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Section 1: 8-K (8-K)

Document


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): November 6, 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 November 6, 2018, Summit Materials, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter ended September 29, 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 November 6, 2018.





EXHIBIT INDEX
 
 
 
 
Exhibit No.
    
Description
99.1
 





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:  November 6, 2018



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1
 
Summit Materials, Inc. Reports Third Quarter 2018 Results
 
- Net Revenue Growth of 8.8% in Three Month Period Ended September 29, 2018, Supported By Organic Volume Improvements
- Completed Two Materials-Based Bolt-on Acquisitions For Total Invested Capital of $72 million Since August 2018
- Reduced Midpoint of Adjusted EBITDA Guidance Range For The Full-Year 2018 By 14%

DENVER, CO. - (November 6, 2018) - Summit Materials, Inc. (NYSE: SUM, “Summit” or the “Company”), a leading vertically integrated construction materials company, today announced results for the third quarter 2018. 
For the three months ended September 29, 2018, the Company reported net income attributable to Summit Inc. of $71.3 million or $0.64 per basic share, compared to net income attributable to Summit Inc. of $81.3 million or $0.74 per basic share in the comparable prior year period. Summit reported adjusted diluted net income of $61.9 million or $0.54 per adjusted diluted share as compared to adjusted diluted net income of $54.0 million or $0.48 per adjusted diluted share in the prior year period. 
Summit's net revenue increased 11.6% in the first nine months of 2018 as compared to the same period in 2017, primarily due to acquisitions. Tom Hill, CEO of Summit Materials stated "we experienced significant inclement weather in the third quarter, as well as continued inflationary cost pressures in our businesses beyond our expectations. While we achieved organic volume and price increases in our aggregates and products during the third quarter, our net income declined and our Adjusted EBITDA remained flat in the third quarter of 2018 as compared to the third quarter of 2017, reflecting lower contributions from our cement segment and Houston operations together with inflation in our variable costs. We had expected normal weather going into the third quarter, instead, weather patterns continued to have a significant negative impact on most of our operating geographies.”  
Organic sales volumes in Summit's cement segment were impacted by a combination of high precipitation levels, together with competitive pressures along the Mississippi River corridor. Further, Summit's Houston operations were affected by a wetter than normal third quarter, as rainfall in many parts of Texas reached all-time record levels in September. Summit's average selling prices on both materials and products gained traction through the third quarter, which partially offset these higher raw materials, freight, labor and fuel costs. As the inflationary cost increases have exceeded Summit's price increases, and the persistent weather conditions impacted operations, Summit reduced 2018 guidance for Adjusted EBITDA to $400 million to $410 million. 
“Underlying demand conditions in most of our markets are healthy and are expected to remain so into 2019,” continued Hill. In Summit's public markets, state transportation funding measures in Texas, coupled with steady increases in federal subsidies, are contributing to increased lettings activity. Single family housing starts and permits remain well below peak levels in Summit's major markets.
Since August 2018, Summit has completed two aggregates-based acquisitions for total invested capital of $72 million. During 2018 to date, Summit has completed 13 acquisitions for total invested capital of $300 million. Across these 13 transactions, Summit has added more than 400 million tons of aggregates reserves to its portfolio.  
“While our guidance for Adjusted EBITDA has been reduced, we continue to generate significant free cash flow from operations that is helping to support the overall growth of our business,” stated Brian Harris, CFO of Summit Materials. The Company expects its net leverage ratio to approximate current levels at year end, based on the midpoint of the revised guidance. Summit plans to reduce its leverage during 2019 through a disciplined capital allocation program, reducing its capital expenditures and implementing an increasingly selective acquisition strategy.

Third Quarter 2018 | Results by Line of Business
 
Aggregates Business: Aggregates net revenues increased by 21.0% to $109.6 million in the third quarter 2018, when compared to the prior year period. Aggregates adjusted cash gross profit margin declined to 69.2% in the third quarter, compared to 73.0% in the prior year period, due to higher variable costs. Organic aggregates sales volumes increased 3.9% in the third quarter 2018, when compared to the prior-year period. Organic growth in aggregates sales volumes was due to higher volumes in the West Region, which more than offset a decline in organic aggregates sales volumes in the East Region. Organic average selling prices on aggregates increased 1.5% in the third quarter 2018 due to improvements in prices within both the West and East segments during the period.
 
Cement Business: Cement segment net revenues declined 7.2% to $94.0 million in the third quarter 2018, when compared to the prior-year period. Cement adjusted cash gross profit margin increased slightly to 50.7% in the third quarter, compared to 50.6% in the prior-year period, as productivity gains were mostly offset by a reduction in average selling price, coupled with higher freight, storage and demurrage costs related to weather-affected cement inventories. Organic sales volume of cement declined 6.4% in the third quarter, when compared to the prior year period, due to high levels of precipitation that continued to disrupt project work during the period, as well as increased competition. Organic average selling prices on cement decreased 1.0% in the third quarter, when compared to the prior year period, as competitive pressures continued in our markets. 
 
