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Section 1: 8-K (8-K)

sum_Current Folio_8K

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


 

FORM 8-K


 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): May 8, 2018


Summit Materials, Inc.

(Exact name of registrant as specified in its charter)


 

 

 

 

 

 

Delaware

001-36873

47-1984212

(State or Other Jurisdiction

(Commission

(I.R.S. Employer

of Incorporation)

File Number)

Identification No.)

 

1550 Wynkoop Street, 3rd Floor
Denver, Colorado 80202

(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s Telephone Number, Including Area Code:  (303) 893-0012

 

Not Applicable

(Former Name or Address, if Changed Since Last Report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company             

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.                                                 

 

 


 

 

 

Item 2.02 Results of Operations and Financial Condition.  

 

On May 8, 2018, Summit Materials, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended March 31, 2018. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

 

The information being furnished pursuant to this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01 Financial Statements and Exhibits.  

 

(d)    Exhibits

 

 

 

 

 

Exhibit No.

    

Description

 

 

 

99.1

 

Press Release of Summit Materials, Inc. dated May 8, 2018.

 

 


 

EXHIBIT INDEX

 

 

 

 

Exhibit No.

    

Description

99.1

 

Press Release of Summit Materials, Inc., dated May 8, 2018.

 

 

 

 

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

 

SUMMIT MATERIALS, INC.

 

 

 

 

 

 

 

By:

/s/ Anne Lee Benedict

 

Name:

Anne Lee Benedict

 

Title:

Chief Legal Officer

 

 

DATED:  May 8, 2018

 

 


(Back To Top)

Section 2: EX-99.1 (EX-99.1)

sum_Ex99_1

Exhibit 99.1

 

Summit Materials, Inc. Reports First Quarter 2018 Results

-Completed Four Bolt-on Acquisitions Since February 2018

-Completed Seven Acquisitions YTD 2018 for Total Invested Capital of $154 million

-Increasing Adjusted EBITDA Guidance For The Full-Year 2018 to a Range of $495 million to $515 million

DENVER, CO. - (May 8, 2018) - Summit Materials, Inc. (NYSE: SUM, “Summit” or the “Company”), a leading vertically integrated construction materials company, today announced results for the first quarter 2018. 

For the three months ended March 31, 2018, the Company reported a basic loss per share of ($0.49) on a net loss attributable to Summit Inc. of ($53.7) million, compared to a basic loss per share of ($0.49) on a net loss attributable to Summit Inc. of ($52.4) million in the prior year period.  On an adjusted basis, Summit reported a diluted loss per share of ($0.55) on a net loss of ($62.9) million, versus a diluted loss per share of ($0.49) on a net loss of ($54.8) million in the prior year period. 

“We have increased our Adjusted EBITDA guidance for the full-year 2018, given the completion of four new bolt-on acquisitions,” stated Tom Hill, CEO of Summit Materials.  “We continue to anticipate mid-to-high single digit organic Adjusted EBITDA growth in the current year, consistent with our prior forecast.”

 

“While demand fundamentals remain strong in our core markets, weather conditions were challenging during the first quarter, resulting in lower materials sales volumes in the period,” continued Hill.  “Importantly, given the inherent seasonality of our business, the first quarter has a very limited impact on our full-year outlook.  Our businesses have strong momentum heading into the start of construction season.  For the full-year 2018, we anticipate organic price and volume growth in both aggregates and cement.”

 

“We continue to deliver robust adjusted cash gross profit margins within our materials lines of business,” noted Hill.  “On a last twelve months (“LTM”) basis through the first quarter 2018, adjusted cash gross profit margins on aggregates and cement increased to 64.5% and 48.4%, respectively, versus 61.4% and 44.4% in the prior year period.  Further, LTM incremental adjusted cash gross margin capture on aggregates and cement remain exceptionally strong, well above the prior twelve month period.”

