Company Release - 11/2/2016 7:00 AM ET

- 3Q16 Net Income of $61.1 million, or $0.61 Basic Earnings per Share

- 3Q16 Adjusted Net Income of $73.5 million, or $0.73 Adjusted Diluted Earnings per Share

- Reaffirmed full year 2016 Adjusted EBITDA financial guidance of $360.0 million to $370.0 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 of 2016. For the three months ended October 1, 2016, the Company generated basic earnings per share of $0.61 and adjusted diluted earnings per share of $0.73 on adjusted net income of $73.5 million, an increase of more than 15% when compared to the prior year period.

“Sustained organic growth in aggregates and cement pricing, coupled with improved cost discipline and margin capture, contributed to significant year-over-year increases in operating cash flow and net income in the third quarter,” stated Tom Hill, CEO of Summit Materials. “Materials gross profit increased nearly 30% on a year over year basis, representing more than half of total gross profit in the period. Overall, total gross profit margin increased 290 basis points on a year-over-year basis to 40.3% in the third quarter 2016.”

“Total sales volumes increased across all lines of business in the third quarter, due mainly to the benefit of acquisitions completed during the past twelve months,” continued Hill. “On an organic basis, total sales volumes of aggregates and products declined due to a combination of severe summer weather in most of our core regional markets and tough prior-year comparisons in Vancouver. Looking ahead, we believe that our regional markets remain in the early stages of a multi-year recovery in public infrastructure, residential and non-residential construction spending, as supported by favorable long-term demographic trends,” continued Hill.

“For the nine months ended 2016, approximately 40% of our aggregates revenues were related to public infrastructure projects,” continued Hill. “Entering 2017, we anticipate an acceleration in public infrastructure spending from current levels, supported in part by the passage of the FAST Act and state-level funding.”

“We remain a disciplined acquirer of strategic assets that serve to further entrench Summit as a leader in markets where our scale and integrated model are proven competitive advantages,” stated Hill. “During the third quarter, we completed four small bolt-on acquisitions, including one transaction that serves to expand our materials distribution capabilities through two acquired terminals in the Louisiana market. We anticipate financial contributions from these transactions will begin to contribute meaningfully in 2017,” continued Hill.

“Net leverage declined to 4.3x at third quarter-end, as Adjusted EBITDA increased more than 20% on a year-over-year basis to $146.2 million,” stated Brian Harris, CFO of Summit Materials. “At quarter-end, we had more than $240 million of cash and availability under our revolving credit facility, providing us with sufficient flexibility with which to support the growth of our existing business. We continue to maintain a high degree of capital discipline, even as we regularly review potential acquisition opportunities that align with our materials-based growth strategy. As before, we remain committed to reducing outstanding net leverage, with the objective of achieving a net debt to Adjusted EBITDA metric of 4.0x by year-end 2016.”

“We are pleased to host our first-ever Investor Day in Houston on November 15, 2016, which will be streamed live via webcast in the investor relations section of our corporate website,” noted Hill. “We believe Summit is uniquely positioned for profitable expansion in the years ahead and intend to provide important details around our roadmap for strategic growth at this important event.”

Third Quarter 2016 | Financial Performance

Net revenue increased to $480.2 million in the third quarter 2016, versus $426.3 million in the prior year period. The year-over-year improvement in net revenue was primarily attributable to higher acquisition-related sales volumes across all lines of business, coupled with improved organic and acquisition-related pricing on aggregates, cement and ready-mix concrete.

The Company reported third quarter 2016 basic earnings per share of $0.61 on net income of $61.1 million. On an adjusted basis, the Company reported third quarter 2016 earnings per share of $0.73 per diluted share on net income of $73.5 million, using 100.0 million weighted-average total shares. The shares of Class A common stock are issued by Summit Materials, Inc., and as such the earnings and equity interests of non-controlling interests, including LP units, are not included in basic earnings per share. Summit believes adjusted net income and Adjusted EPS are more representative of earnings performance, as these measures exclude the non-operating impact to earnings per share of any potential exchange of LP units for Class A common stock in any given quarter.