Products Business: Net revenues increased 12.6% to $315.3 million in the third quarter 2018, when compared to the prior year period. Products adjusted cash gross profit margin declined to 22.5% in the third quarter, versus 26.1% in the prior year period, as the increases in labor, raw materials and transportation costs exceeded increases in our average sales prices. Organic sales volumes of ready-mix concrete increased 3.2% in the third quarter, while organic average selling prices increased 2.3% as compared to the prior year period.  Organic sales volumes of asphalt increased 3.2% in the third quarter, while organic average selling prices increased 3.6%, over the same period in 2017. 

 Third Quarter 2018 | Results By Reporting Segment
 
Net revenue increased by 8.8% to $625.0 million in the third quarter 2018, versus $574.4 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 $108.2 million in the third quarter 2018, compared to $113.9 million in the prior year period. Adjusted EBITDA was $172.0 million in the third quarter 2018, compared to $172.7 million in the prior year period.
 
West Segment: The West Segment reported operating income of $48.2 million in the third quarter 2018, compared to $57.5 million in the prior year period. Adjusted EBITDA decreased to $73.9 million in the third quarter 2018, compared to $76.6 million in the prior year period. The quarterly declines in West Segment operating income and Adjusted EBITDA were primarily attributable to increased labor and hydrocarbon costs, partially offset by increases in average selling prices on aggregates and ready-mix concrete. Aggregates revenue in the third quarter increased 19.0% over the prior year as a result of contributions from acquisitions, a 10.0% increase in organic volumes and a 2.0% increase organic average sales prices. Ready-mix concrete revenue in the third quarter 2018 increased 26.1% over the prior year period, as a result of contributions from acquisitions, along with a 7.6% increase in organic volumes and a 2.8% increase in organic average sales prices. Asphalt revenue also increased by 2.5% in the third quarter, resulting from a 4.9% increase in volumes, offset by a 1.0% decrease in average sales price.
East Segment: The East Segment reported operating income of $38.0 million in the third quarter 2018, compared to $36.9 million in the prior year period. Adjusted EBITDA increased to $58.3 million in the third quarter 2018, compared to $56.4 million in the prior year period. The quarterly improvement in East Segment operating income and Adjusted EBITDA were mainly attributable to increases in net revenue from our acquisition program, increases in average selling prices of aggregates, ready-mix concrete and asphalt, partially offset increased labor and hydrocarbon costs, as well as decreases in ready-mix volumes. Aggregates revenue increased 20.1%, primarily due to increases resulting from our acquisition program as well as increases in average sales prices as organic sales volumes were flat. Ready-mix concrete revenue decreased 1.1% as a result of lower sales volumes, partially offset by an increase in organic average sales prices. Asphalt revenue increased 18.8% primarily as a result of acquisition related volumes and increased average sales prices, partially offset by a decrease in organic sales volumes.
Cement Segment: The Cement Segment reported operating income of $33.5 million in the third quarter 2018, compared to $35.1 million in the prior year period.  Adjusted EBITDA declined to $44.3 million in the third quarter 2018, compared to $46.9 million in the prior year period. The Company experienced slightly lower organic average selling prices as well as declines in organic sales volumes during the three month period ended September 29, 2018 due to high levels of precipitation in the Company’s Mississippi River markets and price-driven competitive pressures.

Acquisitions and Divestitures
 
As of November 6, 2018, the Company has completed 13 acquisitions in 2018, including two transactions that have closed since the Company’s last quarterly update on August 1, 2018. Total investment across the 13 acquisitions completed in 2018 was approximately $300 million, including approximately $72 million for the two bolt-on acquisitions completed since the last update. 
 
Walker Sand & Gravel (Idaho). Walker Sand & Gravel is an aggregates business that expands the Company's market position and reserve base in Idaho. Summit closed on the acquisition in October.
 
Aggregate Reserves (Georgia). Summit acquired property in the greater Atlanta, Georgia area containing over 100 million tons of permitted reserves and an active quarry which is currently leased to a third party through mid 2021. Initially, Summit will receive royalty payments through the end of the lease, at which time Summit will take over quarry operations. Summit closed on the acquisition in October.
 
In the third quarter of 2018, the Company divested a non-core business in the West segment, receiving $21.6 million in cash proceeds, and recorded a gain of $12.1 million related to this transaction.
 
Liquidity and Capital Resources
 
As of September 29, 2018, the Company had cash on hand of $64.9 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 September 29, 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 $460 million to $480 million to a range of $400 million to $410 million, including acquisition-related contributions from two transactions that closed since the Company’s last update in August 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 revised its capital expenditure guidance to be in the range of $225 million to $235 million.