 

“Heavy materials selling prices are trending higher in our core regional markets,” stated Hill.  “Organic average selling prices on aggregates increased on a reported and mix-adjusted basis in the first quarter 2018, with both Houston and Salt Lake City achieving high-single digit organic growth in aggregates selling prices, when compared to the prior-year period.”

 

“We anticipate our average realized selling price on cement sold in the Mississippi River corridor will grow in the low to mid single-digit percent range in 2018,” continued Hill.  “As supplies of domestically produced cement continue to tighten, we anticipate price growth could escalate above current levels in 2019,” noted Hill.  “Cement prices have now risen for six consecutive years in the United States, with no indications of abating.”

 

“In Houston, our single largest ready-mix concrete market by volume, cement prices have increased by $6 per ton on a year-over-year basis,” stated Hill.  “As a buyer of third-party cement in Houston for our ready-mix concrete operations, we believe higher cement prices will translate into higher ready-mix concrete prices in that market this year, given strong underlying demand in the region.”

 

“On a year-to-date basis, we have completed seven acquisitions for total invested capital of $154 million,” continued Hill.  “Recent acquisitions have served to further establish our leadership in well-structured, materials-based markets in Utah, Texas, Oklahoma, Kansas, Kentucky and Missouri.  The acquisition pipeline remains very active as we look ahead to the remainder of the year, with multiple transactions currently in various stages of diligence.”

 

“Our Adjusted EBITDA guidance for the full-year 2018 assumes normalized cost inflation, given year-over-year increases in wages and hydrocarbon expenses,” stated Brian Harris, CFO of Summit Materials.  “Wage inflation remains within historical levels, given our exposure to more rural, less urban markets.  We anticipate wage and benefits inflation of 3.0% to 4.0% in 2018, consistent with our expectations coming into the year.”

 

“Summit’s diesel fuel forward purchase program has helped to mitigate the impact of commodity price volatility within our business, particularly given the recent increase in the price of crude oil-linked hydrocarbon products,” stated Harris.  “Diesel fuel represents our single most significant variable cost each year, with an estimated 30 million gallons consumed annually by our operating companies.  Our program, which utilizes physical contracts to pre-purchase a portion of our required diesel fuel volumes up to twelve months in advance, provides visibility into our overall diesel fuel expense each year.  To date, we have pre-purchased 62% of our current year fuel requirements at an average ultra-low sulfur diesel (“ULSD”) NYMEX price of less than $1.90 per gallon.”

 

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“As of March 31, 2018, we had $397.9 million in cash and availability under our revolving credit facility to support our acquisition strategy and the general growth of the business,” continued Harris.  “We anticipate net leverage to remain between approximately 3.0x and 4.0x for the duration of the year, assuming the mid-point of our upwardly revised Adjusted EBITDA guidance and subject to the pace of acquisitions.”

 

“We believe that demand for construction materials could increase meaningfully during the second half of 2018, given recent feedback from our customers and operating companies,” stated Hill.  “Our outlook for North Texas, Austin, Vancouver, Utah and the Carolinas has improved within the last 90 days, given strong growth in single family residential, stable growth in low-rise commercial and accelerating growth in state public lettings.  Despite the slow start to the year, the combination of accelerating organic growth within our larger platform markets, together with a solid pipeline of acquisition targets, positions Summit for another strong year ahead.”

 

First Quarter 2018 | Financial Performance

 

Net revenue increased by 11.9% to $289.9 million in the first quarter 2018, versus $259.0 million in the prior year period.  The improvement in net revenue was primarily attributable to acquisition-related contributions in the East and West segments, coupled with organic growth in the West Segment.  The Company reported an operating loss of ($51.5) million in the first quarter 2018, versus an operating loss of ($32.8) million in the prior year period.   Adjusted EBITDA declined to $5.5 million in the first quarter 2018, versus $13.6 million in the prior year period.