Operating income increased 5.9% to $88.3 million, compared to the prior year period. Gross profit increased 21.3% to $193.6 million, compared to the prior year period. As a percentage of net revenue, gross profit margin increased 290 basis points to 40.3% in the third quarter 2016, due mainly to improved gross margins across most lines of business and a higher percentage of revenue from aggregates and cement.

Adjusted EBITDA increased 21.4% to $146.2 million, compared to the prior year period, with growth across all operating segments. As a percentage of net revenue, Adjusted EBITDA improved to 30.4%, up 220 basis points from the prior year period. Operating segment Adjusted EBITDA in the third quarter 2016 was as follows:

  • West Segment: Adjusted EBITDA increased 6.6% million to $63.7 million in the third quarter 2016, when compared to the prior-year period. A year-over-year decline in organic Adjusted EBITDA growth was more than offset by acquisition-related EBITDA contributions, including the impact of acquisitions completed in 2015 and 2016.
  • East Segment: Adjusted EBITDA increased 40.6% to $51.6 million in the third quarter 2016, when compared to the prior year period. The East segment reported Adjusted EBITDA growth in the period, both including and excluding acquisitions. This performance was attributable to a higher mix of revenue from aggregates, organic improvement in aggregates and ready mix, and the impact of acquisitions.
  • Cement Segment: Adjusted EBITDA increased 27.6% to $40.3 million, when compared to the prior year period, due mainly to increased sales volumes, higher average prices attributable to stronger residential market demand and improved operational efficiencies, including a reduction in unscheduled downtime, cost reductions and improved production processes.

Third Quarter 2016 | Results by Line of Business

  • Aggregates Business: Aggregates net revenues increased 25.4% to $78.3 million in the third quarter 2016, when compared to the prior year period. Aggregates gross profit as a percentage of aggregates net revenues increased 490 basis points to 71.7% in the third quarter 2016, when compared to the prior year period. Including acquisitions, sales volumes increased 16.8% and average sales price increased 8.1%, when compared to the prior year period. Excluding acquisitions, organic sales volume declined 3.4% and organic average sales price increased 4.6%, when compared to the prior year period. Organic sales volumes were impacted in the third quarter by a combination of lower volumes in: (1) the Vancouver, B.C. market, given the completion of a large sand river project in 2015; and (2) the Texas market, given temporary flooding during the period. Aggregates organic average sales price was strong across all major markets in the third quarter.
  • Cement Business: Cement net revenues increased 22.4% to $81.2 million in the third quarter 2016, when compared to the prior year period. Cement gross profit as a percentage of cement segment net revenues was 48.9% in the third quarter 2016, essentially flat with the prior year period. Sales volumes increased 14.4% and the average sales price increased 7.0% in the third quarter, in each case when compared to the prior year period. Cement volumes increased on a year-over-year basis as a result of the Davenport acquisition in July 2015, while cement prices improved as a result of favorable overall market conditions.
  • Products Business: Net revenues from ready-mix concrete, asphalt and other products increased 8.4% to $226.8 million in the third quarter 2016, when compared to the prior year period. Products gross margin as a percentage of product net revenues increased 180 basis points to 28.4%, when compared to the prior year period. Including acquisitions, sales volumes of ready-mix concrete and asphalt increased 16.6% and 2.7%, respectively, while average sales prices increased 0.6% and declined 7.7%, respectively. Excluding acquisitions, organic sales volumes of ready-mix concrete and asphalt declined 2.8% and 7.9%, respectively, while average sales prices increased 1.7% and declined 7.1%, respectively. The organic decline in products volumes was related to a less favorable geographic sales mix, coupled with temporary budgetary constraints on public infrastructure spending in Kansas and Kentucky.