1



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 third 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 December 6, 2018:
 
Domestic Replay:                   1-844-512-2921
International Replay:              1-412-317-6671
Conference ID:                       13684335

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 Diluted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Free Cash Flow, Net Leverage and Net Debt which are derived on the basis of methodologies other than in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). We have provided these measures because, among other things, we believe that they provide investors with additional information to measure our performance, evaluate our ability to service our debt and evaluate certain flexibility under our restrictive covenants. Our Adjusted Net Income (Loss), Adjusted Diluted EPS, Adjusted EBITDA, Further Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Free Cash Flow, Net Leverage and Net Debt may vary from the use of such terms by others and should not be considered as alternatives to or more important than net income (loss), operating income (loss), revenue or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or to cash flows as measures of liquidity. This press release also includes certain unaudited financial information for the last twelve months (“LTM”) ended September 29, 2018, which is calculated as the nine months ended September 29, 2018 plus the actual results for the year-ended December 30, 2017 less the actual results for the nine months ended September 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, Further Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Adjusted Net Income (Loss), Adjusted Diluted EPS, Free Cash Flow, Net Leverage and Net Debt reflect additional ways of viewing aspects of our business that, when viewed with our GAAP results and the accompanying reconciliations to U.S. GAAP financial measures included in the tables attached to this press release, may provide a more complete understanding of factors and trends affecting our business. We strongly encourage investors to review our consolidated financial statements in their entirety and not rely on any single financial measure. Reconciliations of the non-GAAP measures used in this press release are included in the attached tables. Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.

2



Cautionary Statement Regarding Forward-Looking Statements
 
This press release includes “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “trends,” “plans,” “estimates,” “projects” or “anticipates” or similar expressions that concern our strategy, plans, expectations or intentions. All statements made relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, it is very difficult to predict the effect of known factors, and, of course, it is impossible to anticipate all factors that could affect our actual results. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be realized. Important factors could affect our results and could cause results to differ materially from those expressed in our forward-looking statements, including but not limited to the factors discussed in the section entitled “Risk Factors” in Summit Inc.’s Annual Report on Form 10-K for the fiscal year ended December 30, 2017 (the “Annual Report”) and Summit Inc.'s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2018 each as filed with the Securities and Exchange Commission (the “SEC”), any factors discussed in the section entitled “Risk Factors” in any of our subsequently filed SEC filings and the following:
 
 
-
 
our dependence on the construction industry and the strength of the local economies in which we operate;
 
-
 
the cyclical nature of our business;
 
-
 
risks related to weather and seasonality;
 
-
 
risks associated with our capital-intensive business;
 
-
 
competition within our local markets;
 
-
 
our ability to execute on our acquisition strategy, successfully integrate acquisitions with our existing operations and retain key employees of acquired businesses;
 
-
 
our dependence on securing and permitting aggregate reserves in strategically located areas;
 
-
 
declines in public infrastructure construction and delays or reductions in governmental funding, including the funding by transportation authorities and other state agencies;
 
-
 
environmental, health, safety and climate change laws or governmental requirements or policies concerning zoning and land use;
 
-
 
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, including diesel and liquid asphalt
 
-
 
unexpected operational difficulties;

3



 
-
 
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.

4



SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
($ in thousands, except share and per share amounts)
 
 
 
Three months ended
 
Nine months ended
 
 
September 29,
 
September 30,
 
September 29,
 
September 30,
 
 
2018
 
2017
 
2018
 
2017
Revenue:
 
 
 
 
 
 
 
 
Product
 
$
512,822

 
$
465,556

 
$
1,229,596

 
$
1,088,299

Service
 
112,195

 
108,831

 
234,572

 
223,500

Net revenue
 
625,017

 
574,387

 
1,464,168

 
1,311,799

Delivery and subcontract revenue
 
69,644

 
59,794

 
145,804

 
130,752

Total revenue
 
694,661

 
634,181

 
1,609,972

 
1,442,551

Cost of revenue (excluding items shown separately below):
 
 
 
 
 
 
 
 
Product
 
321,586

 
277,301

 
814,166

 
677,861

Service
 
80,573

 
72,450

 
170,626

 
154,408

Net cost of revenue
 
402,159

 
349,751

 
984,792

 
832,269

Delivery and subcontract cost
 
69,644

 
59,794

 
145,804

 
130,752

Total cost of revenue
 
471,803

 
409,545

 
1,130,596

 
963,021

General and administrative expenses
 
59,457

 
59,175

 
190,975

 
175,729

Depreciation, depletion, amortization and accretion
 
53,974

 
48,969

 
150,663

 
133,756

Transaction costs
 
1,260

 
2,581

 
3,817

 
6,474

Operating income
 
108,167

 
113,911

 
133,921

 
163,571

Interest expense
 
28,889

 
28,921

 
86,616

 
79,876

Loss on debt financings
 

 

 
149

 
190

Tax receivable agreement expense
 

 
501,752

 

 
503,277

Gain on sale of business
 
(12,108
)
 

 
(12,108
)
 

Other income, net
 
(3,371
)
 
(2,716
)
 
(11,942
)
 
(3,963
)
Income (loss) from operations before taxes
 
94,757

 
(414,046
)
 
71,206

 
(415,809
)
Income tax expense (benefit)
 
20,765

 
(498,333
)
 
16,249

 
(497,076
)
Net income
 
73,992

 
84,287

 
54,957

 
81,267

Net income (loss) attributable to noncontrolling interest in subsidiaries
 

 
59

 

 
(27
)
Net income attributable to Summit Holdings (1)
 
2,703

 
2,964

 
1,888

 
2,474

Net income attributable to Summit Inc.
 