 

West Segment:  The West Segment reported an operating loss of ($6.1) million in the first quarter 2018, versus an operating loss of ($0.3) million in the prior year period.  Adjusted EBITDA increased by 3.0% to $16.2 million in the first quarter 2018, when compared to the prior year period.  The year-over-year improvement in segment Adjusted EBITDA was attributable to increased average selling prices on aggregates and ready-mix concrete, together with higher organic sales volumes of ready-mix concrete, partially offset by a decline in organic sales volumes of aggregates and asphalt.

East Segment:  The East Segment reported an operating loss of ($20.9) million in the first quarter 2018, versus an operating loss of ($11.5) million in the prior year period.  Adjusted EBITDA declined to ($3.2) million in the first quarter 2018, versus $4.3 million in the prior year period.  The year-over-year decline in segment Adjusted EBITDA was mainly attributable to a broad-based decline in organic volumes across all lines of business due to challenging seasonal weather conditions.

Cement Segment:  The Cement Segment reported an operating loss of ($2.8) million in the first quarter 2018, versus an operating loss of ($5.3) million in the prior year period.  Adjusted EBITDA increased to $3.7 million in the first quarter 2018, versus $2.7 million in the prior year period.  Higher organic average selling prices were partially offset by challenging seasonal weather conditions along the Mississippi River corridor, which resulted in a year-over-year decline in organic sales volume during the first quarter 2018.

First Quarter 2018 | Results by Line of Business

 

Aggregates Business:   Aggregates net revenues increased by 9.5% to $67.5 million in the first quarter 2018, when compared to the prior year period.  Aggregates adjusted cash gross profit margin declined to 41.5% in the first quarter, versus 43.6% in the prior year period.  Organic aggregates sales volumes declined 6.8% in the first quarter, due mainly to lower organic aggregates sales volumes in the East Segment, where challenging weather impacted working conditions.  Organic average selling prices on aggregates increased 1.6% in the first quarter 2018 due to year-over-year improvements in prices within both the West and East segments during the period.

 

Cement Business:  Cement segment net revenues declined 14.3% to $37.6 million in the first quarter 2018, when compared to the prior-year period.  Cement adjusted cash gross profit margin increased to 19.5% in the first quarter, versus 14.3% in the prior-year period.  Organic sales volume of cement declined 18.8% in the first quarter, when compared to the prior year period, in a seasonally low volume quarter for the segment.  Organic average selling prices on cement increased 3.2% in the first quarter, when compared to the prior year period.  The segment announced an $8 per ton price increase in late 2017 that went into effect in markets north of St. Louis on April 1, 2018.  The Company expects to capture a significant portion of this price increase during 2018. 

 

Products Business:  Net revenues increased 26.0% to $156.2 million in the first quarter 2018, when compared to the prior year period.  Products adjusted cash gross profit margin declined to 16.1% in the first quarter, versus 21.2% in the prior year period.  Organic sales volumes of ready-mix concrete increased 2.8% in the first quarter, while organic average selling prices increased 4.2%, versus the prior year period.  Improved metrics on ready-mix concrete were partially offset by a 22.4% decline in organic sales volumes of asphalt and a 4.4% decline in average selling prices on asphalt in the first quarter, when compared to the prior year period.

 

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Acquisition Program Update

 

As of May 8, 2018, the Company has completed seven acquisitions on a year-to-date basis, including four transactions that have closed since the Company’s last quarterly update on February 14, 2018.  Total investment spend across the seven acquisitions completed year-to-date 2018 was approximately $154 million, including approximately $34 million for the four acquisitions completed since the last update. 

 

Stoner Sand (Missouri).  Stoner Sand is a high synergy, bolt-on aggregates acquisition that is an excellent fit with the Company’s existing operations in the region. Summit closed on the acquisition of Stoner Sand in late February 2018.

 

Midwest Minerals (Kansas).  Midwest Minerals is an aggregates company with extensive, high-quality reserves.  The acquisition expands Summit’s market presence in southeast Kansas. Summit closed on the acquisition of Midwest Minerals in April 2018.

