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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): August 1, 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 August 1, 2018, Summit Materials, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended June 30, 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 August 1, 2018.

 

 


 

EXHIBIT INDEX

 

 

 

 

Exhibit No.

    

Description

99.1

 

Press Release of Summit Materials, Inc., dated August 1, 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:  August 1, 2018

 

 


(Back To Top)

Section 2: EX-99.1 (EX-99.1)

sum_Ex99_1

Exhibit 99.1

 

Summit Materials, Inc. Reports Second Quarter 2018 Results

 

-Y/Y Net Revenue Growth of 14.8%, Supported By Broad-Based Organic Volume Improvements

-Completed Four Materials-Based Bolt-on Acquisitions For Total Invested Capital of $75 million Since May 2018

-Reduced Midpoint of Adjusted EBITDA Guidance Range For The Full-Year 2018 By 7%

-Remain On Pace To Achieve Record Full-Year Adjusted EBITDA in 2018

DENVER, CO. - (August 1, 2018) - Summit Materials, Inc. (NYSE: SUM, “Summit” or the “Company”), a leading vertically integrated construction materials company, today announced results for the second quarter 2018. 

For the three months ended June 30, 2018, the Company reported basic earnings per share of $0.32 on net income attributable to Summit Inc. of $35.5 million, compared to basic earnings per share of $0.46 on net income attributable to Summit Inc. of $50.0 million in the prior year period.  On an adjusted basis, Summit reported adjusted diluted earnings per share of $0.32 on adjusted diluted net income of $37.1 million, versus adjusted diluted earnings per share of $0.47 on adjusted diluted net income of $53.6 million in the prior year period. 

“While net revenue increased 14.8% on a year-over-basis in the second quarter 2018, supported by organic volume growth in our aggregates and products lines of business, Adjusted EBITDA was flat on a year-over-year basis, given lower contributions from our cement segment and Houston operations, together with inflation in our variable costs,” stated Tom Hill, CEO of Summit Materials.  “With a finite number of days remaining in the construction season, we have reduced the midpoint of our 2018 Adjusted EBITDA guidance by 7 percent.” 

“Organic sales volumes in our cement segment were impacted by a combination of high precipitation levels during April and May, together with competitive pressures in the markets we serve,” stated Hill.  “Our Houston operations were impacted by a slower start to the construction season than had been anticipated.  Looking to the second half of the year, we expect a strengthening in both our cement segment and Houston operations, given accelerating demand in our residential, low-rise commercial and public end-markets.”

“The pace of cost inflation in raw materials, freight, labor and fuel exceeded our expectations in the first half of 2018,” continued Hill.  “Although we anticipated some measure of cost inflation entering the year, the effective date of our announced price increases lagged behind the impact of higher costs incurred by our business.  Importantly, our average selling prices on both materials and products have gained traction entering the third quarter, which we expect will offset these higher variable costs in the second half of the year.”

“Demand conditions in most of our markets are strong and are expected to remain so into 2019 and beyond,” continued Hill.  “Within our private markets, we are seeing sustained growth in new single-family home construction, given low inventories and positive demographic trends, while in our public markets, state transportation funding measures in Texas, coupled with steady increases in federal subsidies, are contributing to increased lettings activity.  In July 2018, aggregates shipments per day increased 5% versus the prior year period and 13% versus June 2018.”

“Since May 2018, we have completed four materials-based acquisitions for total invested capital of $75 million,” continued Hill.  “Recent acquisitions have served to further establish our leadership in well-structured, materials-based markets in Texas, Kansas, Missouri and Virginia.  On a year-to-date basis, we have completed eleven acquisitions for total invested capital of $228 million.  Across these eleven transactions, we have added more than 300 million tons of aggregates reserves to our portfolio.  The acquisition pipeline remains active as we look ahead to the remainder of the year, with multiple transactions currently in various stages of diligence.”