$
71,289

 
$
81,264

 
$
53,069

 
$
78,820

Income per share of Class A common stock:
 
 
 
 
 
 
 
 
Basic
 
$
0.64

 
$
0.74

 
$
0.48

 
$
0.73

Diluted
 
$
0.64

 
$
0.73

 
$
0.47

 
$
0.72

Weighted average shares of Class A common stock:
 
 
 
 
 
 
 
 
Basic
 
111,641,344

 
109,545,111

 
111,288,211

 
108,219,132

Diluted
 
111,940,067

 
110,824,468

 
112,472,724

 
108,848,680

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

5



SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
($ in thousands, except share and per share amounts)
 
 
 
September 29,
 
December 30,
 
 
2018
 
2017
 
 
(unaudited)
 
(audited)
Assets
 
 

 
 

Current assets:
 
 

 
 

Cash and cash equivalents
 
$
64,930

 
$
383,556

Accounts receivable, net
 
301,670

 
198,330

Costs and estimated earnings in excess of billings
 
47,629

 
9,512

Inventories
 
229,761

 
184,439

Other current assets
 
15,690

 
7,764

Total current assets
 
659,680

 
783,601

Property, plant and equipment, less accumulated depreciation, depletion and amortization (September 29, 2018 - $748,265 and December 30, 2017 - $631,841)
 
1,751,810

 
1,615,424

Goodwill
 
1,147,588

 
1,036,320

Intangible assets, less accumulated amortization (September 29, 2018 - $7,819 and December 30, 2017 - $6,698)
 
18,892

 
16,833

Deferred tax assets, less valuation allowance (September 29, 2018 and December 30, 2017 - $1,675)
 
267,532

 
284,092

Other assets
 
50,832

 
51,063

Total assets
 
$
3,896,334

 
$
3,787,333

Liabilities and Stockholders’ Equity
 
 
 
 
Current liabilities:
 
 
 
 
Current portion of debt
 
$
4,765

 
$
4,765

Current portion of acquisition-related liabilities
 
14,148

 
14,087

Accounts payable
 
140,174

 
98,744

Accrued expenses
 
114,257

 
116,629

Billings in excess of costs and estimated earnings
 
13,072

 
15,750

Total current liabilities
 
286,416

 
249,975

Long-term debt
 
1,808,190

 
1,810,833

Acquisition-related liabilities
 
29,129

 
58,135

Tax receivable agreement liability
 
333,152

 
331,340

Other noncurrent liabilities
 
80,577

 
65,329

Total liabilities
 
2,537,464

 
2,515,612

Stockholders’ equity:
 
 

 
 

Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 111,654,552 and 110,350,594 shares issued and outstanding as of September 29, 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 September 29, 2018 and December 30, 2017, respectively
 

 

Additional paid-in capital
 
1,188,707

 
1,154,220

Accumulated earnings
 
148,902

 
95,833

Accumulated other comprehensive income
 
6,134

 
7,386

Stockholders’ equity
 
1,344,860

 
1,258,543

Noncontrolling interest in Summit Holdings
 
14,010

 
13,178

Total stockholders’ equity
 
1,358,870

 
1,271,721

Total liabilities and stockholders’ equity
 
$
3,896,334

 
$
3,787,333



6



SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
($ in thousands)
 
 
Nine months ended
 
 
September 29,
 
September 30,
 
 
2018
 
2017
Cash flow from operating activities:
 
 
 
 
Net income
 
$
54,957

 
$
81,267

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation, depletion, amortization and accretion
 
152,829

 
140,634

Share-based compensation expense
 
19,833

 
14,148

Net gain on asset disposals
 
(27,261
)
 
(6,063
)
Non-cash loss on debt financings
 

 
85

Change in deferred tax asset, net
 
12,577

 
(498,816
)
Other
 
873

 
(855
)
(Increase) decrease in operating assets, net of acquisitions and dispositions:
 
 
 
 
Accounts receivable, net
 
(90,481
)
 
(98,961
)
Inventories
 
(26,027
)
 
(12,835
)
Costs and estimated earnings in excess of billings
 
(37,643
)
 
(31,606
)
Other current assets
 
(6,819
)
 
6,026

Other assets
 
(1,217
)
 
(3,141
)
Increase (decrease) in operating liabilities, net of acquisitions and dispositions:
 
 
 
 
Accounts payable
 
24,978

 
38,357

Accrued expenses
 
(2,197
)
 
3,854

Billings in excess of costs and estimated earnings
 
(3,850
)
 
2,386

Tax receivable agreement liability
 
1,812

 
503,277

Other liabilities
 
(1,807
)
 
(5,324
)
Net cash provided by operating activities
 
70,557

 
132,433

Cash flow from investing activities:
 
 
 
 
Acquisitions, net of cash acquired
 
(210,894
)
 
(371,479
)
Purchases of property, plant and equipment
 
(183,752
)
 
(147,478
)
Proceeds from the sale of property, plant and equipment
 
18,426

 
13,290

Proceeds from sale of business
 
21,564

 

Other
 
2,660

 
182

Net cash used for investing activities
 
(351,996
)
 
(505,485
)
Cash flow from financing activities:
 
 
 
 
Proceeds from equity offerings
 

 
237,600

Capital issuance costs
 

 
(627
)
Proceeds from debt issuances
 
64,500

 
302,000

Debt issuance costs
 
(550
)
 