 

Day Concrete (Oklahoma).  Day Concrete is long-established ready-mix concrete company that has a leading position in its local market, and is an excellent fit with the Company’s existing aggregates and ready-mix concrete operations in the state.  Summit closed on the acquisition of Day Concrete in April 2018.

 

Superior Ready-Mix (Kentucky).  Superior Ready-Mix is a ready-mix concrete company that enhances the Company’s market coverage in the region and will integrate seamlessly into existing operations. Summit closed on the acquisition of Superior Ready-Mix in April 2018.

 

Liquidity and Capital Resources

 

As of March 31, 2018, the Company had cash on hand of $178.3 million and borrowing capacity under its revolving credit facility of $219.6 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 March 31, 2018, the Company had $1.8 billion in debt outstanding. 

 

Financial Outlook

 

For the full-year 2018, the Company has increased its Adjusted EBITDA guidance from a range of $490 million to $510 million to a range of $495 million to $515 million, including acquisition-related contributions from four transactions that closed since the Company’s last update in February 2018.  No additional potential acquisitions are included within the Company’s full-year 2018 Adjusted EBITDA guidance.  For the full-year 2018, the Company has reiterated its capital expenditure guidance from a range of $210 million to $225 million. 

 

Webcast and Conference Call Information

Summit Materials will conduct a conference call today at 11:00 a.m. eastern time (9:00 a.m. mountain time) to review the Company’s first quarter 2018 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:

86972581

 

To listen to a replay of the teleconference, which will be available through June 8, 2018:

 

 

 

 

Domestic Replay:

1-844-512-2921

International Replay:

1-412-317-6671

Conference ID:

13677913

 

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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, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Free Cash Flow and Net Leverage 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, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Free Cash Flow and Net Leverage 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. This press release also includes certain unaudited financial information for the last twelve months (“LTM”) ended March 31, 2018, which is calculated as the three months ended March 31, 2018 plus the actual or pro forma year ended December 30, 2017 less the actual or pro forma three months ended April 1, 2017. This presentation is not in accordance with GAAP. However, we believe that this information is useful to investors as we use LTM financial information to evaluate our financial performance for ongoing planning purposes, including a continuous assessment of our financial performance in comparison to budgets and internal projections. In addition, we use such LTM financial information to test compliance with covenants under our senior secured credit facilities.

Adjusted EBITDA, Adjusted EBITDA Margin, LTM financial information 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, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Adjusted Net Income, Adjusted EPS, Free Cash Flow and Net Leverage 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

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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 30, 2017 (the “Annual Report”), as filed with the Securities and Exchange Commission (the “SEC”), any factors discussed in the section entitled “Risk Factors” in our quarterly reports on Form 10-Q or other 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;

 

-

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 petroleum-based resources that we use, including electricity, diesel fuel and liquid asphalt;

 

-

unexpected operational difficulties;

 

-

interruptions in our information technology systems and infrastructure;

 

-

potential labor disputes; and

 

-

rising prices for commodities, labor and other production and delivery costs as a result of inflation or otherwise.

 

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.

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SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

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

 

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31,

 

April 1,

 

    

2018

    

2017

Revenue:

 

 

 

 

 

 

Product

 

$

256,807

 

$

225,017

Service

 

 

33,109

 

 

34,027

Net revenue

 

 

289,916

 

 

259,044

Delivery and subcontract revenue

 

 

24,505

 

 

25,233

Total revenue

 

 

314,421

 

 

284,277

Cost of revenue (excluding items shown separately below):

 

 

 

 

 

 

Product

 

 

197,433

 

 

166,968

Service

 

 

25,923

 

 

25,371

Net cost of revenue

 

 

223,356

 

 

192,339

Delivery and subcontract cost

 

 

24,505

 

 

25,233

Total cost of revenue

 

 

247,861

 

 