“As of June 30, 2018, our net leverage increased to 4.3x, due to the timing of acquisition-related investments,” stated Brian Harris, CFO of Summit Materials.  “By year-end 2018, we anticipate net leverage to be approximately 3.5x, subject to the pace of acquisitions.”

“We continue to generate significant free cash flow from operations that is helping to support the overall growth of our business,” continued Harris.  “Based on the midpoint of our revised guidance, we anticipate Adjusted EBITDA less total capital spending will be approximately $250 million in 2018.  Importantly, this includes approximately $100 million of discretionary capital spending.”

“Our vertically integrated, multi-local strategy continues to gain momentum in our regional markets, positioning Summit as an emerging leader in the North American heavy materials industry that remains on pace to achieve record full-year Adjusted EBITDA in 2018,” stated Hill.

 

 

 

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Second Quarter 2018 | Results by Line of Business

 

Aggregates Business:   Aggregates net revenues increased by 23.1% to $103.7 million in the second quarter 2018, when compared to the prior year period.  Aggregates adjusted cash gross profit margin declined to 64.8% in the second quarter, versus 68.3% in the prior year period, given higher variable costs.  Organic aggregates sales volumes increased 2.3% in the second quarter 2018, when compared to the prior-year period.  Excluding contributions from the Company’s project-dependent sand business in Vancouver, organic aggregates sales volumes increased 4.3% in the second quarter 2018.  Organic growth in aggregates sales volumes was due mainly to higher volumes in the East Region, which more than offset a decline in sales volumes in the West Region, which was impacted by adverse weather conditions during the period.  Organic average selling prices on aggregates increased 3.6% in the second 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 2.8% to $81.8 million in the second quarter 2018, when compared to the prior-year period.  Cement adjusted cash gross profit margin declined to 46.5% in the second quarter, versus 57.4% in the prior-year period, due to higher freight, storage and demurrage costs related to weather-affected cement inventories.  Organic sales volume of cement declined 4.8% in the second quarter, when compared to the prior year period, due mainly to high levels of precipitation that disrupted project work during the period, together with competitive pressures in the market.   Organic average selling prices on cement increased 1.9% in the second quarter, when compared to the prior year period. 

 

Products Business:  Net revenues increased 19.3% to $279.9 million in the second quarter 2018, when compared to the prior year period.  Products adjusted cash gross profit margin declined to 22.0% in the second quarter, versus 25.6% in the prior year period, as the timing of product price increases lagged behind increases in raw materials and labor costs.  Organic sales volumes of ready-mix concrete increased 0.2% in the second quarter, while organic average selling prices increased 2.7%, versus the prior year period.  Organic sales volumes of asphalt increased 2.0% in the second quarter, while organic average selling prices declined 1.3%, versus the prior year period. 

 

 

Second Quarter 2018 | Results By Reporting Segment

 

Net revenue increased by 14.8% to $549.2 million in the second quarter 2018, versus $478.4 million in the prior year period.  The improvement in net revenue was primarily attributable to both organic and acquisition-related contributions in the East and West segments, offset by a decline in the Cement segment.  The Company reported operating income of $77.3 million in the second quarter 2018, versus $82.4 million in the prior year period.   Adjusted EBITDA was $135.3 million in the second quarter 2018, versus $135.2 million in the prior year period.

 

West Segment:  The West Segment reported operating income of $38.4 million in the second quarter 2018, versus operating income of $42.9 million in the prior year period.  Adjusted EBITDA increased to $61.2 million in the second quarter 2018, versus $60.5 million in the prior year period.  The year-over-year improvement in West Segment Adjusted EBITDA was attributable to increased average selling prices on aggregates and ready-mix concrete, together with higher organic sales volumes of asphalt, that offset lower organic aggregates sales in the Company’s Houston operations.