(5,317
)
Payments on debt
 
(79,027
)
 
(12,887
)
Payments on acquisition-related liabilities
 
(35,321
)
 
(22,616
)
Distributions from partnership
 
(69
)
 
(109
)
Proceeds from stock option exercises
 
15,615

 
18,810

Other
 
(1,913
)
 
(846
)
Net cash (used in) provided by financing activities
 
(36,765
)
 
516,008

Impact of foreign currency on cash
 
(422
)
 
734

Net (decrease) increase in cash
 
(318,626
)
 
143,690

Cash and cash equivalents—beginning of period
 
383,556

 
143,392

Cash and cash equivalents—end of period
 
$
64,930

 
$
287,082


7



SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Revenue Data by Segment and Line of Business
($ in thousands)
 
 
Three months ended
 
Nine months ended
 
Twelve Months Ended
 
 
September 29,
 
September 30,
 
September 29,
 
September 30,
 
September 29,
 
September 30,
 
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Segment Net Revenue:
 
 
 
 

 
 

 
 

 
 

 
 

West
 
$
329,346

 
$
293,851

 
$
791,975

 
$
675,674

 
$
1,016,293

 
$
853,759

East
 
201,699

 
179,262

 
458,829

 
406,787

 
600,646

 
538,172

Cement
 
93,972

 
101,274

 
213,364

 
229,338

 
287,839

 
307,257

Net Revenue
 
$
625,017

 
$
574,387

 
$
1,464,168

 
$
1,311,799

 
$
1,904,778

 
$
1,699,188

 
 
 
 
 
 
 
 
 
 
 
 
 
Line of Business - Net Revenue:
 
 

 
 

 
 

 
 

 
 

 
 

Materials
 
 

 
 

 
 

 
 

 
 

 
 

Aggregates
 
$
109,621

 
$
90,594

 
$
280,761

 
$
236,437

 
$
357,707

 
$
299,829

Cement (1)
 
87,909

 
94,915

 
197,439

 
213,243

 
266,237

 
283,934

Products
 
315,292

 
280,047

 
751,396

 
638,619

 
967,289

 
819,865

Total Materials and Products
 
512,822

 
465,556

 
1,229,596

 
1,088,299

 
1,591,233

 
1,403,628

Services
 
112,195

 
108,831

 
234,572

 
223,500

 
313,545

 
295,560

Net Revenue
 
$
625,017

 
$
574,387

 
$
1,464,168

 
$
1,311,799

 
$
1,904,778

 
$
1,699,188

 
 
 
 
 
 
 
 
 
 
 
 
 
Line of Business - Net Cost of Revenue:
 
 

 
 

 
 

 
 

 
 

 
 

Materials
 
 

 
 

 
 

 
 

 
 

 
 

Aggregates
 
$
33,793

 
$
24,478

 
$
109,747

 
$
86,000

 
$
132,476

 
$
109,036

Cement
 
40,294

 
43,715

 
104,441

 
107,399

 
136,100

 
140,732

Products
 
244,410

 
206,911

 
593,862

 
479,274

 
758,598

 
613,169

Total Materials and Products
 
318,497

 
275,104

 
808,050

 
672,673

 
1,027,174

 
862,937

Services
 
83,662

 
74,647

 
176,742

 
159,596

 
226,960

 
207,792

Net Cost of Revenue
 
$
402,159

 
$
349,751

 
$
984,792

 
$
832,269

 
$
1,254,134

 
$
1,070,729

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

 
 

 
 

 
 

 
 

 
 

Materials
 
 

 
 

 
 

 
 

 
 

 
 

Aggregates
 
$
75,828

 
$
66,116

 
$
171,014

 
$
150,437

 
$
225,231

 
$
190,793

Cement (3)
 
47,615

 
51,200

 
92,998

 
105,844

 
130,137

 
143,202

Products
 
70,882

 
73,136

 
157,534

 
159,345

 
208,691

 
206,696

Total Materials and Products
 
194,325

 
190,452

 
421,546

 
415,626

 
564,059

 
540,691

Services
 
28,533

 
34,184

 
57,830

 
63,904

 
86,585

 
87,768

Adjusted Cash Gross Profit
 
$
222,858

 
$
224,636

 
$
479,376

 
$
479,530

 
$
650,644

 
$
628,459

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Cash Gross Profit Margin (2)
 
 

 
 

 
 

 
 

 
 

 
 

Materials
 
 

 
 

 
 

 
 

 
 

 
 

Aggregates
 
69.2
%
 
73.0
%
 
60.9
%
 
63.6
%
 
63.0
%
 
63.6
%
Cement (3)
 
50.7
%
 
50.6
%
 
43.6
%
 
46.2
%
 
45.2
%
 
46.6
%
Products
 
22.5
%
 
26.1
%
 
21.0
%
 
25.0
%
 
21.6
%
 
25.2
%
Services
 
25.4
%
 
31.4
%
 
24.7
%
 
28.6
%
 
27.6
%
 
29.7
%
Total Adjusted Cash Gross Profit Margin
 
35.7
%
 
39.1
%
 
32.7
%
 
36.6
%
 
34.2
%
 
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) Adjusted cash gross profit is calculated as net revenue by line of business less net cost of revenue by line of business. Adjusted cash gross profit margin is defined as adjusted cash gross profit divided by net revenue.
(3) The cement adjusted cash gross profit includes the earnings from the waste processing operations, cement swaps and other products. Cement line of business adjusted cash gross profit margin is defined as cement adjusted cash gross profit divided by cement segment net revenue.