217,572

General and administrative expenses

 

 

69,861

 

 

58,468

Depreciation, depletion, amortization and accretion

 

 

46,958

 

 

39,748

Transaction costs

 

 

1,266

 

 

1,273

Operating loss

 

 

(51,525)

 

 

(32,784)

Interest expense

 

 

28,784

 

 

24,969

Loss on debt financings

 

 

 —

 

 

190

Other income, net

 

 

(7,655)

 

 

(657)

Loss from operations before taxes

 

 

(72,654)

 

 

(57,286)

Income tax benefit

 

 

(16,706)

 

 

(2,178)

Net loss

 

 

(55,948)

 

 

(55,108)

Net loss attributable to noncontrolling interest in subsidiaries

 

 

 —

 

 

(98)

Net loss attributable to Summit Holdings (1)

 

 

(2,219)

 

 

(2,566)

Net loss attributable to Summit Inc.

 

$

(53,729)

 

$

(52,444)

Loss per share of Class A common stock:

 

 

 

 

 

 

Basic

 

$

(0.49)

 

$

(0.49)

Diluted

 

$

(0.49)

 

$

(0.49)

Weighted average shares of Class A common stock:

 

 

 

 

 

 

Basic

 

 

110,659,098

 

 

106,692,717

Diluted

 

 

110,659,098

 

 

106,692,717

 


(1)

Represents portion of business owned by pre-IPO investors rather than by Summit.

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SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

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

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 30,

 

 

    

2018

    

2017

 

 

    

(unaudited)

    

(audited)

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

178,293

 

$

383,556

 

Accounts receivable, net

 

 

180,099

 

 

198,330

 

Costs and estimated earnings in excess of billings

 

 

12,668

 

 

9,512

 

Inventories

 

 

226,750

 

 

184,439

 

Other current assets

 

 

13,742

 

 

7,764

 

Total current assets

 

 

611,552

 

 

783,601

 

Property, plant and equipment, less accumulated depreciation, depletion and amortization (March 31, 2018 - $673,761 and December 30, 2017 - $631,841)

 

 

1,672,880

 

 

1,615,424

 

Goodwill

 

 

1,109,448

 

 

1,036,320

 

Intangible assets, less accumulated amortization (March 31, 2018 - $7,020 and December 30, 2017 - $6,698)

 

 

16,621

 

 

16,833

 

Deferred tax assets, less valuation allowance (March 31, 2018 and December 30, 2017 - $1,675)

 

 

297,729

 

 

284,092

 

Other assets

 

 

48,350

 

 

51,063

 

Total assets

 

$

3,756,580

 

$

3,787,333

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current portion of debt

 

$

6,354

 

$

4,765

 

Current portion of acquisition-related liabilities

 

 

37,101

 

 

14,087

 

Accounts payable

 

 

110,348

 

 

98,744

 

Accrued expenses

 

 

112,329

 

 

116,629

 

Billings in excess of costs and estimated earnings

 

 

15,131

 

 

15,750

 

Total current liabilities

 

 

281,263

 

 

249,975

 

Long-term debt

 

 

1,808,535

 

 

1,810,833

 

Acquisition-related liabilities

 

 

28,894

 

 

58,135

 

Tax receivable agreement liability

 

 

332,162

 

 

331,340

 

Other noncurrent liabilities

 

 

70,379

 

 

65,329

 

Total liabilities

 

 

2,521,233

 

 

2,515,612

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 111,488,573 and 110,350,594 shares issued and outstanding as of March 31, 2018 and December 30, 2017, respectively

 

 

1,116

 

 

1,104

 

Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 100 shares issued and outstanding as of March 31, 2018 and December 30, 2017

 

 

 —

 

 

 —

 

Additional paid-in capital

 

 

1,176,906

 

 

1,154,220

 

Accumulated earnings

 

 

42,104

 

 

95,833

 

Accumulated other comprehensive income

 

 

4,823

 

 

