

62,344

 

 

59,457

 

 

190,915

 

 

190,975

 

Depreciation, depletion, amortization and accretion

 

55,127

 

 

53,974

 

 

164,140

 

 

150,663

 

Transaction costs

 

751

 

 

1,260

 

 

1,449

 

 

3,817

 

Adjusted Cash Gross Profit (exclusive of items shown separately)

 

$

249,103

 

 

$

222,858

 

 

$

510,136

 

 

$

479,376

 

Adjusted Cash Gross Profit Margin (exclusive of items shown separately) (1)

 

37.4

%

 

35.7

%

 

33.5

%

 

32.7

%

_______________________________________________________
(1) Adjusted Cash Gross Profit Margin is defined as Adjusted Cash Gross Profit as a percentage of net revenue.

The following table reconciles net cash provided by operating activities to free cash flow for the three and nine months ended September 28, 2019 and September 29, 2018.

 

 

Three months ended

 

Nine months ended

 

 

September 28,

 

September 29,

 

September 28,

 

September 29,

($ in thousands)

 

2019

 

2018

 

2019

 

2018

Net income

 

$

58,237

 

 

$

73,992

 

 

$

24,726

 

 

$

54,957

 

Non-cash items

 

100,538

 

 

60,379

 

 

208,368

 

 

158,851

 

Net income adjusted for non-cash items

 

158,775

 

 

134,371

 

 

233,094

 

 

213,808

 

Change in working capital accounts

 

(10,880

)

 

(30,096

)

 

(69,251

)

 

(143,251

)

Net cash provided by operating activities

 

147,895

 

 

104,275

 

 

163,843

 

 

70,557

 

Capital expenditures, net of asset sales

 

(29,163

)

 

(47,779

)

 

(126,727

)

 

(165,326

)

Free cash flow

 

$

118,732

 

 

$

56,496

 

 

$

37,116

 

 

$

(94,769

)

 

Karli Anderson
Vice President, Investor Relations
karli.anderson@summit-materials.com
303-515-5152

Source: Summit Materials, Inc.

NYSE: SUM
Stock Quote ($)
22.00
Market Cap ($M)
2,470.15
Change
$(0.08)
(0.36)%
As of November 13, 2019 Close- Minimum 20 minute delay by Sunguard.

Contact Information

Investor Relations Brian Harris
Executive Vice President, CFO
Brian.Harris@summit-materials.com