East Segment:  The East Segment reported operating income of $26.9 million in the second quarter 2018, versus operating income of $21.1 million in the prior year period.  Adjusted EBITDA increased to $45.4 million in the second quarter 2018, versus $38.8 million in the prior year period.  The year-over-year improvement in East Segment Adjusted EBITDA was mainly attributable to organic volume growth in aggregates and ready-mix concrete, which increased 11.0% and 10.3%, respectively in the period.

Cement Segment:  The Cement Segment reported operating income of $25.8 million in the second quarter 2018, versus operating income of $33.7 million in the prior year period.  Adjusted EBITDA declined to $34.7 million in the second quarter 2018, versus $43.8 million in the prior year period.  Higher organic average selling prices were more than offset primarily by high levels of precipitation in the Company’s Mississippi River markets and price-driven competitive pressures that resulted in a year-over-year decline in organic sales volume during the second quarter 2018.

 

 

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Acquisition Program

 

As of August 1, 2018, the Company has completed eleven acquisitions on a year-to-date basis, including four transactions that have closed since the Company’s last quarterly update on May 8, 2018.  Total investment spend across the eleven acquisitions completed year-to-date 2018 was approximately $228 million, including approximately $75 million for the four bolt-on acquisitions completed since the last update. 

 

Olathe Assets (Kansas).  The Olathe Assets comprise two quarries, two asphalt plants and two construction and landfill sites. These assets expand the Company’s existing operations into the southwestern Kansas City metropolitan area.  Summit closed on the acquisition of the Olathe Assets in July 2018.

 

Buckingham Slate (Virginia).  Buckingham is an aggregates acquisition that expands the Company’s market position and reserve base in central Virginia.  Summit closed on the acquisition of Buckingham Slate in June 2018.

 

Buildex (Missouri).   Buildex is a lightweight aggregates business based in western Missouri that provides a complementary product offering to the Company’s existing portfolio in the region.  Summit closed on the acquisition of Buildex in July 2018. 

 

XIT (Texas).  XIT is an aggregates company that provides further vertical integration of the Company’s operations in north Texas.  Summit closed on its acquisition of XIT in July 2018.

 

Liquidity and Capital Resources

 

As of June 30, 2018, the Company had cash on hand of $50.4 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 June 30, 2018, the Company had $1.8 billion in debt outstanding. 

 

Financial Outlook

 

For the full-year 2018, the Company has reduced its Adjusted EBITDA guidance from a range of $495 million to $515 million to a range of $460 million to $480 million, including acquisition-related contributions from four transactions that closed since the Company’s last update in May 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 in the 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 second 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:                       57511368

 

To listen to a replay of the teleconference, which will be available through September 1, 2018:

 

Domestic Replay:                   1-844-512-2921

International Replay:              1-412-317-6671

Conference ID:                       13681575

 

 

 

 

 

 

 

 

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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 (Loss), 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 (Loss), 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 June 30, 2018, which is calculated as the six months ended June 30, 2018 plus the actual for the year-ended December 30, 2017 less the actual six months ended June 30, 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 (Loss), 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

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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 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 any of our subsequently filed 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 electricity and the petroleum-based resources that we use;

 

-

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.

5


 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

June 30,

 

July 1,

 

June 30,

 

July 1,

 

    

2018

    

2017

    

2018

    

2017

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

$

459,967

 

$

397,726

 

$

716,774

 

$

622,743

Service

 

 

89,268

 

 

80,642

 

 

122,377

 

 

114,669

Net revenue

 

 

549,235

 

 

478,368

 

 

839,151

 

 

737,412

Delivery and subcontract revenue

 

 

51,655

 

 

45,725

 

 

76,160

 

 

70,958

Total revenue

 

 

600,890

 

 

524,093

 

 

915,311

 

 

808,370

Cost of revenue (excluding items shown separately below):

 

 

 

 

 

 

 

 

 

 

 

 

Product

 

 

295,147

 

 

233,592

 

 

492,580

 

 