7,386

 

Stockholders’ equity

 

 

1,224,949

 

 

1,258,543

 

Noncontrolling interest in Summit Holdings

 

 

10,398

 

 

13,178

 

Total stockholders’ equity

 

 

1,235,347

 

 

1,271,721

 

Total liabilities and stockholders’ equity

 

$

3,756,580

 

$

3,787,333

 

 

7


 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31,

 

April 1,

 

    

2018

    

2017

Cash flow from operating activities:

 

 

 

 

 

 

Net loss

 

$

(55,948)

 

$

(55,108)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation, depletion, amortization and accretion

 

 

45,559

 

 

43,343

Share-based compensation expense

 

 

8,507

 

 

4,748

Net gain on asset disposals

 

 

(4,077)

 

 

(1,665)

Non-cash loss on debt financings

 

 

 —

 

 

85

Change in deferred tax asset, net

 

 

(17,373)

 

 

(2,337)

Other

 

 

1,579

 

 

783

Decrease (increase) in operating assets, net of acquisitions:

 

 

 

 

 

 

Accounts receivable, net

 

 

27,979

 

 

13,847

Inventories

 

 

(35,248)

 

 

(24,677)

Costs and estimated earnings in excess of billings

 

 

(2,678)

 

 

(7,480)

Other current assets

 

 

(3,202)

 

 

1,477

Other assets

 

 

747

 

 

(726)

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

 

 

 

 

 

 

Accounts payable

 

 

(7,742)

 

 

4,169

Accrued expenses

 

 

(8,660)

 

 

(20,664)

Billings in excess of costs and estimated earnings

 

 

(1,788)

 

 

(2,703)

Tax receivable agreement liability

 

 

822

 

 

 —

Other liabilities

 

 

156

 

 

1,369

Net cash used in operating activities

 

 

(51,367)

 

 

(45,539)

Cash flow from investing activities:

 

 

 

 

 

 

Acquisitions, net of cash acquired

 

 

(113,993)

 

 

(112,333)

Purchases of property, plant and equipment

 

 

(49,505)

 

 

(51,056)

Proceeds from the sale of property, plant and equipment

 

 

7,788

 

 

4,325

Other

 

 

1,500

 

 

974

Net cash used for investing activities

 

 

(154,210)

 

 

(158,090)

Cash flow from financing activities:

 

 

 

 

 

 

Proceeds from equity offerings

 

 

 —

 

 

237,600

Capital issuance costs

 

 

 —

 

 

(638)

Debt issuance costs

 

 

 —

 

 

(699)

Payments on debt

 

 

(3,972)

 

 

(3,566)

Payments on acquisition-related liabilities

 

 

(8,962)

 

 

(16,414)

Distributions from partnership

 

 

(9)

 

 

(79)

Proceeds from stock option exercises

 

 

15,475

 

 

771

Other

 

 

(1,820)

 

 

(731)

Net cash provided by financing activities

 

 

712

 

 

216,244

Impact of foreign currency on cash

 

 

(398)

 

 

100

Net (decrease) increase in cash

 

 

(205,263)

 

 

12,715

Cash and cash equivalents—beginning of period

 

 

383,556

 

 

143,392

Cash and cash equivalents—end of period

 

$

178,293

 

$

156,107

 

8


 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Revenue Data by Segment and Line of Business

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Twelve Months Ended

 

 

 

March 31,

 

April 1,

 

March 31,

 

April 1,

 

 

    

2018

    

2017

    

2018

    

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Net Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

West

 

$

168,944

 

$

131,974

 

$

936,962

 

$

754,700

 

East

 

 

83,421

 

 

83,235

 

 

548,790

 

 

493,645

 

Cement

 

 

37,551

 

 

43,835

 

 

297,529

 

 

290,934

 

Net Revenue

 

$

289,916

 

$

259,044

 

$

1,783,281

 

$

1,539,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Line of Business - Net Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates

 