Liquidity and Capital Resources

At October 1, 2016, the Company improved its leverage metrics as compared to July 2, 2016 with cash on hand of $31.6 million, total outstanding debt of $1.5 billion and a borrowing capacity of $209.4 million. The borrowing capacity is net of $25.6 million of outstanding letters of credit, and is fully available to the Company within the terms and covenant requirements of its credit agreement.

Financial Guidance & Business Outlook

Based on current market conditions, the Company is reiterating its prior full year 2016 Adjusted EBITDA guidance to be in the range of $360.0 million to $370.0 million, versus Adjusted EBITDA of $287.5 million in the full-year 2015. The Adjusted EBITDA outlook includes the successor period impact for acquisitions completed through today’s date.

For the full year 2016, the Company is reiterating its gross capital expenditures guidance to be in the range of $150.0 million to $170.0 million, which includes several profit-improvement projects, mainly in aggregates facilities, which stand to increase capacity and operational efficiency. Longer-term, the Company expects gross capital expenditures to approximate 6% to 7% of net revenue per annum.

Webcast and Conference Call Information

Summit Materials will conduct a conference call at 11:00 a.m. Eastern Time (9:00 a.m. Mountain Time) on Wednesday, November 2, 2016 to review third quarter 2016 results, discuss recent events, and conduct a question-and-answer period. A webcast of the conference call and presentation slides to be referred to on the call 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 telephone conference call:

 

Domestic:

 

1-877-407-0784

 

International:

 

1-201-689-8560

 

Conference ID:

 

86972581

To listen to a replay of the telephone conference call:

 

Domestic:

 

1-877-870-5176

 

International:

 

1-858-384-5517

 

Conference ID:

 

13646656

 

     

The playback recording can be accessed through December 2, 2016

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, and 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, Adjusted EPS, Adjusted EBITDA, gross profit and free cash flow, 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, Adjusted EPS, Adjusted EBITDA, gross profit and free cash flow, 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 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 and other non-GAAP measures on a supplemental basis.

Adjusted EBITDA, gross profit, adjusted net income, Adjusted EPS and free cash flow 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, to the extent available without unreasonable effort. 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 contains “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. Any and all statements made relating to the expectations for our anticipated benefits from recent acquisitions, the macroeconomic outlook for our markets, potential acquisition activity, our estimated and projected earnings, margins, costs, expenditures, cash flows, sales volumes and financial results are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those expected. 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 impact 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 achieved. 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 our Annual Report on Form 10-K for the fiscal year ended January 2, 2016. Such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov.

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 otherwise required by law.

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

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

 

 

   

 

   

 

   

 

   
   

Three months ended

 

Nine months ended

   

October 1,

 

September 26,

 

October 1,

 

September 26,

   

2016

 

2015

 

 

2016

 

 

2015

 

Revenue:

                       

Product

 

$

386,236

 

$

338,020

   

$

907,679

   

$

748,210

 

Service

 

 

93,974

 

 

88,266

 

 

 

193,206

 

 

 

182,224

 

Net revenue

   

480,210

   

426,286

     

1,100,885

     

930,434

 

Delivery and subcontract revenue

 

 

49,227

 

 

45,619

 

 

 

102,205

 

 

 

100,401

 

Total revenue

 

 

529,437

 

 

471,905

 

 

 

1,203,090

 

 

 

1,030,835

 

Cost of revenue (excluding items shown separately below):

                       

Product

   

224,927

   

207,500

     

559,512

     

490,923

 

Service

 

 

61,725

 

 

59,280

 

 

 

136,250

 

 

 

128,514

 

Net cost of revenue

   

286,652

   

266,780

     

695,762

     

619,437

 

Delivery and subcontract cost

 

 

49,227

 

 

45,619

 

 

 

102,205

 

 

 

100,401

 

Total cost of revenue

 

 

335,879

 

 

312,399

 

 

 

797,967

 

 

 

719,838

 

General and administrative expenses

   

64,194

   

42,539

     

185,208

     

149,484

 

Depreciation, depletion, amortization and accretion

   

39,427

   

33,306

     