400,560

Service

 

 

64,130

 

 

56,587

 

 

90,053

 

 

81,958

Net cost of revenue

 

 

359,277

 

 

290,179

 

 

582,633

 

 

482,518

Delivery and subcontract cost

 

 

51,655

 

 

45,725

 

 

76,160

 

 

70,958

Total cost of revenue

 

 

410,932

 

 

335,904

 

 

658,793

 

 

553,476

General and administrative expenses

 

 

61,657

 

 

58,086

 

 

131,518

 

 

116,554

Depreciation, depletion, amortization and accretion

 

 

49,731

 

 

45,039

 

 

96,689

 

 

84,787

Transaction costs

 

 

1,291

 

 

2,620

 

 

2,557

 

 

3,893

Operating income

 

 

77,279

 

 

82,444

 

 

25,754

 

 

49,660

Interest expense

 

 

28,943

 

 

25,986

 

 

57,727

 

 

50,955

Loss on debt financings

 

 

149

 

 

 —

 

 

149

 

 

190

Tax receivable agreement expense

 

 

 —

 

 

1,525

 

 

 —

 

 

1,525

Other income, net

 

 

(916)

 

 

(590)

 

 

(8,571)

 

 

(1,247)

Income (loss) from operations before taxes

 

 

49,103

 

 

55,523

 

 

(23,551)

 

 

(1,763)

Income tax expense (benefit)

 

 

12,190

 

 

3,435

 

 

(4,516)

 

 

1,257

Net income (loss)

 

 

36,913

 

 

52,088

 

 

(19,035)

 

 

(3,020)

Net income (loss) attributable to noncontrolling interest in subsidiaries

 

 

 —

 

 

12

 

 

 —

 

 

(86)

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

 

 

1,404

 

 

2,076

 

 

(815)

 

 

(490)

Net income (loss) attributable to Summit Inc.

 

$

35,509

 

$

50,000

 

$

(18,220)

 

$

(2,444)

Income (loss) per share of Class A common stock:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.32

 

$

0.46

 

$

(0.16)

 

$

(0.02)

Diluted

 

$

0.32

 

$

0.46

 

$

(0.16)

 

$

(0.02)

Weighted average shares of Class A common stock:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

111,564,190

 

 

108,419,568

 

 

111,111,644

 

 

107,556,143

Diluted

 

 

112,583,321

 

 

109,429,944

 

 

111,111,644

 

 

107,556,143

 


(1)

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

6


 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

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

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 30,

 

 

    

2018

    

2017

 

 

    

(unaudited)

    

(audited)

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

50,404

 

$

383,556

 

Accounts receivable, net

 

 

268,819

 

 

198,330

 

Costs and estimated earnings in excess of billings

 

 

44,481

 

 

9,512

 

Inventories

 

 

245,238

 

 

184,439

 

Other current assets

 

 

12,381

 

 

7,764

 

Total current assets

 

 

621,323

 

 

783,601

 

Property, plant and equipment, less accumulated depreciation, depletion and amortization (June 30, 2018 - $711,216 and December 30, 2017 - $631,841)

 

 

1,733,653

 

 

1,615,424

 

Goodwill

 

 

1,114,967

 

 

1,036,320

 

Intangible assets, less accumulated amortization (June 30, 2018 - $7,337 and December 30, 2017 - $6,698)

 

 

16,294

 

 

16,833

 

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

 

 

287,606

 

 

284,092

 

Other assets

 

 

50,413

 

 

51,063

 

Total assets

 

$

3,824,256

 

$

3,787,333

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Current portion of debt

 

$

6,354

 

$

4,765

 

Current portion of acquisition-related liabilities

 

 

15,634

 

 

14,087

 

Accounts payable

 

 

144,284

 

 

98,744

 

Accrued expenses

 

 

118,494

 

 

116,629

 

Billings in excess of costs and estimated earnings

 

 

14,724

 