$

67,450

 

$

61,622

 

$

319,211

 

$

276,323

 

Cement (1)

 

 

33,117

 

 

39,435

 

 

275,723

 

 

261,248

 

Products

 

 

156,240

 

 

123,960

 

 

886,792

 

 

730,352

 

Total Materials and Products

 

 

256,807

 

 

225,017

 

 

1,481,726

 

 

1,267,923

 

Services

 

 

33,109

 

 

34,027

 

 

301,555

 

 

271,356

 

Net Revenue

 

$

289,916

 

$

259,044

 

$

1,783,281

 

$

1,539,279

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Line of Business - Net Cost of Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates

 

$

39,482

 

$

34,782

 

$

113,429

 

$

106,771

 

Cement

 

 

25,788

 

 

33,173

 

 

131,673

 

 

132,154

 

Products

 

 

131,137

 

 

97,741

 

 

677,406

 

 

538,997

 

Total Materials and Products

 

 

196,407

 

 

165,696

 

 

922,508

 

 

777,922

 

Services

 

 

26,949

 

 

26,643

 

 

210,120

 

 

191,970

 

Net Cost of Revenue

 

$

223,356

 

$

192,339

 

$

1,132,628

 

$

969,892

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates

 

$

27,968

 

$

26,840

 

$

205,782

 

$

169,552

 

Cement (3)

 

 

7,329

 

 

6,262

 

 

144,050

 

 

129,094

 

Products

 

 

25,103

 

 

26,219

 

 

209,386

 

 

191,355

 

Total Materials and Products

 

 

60,400

 

 

59,321

 

 

559,218

 

 

490,001

 

Services

 

 

6,160

 

 

7,384

 

 

91,435

 

 

79,386

 

Adjusted Cash Gross Profit

 

$

66,560

 

$

66,705

 

$

650,653

 

$

569,387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Cash Gross Profit Margin (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates

 

 

41.5

%

 

43.6

%

 

64.5

%

 

61.4

%

Cement (3)

 

 

19.5

%

 

14.3

%

 

48.4

%

 

44.4

%

Products

 

 

16.1

%

 

21.2

%

 

23.6

%

 

26.2

%

Services

 

 

18.6

%

 

21.7

%

 

30.3

%

 

29.3

%

Total Adjusted Cash Gross Profit Margin

 

 

23.0

%

 

25.8

%

 

36.5

%

 

37.0

%


(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)

Previously, we presented gross profit as a non- GAAP metric. We have renamed that metric adjusted cash gross profit to be more descriptive of the calculation. Adjusted cash gross profit 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.

9


 

 

 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Volume and Price Statistics

(Units in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Total Volume

    

March 31, 2018

    

April 1, 2017

 

Aggregates (tons)

 

 

8,814

 

 

7,963

 

Cement (tons)

 

 

294

 

 

362

 

Ready-mix concrete (cubic yards)

 

 

1,142

 

 

906

 

Asphalt (tons)

 

 

350

 

 

362

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Pricing

    

March 31, 2018

    

April 1, 2017

 

Aggregates (per ton)

 

$

9.86

 

$

9.84

 

Cement (per ton)

 

 

115.04

 

 

111.48

 

Ready-mix concrete (per cubic yards)

 

 

107.08

 

 

103.04

 

Asphalt (per ton)

 

 

52.04

 

 

53.98

 

 

 

 

 

 

 

 

 

Year over Year Comparison

    

Volume

    

Pricing

 

Aggregates (per ton)

 

 

10.7

%  

 

0.2

%

Cement (per ton)

 

 

(18.8)

%  

 

3.2

%

Ready-mix concrete (per cubic yards)

 

 

26.0

%  

 

3.9

%

Asphalt (per ton)

 

 

(3.3)

%  

 

(3.6)

%

 

 

 

 

 

 

 

 

Year over Year Comparison (Excluding acquisitions)

    

Volume

    

Pricing

 