8



SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Volume and Price Statistics
(Units in thousands)
 
 
 
Three months ended
 
Nine months ended
Total Volume
 
September 29, 2018
 
September 30, 2017
 
September 29, 2018
 
September 30, 2017
Aggregates (tons)
 
14,116

 
11,998

 
36,081

 
31,247

Cement (tons)
 
796

 
850

 
1,770

 
1,925

Ready-mix concrete (cubic yards)
 
1,519

 
1,320

 
4,164

 
3,463

Asphalt (tons)
 
2,212

 
2,124

 
4,173

 
4,004

 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
Nine months ended
Pricing
 
September 29, 2018
 
September 30, 2017
 
September 29, 2018
 
September 30, 2017
Aggregates (per ton)
 
$
10.41

 
$
10.23

 
$
10.20

 
$
10.04

Cement (per ton)
 
112.03

 
113.15

 
113.37

 
112.45

Ready-mix concrete (per cubic yards)
 
108.75

 
106.09

 
107.69

 
104.63

Asphalt (per ton)
 
56.34

 
54.37

 
55.35

 
54.55

 
 
 
 
 
 
 
 
 
Year over Year Comparison
 
Volume
 
Pricing
 
Volume
 
Pricing
Aggregates (per ton)
 
17.7
 %
 
1.8
 %
 
15.5
 %
 
1.6
%
Cement (per ton)
 
(6.4
)%
 
(1.0
)%
 
(8.1
)%
 
0.8
%
Ready-mix concrete (per cubic yards)
 
15.1
 %
 
2.5
 %
 
20.2
 %
 
2.9
%
Asphalt (per ton)
 
4.1
 %
 
3.6
 %
 
4.2
 %
 
1.5
%
 
 
 
 
 
 
 
 
 
Year over Year Comparison (Excluding acquisitions)
 
Volume
 
Pricing
 
Volume
 
Pricing
Aggregates (per ton)
 
3.9
 %
 
1.5
 %
 
0.6
 %
 
2.3
%
Cement (per ton)
 
(6.4
)%
 
(1.0
)%
 
(8.1
)%
 
0.8
%
Ready-mix concrete (per cubic yards)
 
3.2
 %
 
2.3
 %
 
2.0
 %
 
3.0
%
Asphalt (per ton)
 
3.2
 %
 
3.6
 %
 
0.4
 %
 
1.2
%



9



SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Reconciliations of Gross Revenue to Net Revenue by Line of Business
($ and Units in thousands, except pricing information)
 
 
 
Three months ended September 29, 2018
 
 
 
 
 
 
Gross Revenue
 
Intercompany
 
Net
 
 
Volumes
 
Pricing
 
by Product 
 
Elimination/Delivery 
 
Revenue 
Aggregates
 
14,116

 
$
10.41

 
$
146,913

 
$
(37,292
)
 
$
109,621

Cement
 
796

 
112.03

 
89,224

 
(1,315
)
 
87,909

Materials
 
 
 
 
 
$
236,137

 
$
(38,607
)
 
$
197,530

Ready-mix concrete
 
1,519

 
108.75

 
165,204

 
(337
)
 
164,867

Asphalt
 
2,212

 
56.34

 
124,622

 
48

 
124,670

Other Products
 
 
 
 
 
116,410

 
(90,655
)
 
25,755

Products
 
 
 
 
 
$
406,236

 
$
(90,944
)
 
$
315,292

 
 
 
 
Nine months ended September 29, 2018
 
 
 
 
 
 
Gross Revenue
 
Intercompany
 
Net
 
 
Volumes
 
Pricing
 
by Product
 
Elimination/Delivery
 
Revenue
Aggregates
 
36,081

 
$
10.20

 
$
368,005

 
$
(87,244
)
 
$
280,761

Cement
 
1,770

 
113.37

 
200,704

 
(3,265
)
 
197,439

Materials
 
 
 
 
 
$
568,709

 
$
(90,509
)
 
$
478,200

Ready-mix concrete
 
4,164

 
107.69

 
448,442

 
(952
)
 
447,490

Asphalt
 
4,173

 
55.35

 
230,962

 
(216
)
 
230,746

Other Products
 
 
 
 
 
287,069

 
(213,909
)
 
73,160

Products
 
 
 
 
 
$
966,473

 
$
(215,077
)
 
$
751,396


10



SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Reconciliations of Non-GAAP Financial Measures
($ in thousands, except share and per share amounts)
The tables below reconcile our net income (loss) to Adjusted EBITDA by segment for the three and nine months ended September 29, 2018 and September 30, 2017.
 
