424B3 1 a2229942z424b3.htm 424B3

Use these links to rapidly review the document
TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

Table of Contents

Filed Pursuant to Rule 424(b)(3)
Registration No. 333-213904

PROSPECTUS

LOGO

SUMMIT MATERIALS, LLC
SUMMIT MATERIALS FINANCE CORP.

Offer to Exchange (the "exchange offer")



         $250,000,000 aggregate principal amount of 8.500% Senior Notes due 2022 (the "exchange notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), for any and all outstanding 8.50% Senior Notes due 2022 issued on March 8, 2016 (the "outstanding notes" and, together with the exchange notes, the "notes").

         The exchange notes will be joint and several obligations of Summit Materials, LLC and Summit Materials Finance Corp. and will be fully and unconditionally guaranteed on a joint and several senior unsecured basis by all of our existing and future wholly-owned domestic restricted subsidiaries that guarantee indebtedness under our existing senior secured credit facilities, our 6.125% senior notes due 2023 (the "2023 notes") and the outstanding notes.



         We are conducting the exchange offer in order to provide you with an opportunity to exchange your unregistered outstanding notes for freely tradable exchange notes that have been registered under the Securities Act.

The Exchange Offer

    We will exchange all outstanding notes that are validly tendered and not validly withdrawn for an equal principal amount of exchange notes that are freely tradable.

    You may withdraw tenders of outstanding notes at any time prior to the expiration date of the exchange offer.

    The exchange offer expires at 5:00 p.m., New York City time, on November 4, 2016, which is the 21st business day after the date of this prospectus, unless extended. We do not currently intend to extend the expiration date.

    The exchange of the outstanding notes for the exchange notes in the exchange offer will not constitute a taxable event for U.S. federal income tax purposes.

    The terms of the exchange notes to be issued in the exchange offer are substantially identical to the outstanding notes, except that the exchange notes will be freely tradable.

Results of the Exchange Offer

    The exchange notes may be sold in the over-the-counter market, in negotiated transactions or through a combination of such methods. We do not plan to list the exchange notes on a national market.

         All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the indenture. In general, the outstanding notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, we do not currently anticipate that we will register the outstanding notes under the Securities Act.



         You should carefully consider the "Risk Factors" beginning on page 21 of this prospectus before participating in the exchange offer.

         Each broker dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker dealer in connection with resales of exchange notes received in exchange for outstanding notes where such outstanding notes were acquired as a result of market making activities or other trading activities.

         Neither the Securities and Exchange Commission (the "SEC") nor any state securities commission has approved or disapproved of the exchange notes to be distributed in the exchange offer or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

   

The date of this prospectus is October 6, 2016.


Table of Contents

        You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. This prospectus may be used only for the purposes for which it has been published and no person has been authorized to give any information not contained herein. If you receive any other information, you should not rely on it. We are not making an offer of these securities in any state where the offer is not permitted.


TABLE OF CONTENTS

 
  Page  

Forward-Looking Statements

    ii  

Market Data

    iii  

Certain Definitions

    iv  

Prospectus Summary

    1  

Risk Factors

    21  

Use of Proceeds

    39  

Capitalization

    40  

Unaudited Pro Forma Condensed Consolidated Financial Information

    41  

Selected Historical Consolidated Financial Data

    44  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    45  

Business

    94  

Management

    118  

Executive and Director Compensation

    126  

Security Ownership of Certain Beneficial Owners and Management

    153  

Certain Relationships and Related Person Transactions

    156  

Description of Other Indebtedness

    164  

Description of the Notes

    167  

The Exchange Offer

    247  

Certain U.S. Federal Income Tax Considerations

    258  

Certain ERISA Considerations

    259  

Plan of Distribution

    261  

Legal Matters

    262  

Experts

    262  

Where You Can Find More Information

    262  

Index to Financial Statements

    F-1  

i


Table of Contents


FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "approximately," "predicts," "intends," "trends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors include but are not limited to those described under "Risk Factors." These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

ii


Table of Contents


MARKET DATA

        This prospectus includes market and industry data and forecasts that we have derived from independent consultant reports, publicly available information, various industry publications, other published industry sources and our internal data and estimates. Independent consultant reports, industry publications and other published industry sources generally indicate that the information contained therein was obtained from sources believed to be reliable.