109,195

     

86,818

 

Transaction costs

 

 

1,684

 

 

304

 

 

 

5,290

 

 

 

8,044

 

Operating income

   

88,253

   

83,357

     

105,430

     

66,651

 

Other expense (income), net

   

565

   

(1,171

)

   

799

     

(678

)

Loss on debt financings

   

   

32,641

     

     

64,313

 

Interest expense

 

 

25,273

 

 

20,727

 

 

 

72,467

 

 

 

62,231

 

Income (loss) from operations before taxes

   

62,415

   

31,160

     

32,164

     

(59,215

)

Income tax expense (benefit)

 

 

1,309

 

 

(2,655

)

 

 

(7,913

)

 

 

(12,468

)

Income (loss) from continuing operations

   

61,106

   

33,815

     

40,077

     

(46,747

)

Income from discontinued operations

 

 

 

 

(57

)

 

 

 

 

 

(815

)

Net income (loss)

   

61,106

   

33,872

     

40,077

     

(45,932

)

Net income (loss) attributable to noncontrolling interest in subsidiaries

   

92

   

52

     

57

     

(1,917

)

Net income (loss) attributable to Summit Holdings (1)

 

 

16,194

 

 

19,109

 

 

 

2,947

 

 

 

(48,370

)

Net income attributable to Summit Inc.

 

$

44,820

 

$

14,711

 

 

$

37,073

 

 

$

4,355

 

Net income per share of Class A common stock:

                       

Basic

 

$

0.61

 

$

0.38

   

$

0.60

   

$

0.13

 

Diluted

 

$

0.61

 

$

0.38

   

$

0.41

   

$

0.13

 

Weighted average shares of Class A common stock:

                       

Basic

   

73,297,795

   

38,901,989

     

61,550,741

     

32,589,721

 

Diluted

   

73,444,105

   

38,945,467

     

100,343,458

     

32,632,630

 

(1) Represents portion of business owned by private interests

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

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

 

 

   

 

   
   

October 1,

 

January 2,

   

2016

 

2016

   

(unaudited)

 

(audited)

Assets

           

Current assets:

           

Cash and cash equivalents

 

$

31,643

   

$

186,405

 

Accounts receivable, net

   

247,175

     

145,544

 

Costs and estimated earnings in excess of billings

   

39,052

     

5,690

 

Inventories

   

164,875

     

130,082

 

Other current assets

 

 

8,353

 

 

 

4,807

 

Total current assets

   

491,098

     

472,528

 

Property, plant and equipment, less accumulated depreciation, depletion and amortization (October 1, 2016 - $452,186 and January 2, 2016 - $366,505)

   

1,456,491

     

1,269,006

 

Goodwill

   

760,448

     

596,397

 

Intangible assets, less accumulated amortization (October 1, 2016 - $7,315 and January 2, 2016 - $5,237)

   

25,205

     

15,005

 

Other assets

 

 

47,796

 

 

 

43,243

 

Total assets

 

$

2,781,038

 

 

$

2,396,179

 

Liabilities and Stockholders’ Equity

           

Current liabilities:

           

Current portion of debt

 

$

6,500

   

$

6,500

 

Current portion of acquisition-related liabilities

   

21,907

     

20,584

 

Accounts payable

   

113,329

     

81,397

 

Accrued expenses

   

108,711

     

92,942

 

Billings in excess of costs and estimated earnings

 

 

16,869

 

 

 

13,081

 

Total current liabilities

   

267,316

     

214,504

 

Long-term debt

   

1,515,381

     

1,273,652

 

Acquisition-related liabilities

   

31,473

     

39,977

 

Other noncurrent liabilities

 

 

121,133

 

 

 

100,186

 

Total liabilities

 

 

1,935,303

 

 

 

1,628,319

 

           

 

Stockholders’ equity:

           

Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 75,566,319 and 49,745,944 shares issued and outstanding as of October 1, 2016 and January 2, 2016, respectively

   

756

     

497

 

Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 28,661,526 and 69,007,297 shares issued and outstanding as of October 1, 2016 and January 2, 2016, respectively

   

287

     

690

 

Additional paid-in capital

   

730,201

     

619,003

 

Accumulated earnings

   

46,259

     

10,870

 

Accumulated other comprehensive loss

 

 

(2,865

)

 

 

(2,795

)

Stockholders’ equity

   

774,638

     

628,265

 

Noncontrolling interest in consolidated subsidiaries

   

1,419

     

1,362

 

Noncontrolling interest in Summit Holdings

 

 

69,678

 

 

 

138,233

 

Total stockholders’ equity

 

 

845,735

 

 

 

767,860

 

Total liabilities and stockholders’ equity

 

$

2,781,038

 

 

$

2,396,179

 

 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

($ in thousands)

 

 

   

 

   
   

Nine months ended

   

October 1,

 

September 26,

   

2016

 

2015

Cash flow from operating activities:

           

Net income (loss)

 

$

40,077

   

$

(45,932

)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

           

Depreciation, depletion, amortization and accretion

   

118,026

     

90,789

 

Share-based compensation expense

   

46,123

     

18,589

 

Deferred income tax benefit

   

(8,994

)

   

-

 

Net gain on asset disposals

   

(5,844

)

   

(4,990

)

Net gain on debt financings

   

-

     

(4,570

)

Other

   

(971

)

   

136

 

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

           

Accounts receivable, net

   

(81,234

)

   

(56,287

)

Inventories

   

(17,072

)

   

(3,830

)

Costs and estimated earnings in excess of billings

   

(34,349

)

   

(23,402

)

Other current assets

   

(2,876

)

   

(4,401

)

Other assets

   

(217

)

   

(524

)

Increase (decrease) in operating liabilities, net of acquisitions:

           

Accounts payable

   

23,812

     

29,383

 

Accrued expenses

   

8,948

     

(11,575

)

Billings in excess of costs and estimated earnings

   

2,138

     

(763

)

Other liabilities

 

 

(3,044

)

 

 

(853

)

Net cash provided by (used in) operating activities

 

 

84,523

 

 

 

(18,230

)

Cash flow from investing activities:

           

Acquisitions, net of cash acquired

   

(331,463

)

   

(505,466

)

Purchases of property, plant and equipment

   

(121,945

)

   

(69,672

)

Proceeds from the sale of property, plant and equipment

   

16,222

     

8,883

 

Other

 

 

1,500

 

 

 

610

 

Net cash used for investing activities

 

 

(435,686

)

 

 

(565,645

)

Cash flow from financing activities:

           

Proceeds from equity offerings

   

-

     

1,037,444

 

Capital issuance costs

   

(136

)

   

(61,218

)

Proceeds from stock option exercises

   

113

     

-

 

Shares redeemed to settle employee taxes

   

(8

)

   

-

 

Proceeds from debt issuances

   

354,000

     

1,415,750

 

Debt issuance costs

   

(5,675

)

   

(10,911

)

Payments on debt

   

(114,254

)

   

(1,251,407

)

Purchase of noncontrolling interests

   

-

     

(497,848

)

Payments on acquisition-related liabilities

   

(28,920

)

   

(15,018

)

Distributions from partnership

 

 

(9,049

)

 

 

(26,448

)

Net cash provided by financing activities

 

 

196,071

 

 

 

590,344

 

Impact of foreign currency on cash

   

330

     

(697

)

Net (decrease) increase in cash

 

 

(154,762

)

 

 

5,772

 

Cash and cash equivalents—beginning of period

 

 

186,405

 

 

 

13,215

 

Cash and cash equivalents—end of period

 

$

31,643

 

 

$

18,987

 

 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Revenue Data by Segment and Line of Business

($ in thousands)

 

 

   

 

   

 

   

 

   
   

Three months ended

   

Nine months ended

   

October 1,

 

September 26,

   

October 1,

   

September 26,

   

2016

 