Reconciliation of Net Income (Loss) to Adjusted EBITDA
 
Three months ended September 29, 2018
by Segment
 
West
 
East
 
Cement
 
Corporate
 
Consolidated
($ in thousands)
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
61,021

 
$
37,351

 
$
35,326

 
$
(59,706
)
 
$
73,992

Interest expense (income)
 
1,380

 
844

 
(1,709
)
 
28,374

 
28,889

Income tax expense
 
567

 
275

 

 
19,923

 
20,765

Depreciation, depletion and amortization
 
23,144

 
19,154

 
10,622

 
574

 
53,494

EBITDA
 
$
86,112

 
$
57,624

 
$
44,239

 
$
(10,835
)
 
$
177,140

Accretion
 
145

 
275

 
60

 

 
480

Gain on sale of business
 
(12,108
)
 

 

 

 
(12,108
)
Transaction costs
 
2

 

 

 
1,258

 
1,260

Non-cash compensation
 

 

 

 
5,643

 
5,643

Other
 
(235
)
 
406

 

 
(580
)
 
(409
)
Adjusted EBITDA
 
$
73,916

 
$
58,305

 
$
44,299

 
$
(4,514
)
 
$
172,006

Adjusted EBITDA Margin (1)
 
22.4
%
 
28.9
%
 
47.1
%
 
 
 
27.5
%
 
Reconciliation of Net Income (Loss) to Adjusted EBITDA
 
Three months ended September 30, 2017
by Segment
 
West
 
East
 
Cement
 
Corporate
 
Consolidated
($ in thousands)
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
54,839

 
$
37,617

 
$
36,056

 
$
(44,225
)
 
$
84,287

Interest expense (income)
 
1,839

 
889

 
(1,011
)
 
27,204

 
28,921

Income tax expense (benefit)
 
889

 

 

 
(499,222
)
 
(498,333
)
Depreciation, depletion and amortization
 
18,697

 
17,416

 
11,751

 
619

 
48,483

EBITDA
 
$
76,264

 
$
55,922

 
$
46,796

 
$
(515,624
)
 
$
(336,642
)
Accretion
 
210

 
212

 
64

 

 
486

Tax receivable agreement expense
 

 

 

 
501,752

 
501,752

Transaction costs
 
14

 

 

 
2,567

 
2,581

Non-cash compensation
 

 

 

 
4,724

 
4,724

Other
 
149

 
263

 

 
(612
)
 
(200
)
Adjusted EBITDA
 
$
76,637

 
$
56,397

 
$
46,860

 
$
(7,193
)
 
$
172,701

Adjusted EBITDA Margin (1)
 
26.1
%
 
31.5
%
 
46.3
%
 
 
 
30.1
%

11



Reconciliation of Net Income (Loss) to Adjusted EBITDA
 
Nine months ended September 29, 2018
by Segment
 
West
 
East
 
Cement
 
Corporate
 
Consolidated
($ in thousands)
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
97,625

 
$
42,128

 
$
61,687

 
$
(146,483
)
 
$
54,957

Interest expense (income)
 
4,114

 
2,397

 
(4,794
)
 
84,899

 
86,616

Income tax expense
 
616

 
5

 

 
15,628

 
16,249

Depreciation, depletion and amortization
 
67,597

 
54,272

 
25,651

 
1,919

 
149,439

EBITDA
 
$
169,952

 
$
98,802

 
$
82,544

 
$
(44,037
)
 
$
307,261

Accretion
 
432

 
710

 
82

 

 
1,224

Loss on debt financings
 

 

 

 
149

 
149

Gain on sale of business
 
(12,108
)
 

 

 

 
(12,108
)
Transaction costs
 
(4
)
 

 

 
3,821

 
3,817

Non-cash compensation
 

 

 

 
19,833

 
19,833

Other (2)
 
(6,956
)
 
985

 

 
(1,345
)
 
(7,316
)
Adjusted EBITDA
 
$
151,316

 
$
100,497

 
$
82,626

 
$
(21,579
)
 
$
312,860

Adjusted EBITDA Margin (1)
 
19.1
%
 
21.9
%
 
38.7
%
 
 

 
21.4
%
 
 
Reconciliation of Net Income (Loss) to Adjusted EBITDA
 
Nine months ended September 30, 2017
by Segment
 
West
 
East
 
Cement
 
Corporate
 
Consolidated
($ in thousands)
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
93,342

 
$
46,124

 
$
65,785

 
$
(123,984
)
 
$
81,267

Interest expense (income)
 
5,586

 
2,503

 
(2,345
)
 
74,132

 
79,876

Income tax expense (benefit)
 
1,424

 
(21
)
 

 
(498,479
)
 
(497,076
)
Depreciation, depletion and amortization
 
51,389

 
49,343

 
29,702

 
1,940

 
132,374

EBITDA
 
$
151,741

 
$
97,949

 
$
93,142

 
$
(546,391
)
 
$
(203,559
)
Accretion
 
600

 
596

 
186

 

 
1,382

Loss on debt financings
 

 

 

 
190

 
190

Tax receivable agreement expense
 

 

 

 
503,277

 
503,277

Transaction costs
 
23

 

 

 
6,451

 
6,474

Non-cash compensation
 

 

 

 
14,148

 
14,148

Other
 
492

 
966

 

 
(1,804
)
 
(346
)
Adjusted EBITDA
 
$
152,856

 
$
99,511

 
$
93,328

 
$
(24,129
)
 
$
321,566

Adjusted EBITDA Margin (1)
 
22.6
%
 
24.5
%
 
40.7
%
 
 
 
24.5
%
_______________________________________________________
(1) Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of net revenue.
(2) In the nine months ended September 29, 2018, we negotiated a $6.9 million reduction in the amount of a contingent liability from one of our acquisitions. As we had passed the period to revise the opening balance sheet for this acquisition, the adjustment was recorded as other income.