 

15,750

 

Total current liabilities

 

 

299,490

 

 

249,975

 

Long-term debt

 

 

1,807,290

 

 

1,810,833

 

Acquisition-related liabilities

 

 

28,904

 

 

58,135

 

Tax receivable agreement liability

 

 

333,028

 

 

331,340

 

Other noncurrent liabilities

 

 

77,773

 

 

65,329

 

Total liabilities

 

 

2,546,485

 

 

2,515,612

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 111,629,238 and 110,350,594 shares issued and outstanding as of June 30, 2018 and December 30, 2017, respectively

 

 

1,117

 

 

1,104

 

Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 99 and 100 shares issued and outstanding as of June 30, 2018 and December 30, 2017, respectively

 

 

 —

 

 

 —

 

Additional paid-in capital

 

 

1,183,071

 

 

1,154,220

 

Accumulated earnings

 

 

77,613

 

 

95,833

 

Accumulated other comprehensive income

 

 

4,645

 

 

7,386

 

Stockholders’ equity

 

 

1,266,446

 

 

1,258,543

 

Noncontrolling interest in Summit Holdings

 

 

11,325

 

 

13,178

 

Total stockholders’ equity

 

 

1,277,771

 

 

1,271,721

 

Total liabilities and stockholders’ equity

 

$

3,824,256

 

$

3,787,333

 

 

7


 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

($ in thousands)

 

 

 

 

 

 

 

 

 

 

Six months ended

 

 

June 30,

 

July 1,

 

    

2018

    

2017

Cash flow from operating activities:

 

 

 

 

 

 

Net loss

 

$

(19,035)

 

$

(3,020)

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

 

 

 

 

 

 

Depreciation, depletion, amortization and accretion

 

 

98,562

 

 

90,781

Share-based compensation expense

 

 

14,190

 

 

9,424

Net gain on asset disposals

 

 

(7,508)

 

 

(4,052)

Non-cash loss on debt financings

 

 

 —

 

 

85

Change in deferred tax asset, net

 

 

(6,934)

 

 

391

Other

 

 

162

 

 

710

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

 

 

 

 

 

 

Accounts receivable, net

 

 

(57,763)

 

 

(68,539)

Inventories

 

 

(44,428)

 

 

(19,272)

Costs and estimated earnings in excess of billings

 

 

(34,525)

 

 

(21,571)

Other current assets

 

 

(1,766)

 

 

3,535

Other assets

 

 

780

 

 

(1,565)

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

 

 

 

 

 

 

Accounts payable

 

 

23,912

 

 

28,550

Accrued expenses

 

 

1,674

 

 

(6,789)

Billings in excess of costs and estimated earnings

 

 

(2,187)

 

 

1,252

Tax receivable agreement liability

 

 

1,688

 

 

1,525

Other liabilities

 

 

(540)

 

 

(296)

Net cash (used in) provided by operating activities

 

 

(33,718)

 

 

11,149

Cash flow from investing activities:

 

 

 

 

 

 

Acquisitions, net of cash acquired

 

 

(153,196)

 

 

(213,124)

Purchases of property, plant and equipment

 

 

(131,657)

 

 

(109,088)

Proceeds from the sale of property, plant and equipment

 

 

14,110

 

 

8,411

Other

 

 

684

 

 

137

Net cash used for investing activities

 

 

(270,059)

 

 

(313,664)

Cash flow from financing activities:

 

 

 

 

 

 

Proceeds from equity offerings

 

 

 —

 

 

237,600

Capital issuance costs

 

 

 —

 

 

(627)

Proceeds from debt issuances

 

 

 —

 

 

302,000

Debt issuance costs

 

 

(550)

 

 

(5,308)

Payments on debt

 

 

(10,772)

 

 

(9,288)

Payments on acquisition-related liabilities

 

 

(31,224)

 

 

(17,204)

Distributions from partnership

 

 