2015

   

2016

   

2015

                       

 

Net Revenue by Segment

                       

West

 

$

235,667

 

$

233,703

 

$

558,488

 

$

536,722

East

   

154,980

   

120,151

   

339,229

   

273,095

Cement

 

 

89,563

 

 

72,432

 

 

203,168

 

 

120,617

Net Revenue

 

$

480,210

 

$

426,286

 

$

1,100,885

 

$

930,434

                       

 

Net Revenue by Line of Business

                       

Materials

                       

Aggregates

 

$

78,274

 

$

62,422

 

$

201,217

 

$

161,896

Cement (1)

   

81,154

   

66,313

   

179,658

   

104,986

Products

 

 

226,808

 

 

209,285

 

 

526,804

 

 

481,328

Total Materials and Products

 

 

386,236

 

 

338,020

 

 

907,679

 

 

748,210

Services

 

 

93,974

 

 

88,266

 

 

193,206

 

 

182,224

Net Revenue

 

$

480,210

 

$

426,286

 

$

1,100,885

 

$

930,434

                       

 

Gross Profit

                       

Materials

                       

Aggregates

 

$

56,108

 

$

41,719

 

$

123,773

 

$

92,935

Cement (1)

   

43,822

   

35,877

   

89,608

   

51,891

Products

   

64,398

   

55,716

   

141,260

   

119,654

Services

 

 

29,230

 

 

26,194

 

 

50,482

 

 

46,517

Gross Profit

 

$

193,558

 

$

159,506

 

$

405,123

 

$

310,997

(1) Net revenue for the cement line of business excludes revenue associated with the processing of 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. The cement segment gross profit includes the earnings from the waste processing operations, cement swaps and other products.

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Volume and Price Statistics

(Units in thousands)

 

 

                       
   

Three months ended

 

Nine months ended

 

Total Volume

 

October 1, 2016

 

September 26, 2015

 

October 1, 2016

 

September 26, 2015

 

Aggregates (tons)

   

10,658

     

9,127

     

27,302

     

23,949

   

Cement (tons)

   

757

     

662

     

1,699

     

1,093

   

Ready-mix concrete (cubic yards)

   

1,083

     

929

     

2,798

     

2,493

   

Asphalt (tons)

   

1,735

     

1,690

     

3,269

     

3,288

   
                         

 

   

Three months ended

 

Nine months ended

 

Pricing

 

October 1, 2016

 

September 26, 2015

 

October 1, 2016

 

September 26, 2015

 

Aggregates (per ton)

 

$

10.19

   

$

9.43

   

$

9.91

   

$

9.12

   

Cement (per ton)

   

109.35

     

102.17

     

108.26

     

100.36

   

Ready-mix concrete (per cubic yards)

   

103.36

     

102.74

     

103.48

     

102.22

   

Asphalt (per ton)

   

53.91

     

58.40

     

55.63

     

57.52

   
                         

 

Year over Year Comparison

 

Volume

 

Pricing

 

Volume

 

Pricing

 

Aggregates (per ton)

   

16.8

 

%

 

8.1

 

%

 

14.0

 

%

 

8.7

 

%

Cement (per ton)

   

14.4

 

%

 

7.0

 

%

 

55.4

 

%

 

7.9

 

%

Ready-mix concrete (per cubic yards)

   

16.6

 

%

 

0.6

 

%

 

12.2

 

%

 

1.2

 

%

Asphalt (per ton)

   

2.7

 

%

 

(7.7

)

%

 

(0.6

)

%

 

(3.3

)

%

                         

 

Year over Year Comparison (Excluding acquisitions)

 

Volume

 

Pricing

 

Volume

 

Pricing

 

Aggregates (per ton)

   

(3.4

)

%

 

4.6

 

%

 

(3.3

)

%

 

6.4

 

%

Cement (per ton)

   

*

   

*

   

*

   

*

 

Ready-mix concrete (per cubic yards)

   

(2.8

)

%

 

1.7

 

%

 

(1.2

)

%

 

2.2

 

%

Asphalt (per ton)

   

(7.9

)

%

 

(7.1

)

%

 

(14.3

)

%

 

(1.8

)

%

* The Davenport Assets were immediately integrated with our existing cement operations such that it is impracticable to bifurcate the growth attributable to the Davenport Assets from organic growth.