12



The table below reconciles our net income per share attributable to Summit Materials, Inc. to adjusted diluted net income per share for the three and nine months ended September 29, 2018 and September 30, 2017. The per share amount of the net income attributable to Summit Materials, Inc. presented in the table is calculated using the total equity interests for the purpose of reconciling to adjusted diluted net income per share.
 
 
Three months ended
 
Nine months ended
 
 
September 29, 2018
 
September 30, 2017
 
September 29, 2018
 
September 30, 2017
Reconciliation of Net Income Per Share to Adjusted Diluted EPS
 
Net Income
 
Per Equity Unit
 
Net Income
 
Per Equity Unit
 
Net Income
 
Per Equity Unit
 
Net Income
 
Per Equity Unit
Net income attributable to Summit Materials, Inc.
 
$
71,289

 
$
0.62

 
$
81,264

 
$
0.71

 
$
53,069

 
$
0.46

 
$
78,820

 
$
0.70

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interest
 
2,703

 
0.03

 
2,964

 
0.03

 
1,888

 
0.02

 
2,474

 
0.02

Adjustment to acquisition deferred liability
 

 

 

 

 
(6,947
)
 
(0.06
)
 

 

Gain on sale of business
 
(12,108
)
 
(0.11
)
 

 

 
(12,108
)
 
(0.11
)
 

 

Loss on debt financings
 

 

 

 

 
149

 

 
190

 

Adjusted diluted net income before tax related adjustments
 
61,884

 
0.54

 
84,228

 
0.74

 
36,051

 
0.31

 
81,484

 
0.72

Tax receivable agreement expense
 

 

 
501,752

 
4.42

 

 

 
503,277

 
4.46

Valuation allowance release
 

 

 
(531,952
)
 
(4.68
)
 

 

 
(531,952
)
 
(4.71
)
Adjusted diluted net income
 
$
61,884

 
$
0.54

 
$
54,028

 
$
0.48

 
$
36,051

 
$
0.31

 
$
52,809

 
$
0.47

Weighted-average shares:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic Class A common stock
 
111,641,344

 
 
 
109,545,111

 
 
 
111,288,211

 
 
 
108,219,132

 
 
LP Units outstanding
 
3,448,343

 
 
 
4,039,020

 
 
 
3,538,385

 
 
 
4,560,976

 
 
Total equity units
 
115,089,687

 
 
 
113,584,131

 
 
 
114,826,596

 
 
 
112,780,108

 
 
 
The following table reconciles operating income to Adjusted Cash Gross Profit and Adjusted Cash Gross Profit Margin for the three and nine months ended September 29, 2018 and September 30, 2017 
 
 
Three months ended
 
Nine months ended
 
 
September 29,
 
September 30,
 
September 29,
 
September 30,
Reconciliation of Operating Income to Adjusted Cash Gross Profit
 
2018
 
2017
 
2018
 
2017
($ in thousands)
 
 
 
 
 
 
 
 
Operating income
 
$
108,167

 
$
113,911

 
$
133,921

 
$
163,571

General and administrative expenses
 
59,457

 
59,175

 
190,975

 
175,729

Depreciation, depletion, amortization and accretion
 
53,974

 
48,969

 
150,663

 
133,756

Transaction costs
 
1,260

 
2,581

 
3,817

 
6,474

Adjusted Cash Gross Profit (exclusive of items shown separately)
 
$
222,858

 
$
224,636

 
$
479,376

 
$
479,530

Adjusted Cash Gross Profit Margin (exclusive of items shown separately) (1)
 
35.7
%
 
39.1
%
 
32.7
%
 
36.6
%
_______________________________________________________
(1) Adjusted Cash Gross Profit Margin is defined as Adjusted Cash Gross Profit as a percentage of net revenue.

13



The following table reconciles net cash provided by operating activities to free cash flow for the three and nine months ended September 29, 2018 and September 30, 2017
 
 
Three months ended
 
Nine months ended
 
 
September 29,
 
September 30,
 
September 29,
 
September 30,
($ in thousands)
 
2018
 
2017
 
2018
 
2017
Net income
 
$
73,992

 
$
84,287

 
$
54,957

 
$
81,267

Non-cash items
 
60,379

 
(448,206
)
 
158,851

 
(350,867
)
Net income adjusted for non-cash items
 
134,371

 
(363,919
)
 
213,808

 
(269,600
)
Change in working capital accounts
 
(30,096
)
 
485,203

 
(143,251
)
 
402,033

Net cash provided by operating activities
 
104,275

 
121,284

 
70,557