(69)

 

 

(79)

Proceeds from stock option exercises

 

 

15,615

 

 

5,736

Other

 

 

(1,904)

 

 

(832)

Net cash (used in) provided by financing activities

 

 

(28,904)

 

 

511,998

Impact of foreign currency on cash

 

 

(471)

 

 

188

Net (decrease) increase in cash

 

 

(333,152)

 

 

209,671

Cash and cash equivalents—beginning of period

 

 

383,556

 

 

143,392

Cash and cash equivalents—end of period

 

$

50,404

 

$

353,063

 

8


 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Revenue Data by Segment and Line of Business

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

Twelve Months Ended

 

 

 

June 30,

 

July 1,

 

June 30,

 

July 1,

 

June 30,

 

July 1,

 

 

    

2018

    

2017

    

2018

    

2017

    

2018

    

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment Net Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

West

 

$

293,685

 

$

249,849

 

$

462,629

 

$

381,823

 

$

980,798

 

$

795,575

 

East

 

 

173,709

 

 

144,290

 

 

257,130

 

 

227,525

 

 

578,209

 

 

513,890

 

Cement

 

 

81,841

 

 

84,229

 

 

119,392

 

 

128,064

 

 

295,141

 

 

295,546

 

Net Revenue

 

$

549,235

 

$

478,368

 

$

839,151

 

$

737,412

 

$

1,854,148

 

$

1,605,011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Line of Business - Net Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates

 

$

103,690

 

$

84,221

 

$

171,140

 

$

145,843

 

$

338,680

 

$

287,509

 

Cement (1)

 

 

76,413

 

 

78,893

 

 

109,530

 

 

118,328

 

 

273,243

 

 

270,173

 

Products

 

 

279,864

 

 

234,612

 

 

436,104

 

 

358,572

 

 

932,044

 

 

766,626

 

Total Materials and Products

 

 

459,967

 

 

397,726

 

 

716,774

 

 

622,743

 

 

1,543,967

 

 

1,324,308

 

Services

 

 

89,268

 

 

80,642

 

 

122,377

 

 

114,669

 

 

310,181

 

 

280,703

 

Net Revenue

 

$

549,235

 

$

478,368

 

$

839,151

 

$

737,412

 

$

1,854,148

 

$

1,605,011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Line of Business - Net Cost of Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates

 

$

36,472

 

$

26,740

 

$

75,954

 

$

61,522

 

$

123,161

 

$

106,724

 

Cement

 

 

38,359

 

 

30,511

 

 

64,147

 

 

63,684

 

 

139,521

 

 

134,290

 

Products

 

 

218,315

 

 

174,622

 

 

349,452

 

 

272,363

 

 

721,099

 

 

568,668

 

Total Materials and Products

 

 

293,146

 

 

231,873

 

 

489,553

 

 

397,569

 

 

983,781

 

 

809,682

 

Services

 

 

66,131

 

 

58,306

 

 

93,080

 

 

84,949

 

 

217,945

 

 

197,889

 

Net Cost of Revenue

 

$

359,277

 

$

290,179

 

$

582,633

 

$

482,518

 

$

1,201,726

 

$

1,007,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates

 

$

67,218

 

$

57,481

 

$

95,186

 

$

84,321

 

$

215,519

 

$

180,785

 

Cement (3)

 

 

38,054

 

 

48,382

 

 

45,383

 

 

54,644

 

 

133,722

 

 

135,883

 

Products

 

 

61,549

 

 

59,990

 

 

86,652

 

 

86,209

 

 

210,945

 

 

197,958

 

Total Materials and Products

 

 

166,821

 

 

165,853

 

 

227,221

 

 

225,174

 

 

560,186

 

 

514,626

 

Services

 

 

23,137

 

 

22,336

 

 

29,297

 

 

29,720

 

 

92,236

 

 

82,814

 

Adjusted Cash Gross Profit

 