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

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

($ and Units in thousands)

 

 

 

 

   

 

   

 

   

 

   
   

Three months ended October 1, 2016

             

Gross Revenue

 

Intercompany

 

Net

   

Volumes

 

Pricing

 

by Product

 

Elimination/Delivery

 

Revenue

Aggregates

 

10,658

 

$

10.19

 

$

108,565

 

$

(30,291

)

 

$

78,274

Cement

 

757

 

 

109.35

 

 

82,746

 

 

(1,592

)

 

 

81,154

Materials

           

$

191,311

 

$

(31,883

)

 

$

159,428

Ready-mix concrete

 

1,083

   

103.36

   

111,954

   

(814

)

   

111,140

Asphalt

 

1,735

   

53.91

   

93,545

   

(214

)

   

93,331

Other Products

           

 

104,384

 

 

(82,047

)

 

 

22,337

Products

           

$

309,883

 

$

(83,075

)

 

$

226,808

 

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 and present Adjusted EBITDA by segment for the three and nine months ended October 1, 2016 and September 26, 2015.

 

 

   

 

   

 

   

 

   
   

Three months ended

 

Nine months ended

   

October 1,

 

September 26,

 

October 1,

 

September 26,

Reconciliation of Net Income (Loss) to Adjusted EBITDA

 

2016

 

2015

 

2016

 

2015

Net income (loss)

 

$

61,106

   

$

33,872

   

$

40,077

   

$

(45,932

)

Interest expense

   

25,273

     

20,727

     

72,467

     

62,231

 

Income tax expense (benefit)

   

1,309

     

(2,655

)

   

(7,913

)

   

(12,468

)

Depreciation, depletion and amortization

 

 

39,055

 

 

 

32,940

 

 

 

107,993

 

 

 

85,689

 

EBITDA

 

$

126,743

 

 

$

84,884

 

 

$

212,624

 

 

$

89,520

 

Accretion

   

372

     

366

     

1,202

     

1,129

 

IPO/ Legacy equity modification costs

   

12,506

     

     

37,257

     

28,296

 

Loss on debt financings

   

     

32,641

     

     

64,313

 

Income from discontinued operations

   

     

(57

)

   

     

(815

)

Transaction costs

   

1,684

     

304

     

5,290

     

8,044

 

Management fees and expenses

   

     

     

     

1,046

 

Non-cash compensation

   

3,801

     

1,569

     

8,866

     

4,138

 

Other

 

 

1,085

 

 

 

699

 

 

 

4,093

 

 

 

1,528

 

Adjusted EBITDA

 

$

146,191

 

 

$

120,406

 

 

$

269,332

 

 

$

197,199

 

                       

 

Adjusted EBITDA by Segment

                       

West

   

63,683

     

59,760

     

127,547

     

111,450

 

East

   

51,558

     

36,677

     

90,405

     

62,758

 

Cement

   

40,264

     

31,554

     

78,828

     

43,897

 

Corporate

 

 

(9,314

)

 

 

(7,585

)

 

 

(27,448

)

 

 

(20,906

)

Adjusted EBITDA

 

$

146,191

 

 

$

120,406

 

 

$

269,332

 

 

$

197,199

 

The table below reconciles our net income per share attributable to Summit Materials, Inc. to adjusted income per share for the three and six months ended October 1, 2016 and September 26, 2015. 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 net income per share.

 

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   
   

Three months ended

 

Nine months ended

   

October 1, 2016

 

September 26, 2015

 

October 1, 2016

 

September 26, 2015

Reconciliation of Net Income Per Share to Adjusted EPS

 

Net Income

 

Per Share

 

Net Income

 

Per Share

 

Net Income

 

Per Share

 

Net Income

 

Per Share

Net income attributable to Summit Materials, Inc.