        Our internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which we operate and our management's understanding of industry conditions. Although we believe that such information is reliable, we have not had this information verified by any independent sources.

iii


Table of Contents


CERTAIN DEFINITIONS

        As used in this prospectus, unless otherwise noted or the context otherwise requires:

    "we," "our," "us" and the "Company" refer to Summit Materials, LLC and its subsidiaries as a combined entity, including Summit Materials Finance Corp. ("Finance Corp."), an indirect wholly-owned subsidiary of Summit Materials, LLC and the co-issuer of the notes;

    "Summit LLC" refers only to Summit Materials, LLC

    "Summit Holdings" refers only to Summit Materials Holdings L.P., our indirect parent entity;

    "Summit Inc." refers only to Summit Materials, Inc., the general partner of Summit Holdings;

    "Summit Materials" refers to Summit Inc. and Summit LLC together with their respective subsidiaries

    the "Issuers" refers to Summit LLC and Finance Corp. as co-issuers of the outstanding notes and the 2023 notes;

    "Continental Cement" refers to Continental Cement Company, L.L.C.;

    "Cornejo" refers collectively to Cornejo & Sons, L.L.C., C&S Group, Inc., Concrete Materials Company of Kansas, LLC and Cornejo Materials, Inc.;

    "Harper Contracting" refers collectively to substantially all the assets of Harper Contracting, Inc., Harper Sand and Gravel, Inc., Harper Excavating, Inc., Harper Ready Mix Company, Inc. and Harper Investments, Inc.;

    "Altaview Concrete" refers collectively to Altaview Concrete, LLC, Peak Construction Materials, LLC, Peak Management, L.C. and Wasatch Concrete Pumping, LLC;

    "RK Hall" refers collectively to R.K. Hall Construction, Ltd., RHMB Capital, L.L.C., Hall Materials, Ltd., B&H Contracting, L.P. and RKH Capital, L.L.C.;

    "B&B" refers collectively to B&B Resources, Inc., Valley Ready Mix, Inc. and Salt Lake Sand & Gravel, Inc.;

    "Industrial Asphalt" refers collectively to Industrial Asphalt, LLC, Asphalt Paving Company of Austin, LLC, KBDJ, L.P. and all the assets of Apache Materials Transport, Inc.;

    "Ramming Paving" refers collectively to J.D. Ramming Paving Co., LLC, RTI Hot Mix, LLC, RTI Equipment Co., LLC and Ramming Transportation Co., LLC;

    "Lafarge" refers to Lafarge North America Inc. prior to its parent company's merger with Holcim (US) Inc.'s parent company effective in July 2015. Subsequent to the merger, Lafarge and Holcim (US) Inc. are referred to as LafargeHolcim;

    "Westroc" refers to Westroc, LLC;

    "Alleyton" refers collectively to Alleyton Resource Company, LLC, Alcomat, LLC and Alleyton Services Company, LLC, formerly known as Alleyton Resource Corporation, Colorado Gulf, LP and certain assets of Barten Shepard Investments, LP;

    "Troy Vines" refers to Troy Vines, Incorporated;

    "Buckhorn Materials" refers to Buckhorn Materials, LLC, which is the surviving entity from the acquisition of Buckhorn Materials, LLC and Construction Materials Group LLC;

    "Canyon Redi-Mix" refers collectively to Canyon Redi-Mix, Inc. and CRM Mixers LP;

iv


Table of Contents

    "Mainland" refers to Mainland Sand & Gravel ULC, which is the surviving entity from the acquisition of Rock Head Holdings Ltd., B.I.M Holdings Ltd., Carlson Ventures Ltd., Mainland Sand and Gravel Ltd. and Jamieson Quarries Ltd.;