Aggregates (per ton)

 

 

(6.8)

%  

 

1.6

%

Cement (per ton)

 

 

(18.8)

%

 

3.2

%

Ready-mix concrete (per cubic yards)

 

 

2.8

%  

 

4.2

%

Asphalt (per ton)

 

 

(22.4)

%  

 

(4.4)

%

 

10


 

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 March 31, 2018

 

    

 

    

 

 

    

Gross Revenue

    

Intercompany

    

Net

 

 

Volumes

 

Pricing

 

by Product

 

Elimination/Delivery

 

Revenue

Aggregates

 

8,814

 

$

9.86

 

$

86,879

 

$

(19,429)

 

$

67,450

Cement

 

294

 

 

115.04

 

 

33,766

 

 

(649)

 

 

33,117

Materials

 

 

 

 

 

 

$

120,645

 

$

(20,078)

 

$

100,567

Ready-mix concrete

 

1,142

 

 

107.08

 

 

122,308

 

 

(293)

 

 

122,015

Asphalt

 

350

 

 

52.04

 

 

18,220

 

 

(79)

 

 

18,141

Other Products

 

 

 

 

 

 

 

62,495

 

 

(46,411)

 

 

16,084

Products

 

 

 

 

 

 

$

203,023

 

$

(46,783)

 

$

156,240

 

11


 

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 months ended March 31, 2018 and April 1, 2017.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income (Loss) to Adjusted EBITDA

 

Three months ended March 31, 2018

by Segment

 

West

 

East

 

Cement

 

Corporate

 

Consolidated

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

72

 

$

(21,644)

 

$

(1,097)

 

$

(33,279)

 

$

(55,948)

Interest expense (income)

 

 

1,180

 

 

606

 

 

(1,606)

 

 

28,604

 

 

28,784

Income tax expense (benefit)

 

 

(382)

 

 

(186)

 

 

 —

 

 

(16,138)

 

 

(16,706)

Depreciation, depletion and amortization

 

 

22,008

 

 

17,512

 

 

6,313

 

 

710

 

 

46,543

EBITDA

 

$

22,878

 

$

(3,712)

 

$

3,610

 

$

(20,103)

 

$

2,673

Accretion

 

 

143

 

 

215

 

 

57

 

 

 —

 

 

415

Transaction costs

 

 

(4)

 

 

 —

 

 

 —

 

 

1,270

 

 

1,266

Non-cash compensation

 

 

 —

 

 

 —

 

 

 —

 

 

8,507

 

 

8,507

Other (1)

 

 

(6,844)

 

 

294

 

 

 —

 

 

(798)

 

 

(7,348)

Adjusted EBITDA

 

$

16,173

 

$

(3,203)

 

$

3,667

 

$

(11,124)

 

$

5,513

Adjusted EBITDA Margin (2)

 

 

9.6%

 

 

(3.8)%

 

 

9.8%

 

 

 

 

 

1.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Loss to Adjusted EBITDA

 

Three months ended April 1, 2017

by Segment

 

West

 

East

 

Cement

 

Corporate

 

Consolidated

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(2,026)

 

$

(12,093)

 

$

(4,713)

 

$

(36,276)

 

$

(55,108)

Interest expense

 

 

1,904

 

 

685

 

 

(650)

 

 

23,030

 

 

24,969

Income tax expense (benefit)

 

 

 2

 

 

 —

 

 

 —

 

 

(2,180)

 

 

(2,178)

Depreciation, depletion and amortization

 

 

15,468

 

 

15,187

 

 

7,990

 

 

659

 

 

39,304

EBITDA

 

$

15,348

 

$

3,779

 

$

2,627

 

$

(14,767)

 

$

6,987

Accretion

 

 

195

 

 

191

 

 

58

 

 

 —

 

 

444

Loss on debt financings

 

 

 —

 

 

 —

 

 

 —

 

 

190

 

 

190

Transaction costs