 

$

44,820

 

$

0.45

 

$

14,711

 

$

0.16

 

$

37,073

 

$

0.37

 

$

4,355

   

$

0.05

 

Adjustments:

                                               

Net income (loss) attributable to noncontrolling interest

   

16,194

   

0.16

   

19,109

   

0.20

   

2,947

   

0.03

   

(48,370

)

   

(0.49

)

IPO/ Legacy equity modification costs

   

12,506

   

0.12

   

   

   

37,257

   

0.37

   

28,296

     

0.29

 

Loss on debt financings, net of tax

 

 

 

 

 

 

29,654

 

 

0.29

 

 

 

 

 

 

56,025

 

 

 

0.57

 

Adjusted diluted net income

 

$

73,520

 

$

0.73

 

$

63,474

 

$

0.65

 

$

77,277

 

$

0.77

 

$

40,306

 

 

$

0.42

 

Weighted-average shares:

                                               

Class A common stock

   

73,297,795

         

38,901,989

         

61,550,741

         

32,589,721

       

LP Units outstanding

 

 

26,731,747

       

 

59,360,949

       

 

38,470,523

       

 

64,618,209

 

     

Total equity interest

 

 

100,029,542

       

 

98,262,938

       

 

100,021,264

       

 

97,207,930

 

     

The following table reconciles operating income to gross profit for the three and nine months ended October 1, 2016 and September 26, 2015.

 

 

                       
   

Three months ended

 

Nine months ended

 
   

October 1,

 

September 26,

 

October 1,

 

September 26,

 

Reconciliation of Operating Income to Gross Profit

 

2016

 

2015

 

2016

 

2015

 
                         

 

Operating income

 

$

88,253

 

$

83,357

 

$

105,430

 

$

66,651

 

General and administrative expenses

   

64,194

   

42,539

   

185,208

   

149,484

 

Depreciation, depletion, amortization and accretion

   

39,427

   

33,306

   

109,195

   

86,818

 

Transaction costs

 

 

1,684

 

 

304

 

 

5,290

 

 

8,044

 

Gross Profit (exclusive of items shown separately)

 

$

193,558

 

$

159,506

 

$

405,123

 

$

310,997

 

Gross Margin(1) (exclusive of items shown separately)

   

40.3

%

 

37.4

%

 

36.8

%

 

33.4

%

(1) Gross margin is defined as gross profit as a percentage of net revenue.

The following table reconciles net cash used for operating activities to free cash flow for the three and nine months ended October 1, 2016 and September 26, 2015.

 

 

   

 

   

 

   

 

   
   

Three months ended

 

Nine months ended

   

October 1,

 

September 26,

 

October 1,

 

September 26,

   

2016

 

2015

 

2016

 

2015

Net income (loss)

 

$

61,106

   

$

33,872

   

$

40,077

   

$

(45,932

)

Non-cash items

 

 

55,899

 

 

 

35,008

 

 

 

148,340

 

 

 

99,954

 

Net income (loss) adjusted for non-cash items

   

117,005

     

68,880

     

188,417

     

54,022

 

Change in working capital accounts

 

 

(5,982

)

 

 

(6,886

)

 

 

(103,894

)

 

 

(72,252

)

Net cash provided by (used in) operating activities

   

111,023

     

61,994

     

84,523

     

(18,230

)

Capital expenditures, net of asset sales

 

 

(23,496

)

 

 

(23,449

)

 

 

(105,723

)

 

 

(60,789

)

Free cash flow

 

$

87,527

 

 

$

38,545

 

 

$

(21,200

)

 

$

(79,019

)

Summit Materials, Inc.
Investor Relations:
303-515-5159
investorrelations@summit-materials.com
or
Media:
303-515-5158
mediarelations@summit-materials.com

Source: Summit Materials, Inc.