$

189,958

 

$

188,189

 

$

256,518

 

$

254,894

 

$

652,422

 

$

597,440

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Cash Gross Profit Margin (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Materials

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregates

 

 

64.8

%

 

68.3

%

 

55.6

%

 

57.8

%

 

63.6

%

 

62.9

%

Cement (3)

 

 

46.5

%

 

57.4

%

 

38.0

%

 

42.7

%

 

45.3

%

 

46.0

%

Products

 

 

22.0

%

 

25.6

%

 

19.9

%

 

24.0

%

 

22.6

%

 

25.8

%

Services

 

 

25.9

%

 

27.7

%

 

23.9

%

 

25.9

%

 

29.7

%

 

29.5

%

Total Adjusted Cash Gross Profit Margin

 

 

34.6

%

 

39.3

%

 

30.6

%

 

34.6

%

 

35.2

%

 

37.2

%


(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

 

Six months ended

 

Total Volume

    

June 30, 2018

    

July 1, 2017

 

June 30, 2018

    

July 1, 2017

 

Aggregates (tons)

 

 

13,151

 

 

11,286

 

 

21,966

 

 

19,249

 

Cement (tons)

 

 

680

 

 

714

 

 

974

 

 

1,075

 

Ready-mix concrete (cubic yards)

 

 

1,503

 

 

1,237

 

 

2,645

 

 

2,143

 

Asphalt (tons)

 

 

1,611

 

 

1,517

 

 

1,961

 

 

1,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

Pricing

    

June 30, 2018

    

July 1, 2017

 

June 30, 2018

    

July 1, 2017

 

Aggregates (per ton)

 

$

10.21

 

$

9.97

 

$

10.07

 

$

9.92

 

Cement (per ton)

 

 

114.21

 

 

112.09

 

 

114.46

 

 

111.89

 

Ready-mix concrete (per cubic yards)

 

 

107.09

 

 

104.23

 

 

107.09

 

 

103.73

 

Asphalt (per ton)

 

 

54.70

 

 

54.94

 

 

54.23

 

 

54.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year over Year Comparison

    

Volume

    

Pricing

 

Volume

    

Pricing

 

Aggregates (per ton)

 

 

16.5

%  

 

2.4

%

 

14.1

%  

 

1.5

%

Cement (per ton)

 

 

(4.8)

%  

 

1.9

%

 

(9.4)

%  

 

2.3

%

Ready-mix concrete (per cubic yards)

 

 

21.5

%  

 

2.7

%

 

23.4

%  

 

3.2

%

Asphalt (per ton)

 

 

6.2

%  

 

(0.4)

%

 

4.3

%  

 

(1.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year over Year Comparison (Excluding acquisitions)

    

Volume

    

Pricing

 

Volume

    

Pricing

 

Aggregates (per ton)

 

 

2.3

%  

 

3.6

%

 

(1.5)

%  

 

2.8

%

Cement (per ton)

 

 

(4.8)

%  

 

1.9

%

 

(9.4)

%

 

2.3

%

Ready-mix concrete (per cubic yards)

 

 

0.2

%  

 

2.7

%

 

1.3

%  

 

3.4

%

Asphalt (per ton)

 

 

2.0

%  

 

(1.3)

%

 

(2.7)

%  

 

(1.7)

%

 

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 June 30, 2018

 

 

 

 

 

 

 

Gross Revenue

 

Intercompany

 

Net

 

 

Volumes

 

Pricing

 

by Product 

 

Elimination/Delivery 

 

Revenue 

Aggregates

    

13,151

    

$

10.21

    

$

134,213

    

$

(30,523)

    

$

103,690

Cement

 

680

 

 

114.21

 

 

77,714

 

 

(1,301)

 

 

76,413

Materials

 

 

 

 

 

 

$

211,927

 

$

(31,824)

 

$

180,103

Ready-mix concrete

 

1,503

</