    "Southwest Ready Mix" refers to Southwest Ready Mix, LLC;

    "Colorado County S&G" refers to Colorado County Sand & Gravel Co., L.L.C., which is the surviving entity from the acquisition of Colorado County Sand & Gravel Co., L.L.C, M & M Gravel Sales, Inc., Marek Materials Co. Operating, Ltd. and Marek Materials Co., L.L.C.;

    "Concrete Supply" refers to Concrete Supply of Topeka, Inc., Penny's Concrete and Ready Mix, L.L.C. and Builders Choice Concrete Company of Missouri, L.L.C.;

    "Lewis & Lewis" refers to Lewis & Lewis, Inc.;

    "Davenport Assets" and the "Lafarge Target Business" refer to a cement plant and quarry in Davenport, Iowa (the "Davenport Plant") and seven cement distribution terminals along the Mississippi River;

    "LeGrand" refers to LeGrand Johnson Construction Co.;

    "Pelican" refers to Pelican Asphalt Company LLC;

    "Boxley" refers to Boxley Materials Company;

    "Sierra" refers to Sierra Ready Mix, LLC;

    "Oldcastle Assets" refers to the seven aggregates quarries located in central and northwest Missouri acquired from APAC-Kansas, Inc. and APAC-Missouri, Inc., subsidiaries of Oldcastle, Inc.;

    Weldon" refers to the Weldon Real Estate, LLC;

    "Rustin" refers H.C. Rustin Corporation;

    "RD Johnson" refers to R.D. Johnson Excavating Company, LLC and Asphalt Sales of Lawrence, LLC;

    "Angelle Assets" refers to the acquisition and lease of real property and cement terminal equipment located in Port Allen and LaPlace, LA.;

    "Blackstone" refers to investment funds associated with or designated by The Blackstone Group L.P. and its affiliates;

    "Silverhawk" refers to certain investment funds affiliated with Silverhawk Summit, L.P.;

    "Sponsors" refers to Blackstone and Silverhawk;

    "EBITDA" refers to net income (loss) before interest expense, income tax expense (benefit), depreciation, depletion and amortization expense;

    the "board" and the "directors" refer to the board and the directors of Summit Inc. following its initial public offering ("IPO") and to the board and the directors of the general partner of Summit Holdings prior to Summit Inc.'s IPO;

    "executive officers," "named executive officers" and "NEOs" refer to Summit Inc.'s executives following the IPO and to Summit LLC's executives prior to the IPO (such executives who serve in substantially the same capacities for both entities and all of whom are compensated for services performed for both entities); and

    "we," "us" and "our" in context of the compensation programs and decisions refer to the compensation programs and decisions that apply to both Summit Inc. and Summit LLC.

        Defined terms above that relate to our completed acquisitions are in chronological order. See "Business—Acquisition History" for a table of acquisitions we have completed since August 2009.

v


Table of Contents

 


PROSPECTUS SUMMARY

        This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that may be important to you. You should read this entire prospectus carefully, including the section entitled "Risk Factors" and our consolidated financial statements and the related notes thereto included elsewhere in this prospectus, before participating in the exchange offer.


Our Company

        We are one of the fastest growing construction materials companies in the United States, with an 82% increase in revenue between the year ended December 31, 2011 and the year ended January 2, 2016, as compared to an average increase of approximately 38% in revenue reported by our competitors over the same period. Our materials include aggregates, which we supply across the country, with a focus on Texas, Kansas, Utah, Missouri and Kentucky, and cement, which we supply primarily in Missouri, Iowa and along the Mississippi River. Within our markets, we offer customers a single-source provider for construction materials and related downstream products through our vertical integration. In addition to supplying aggregates to customers, we use our materials internally to produce ready-mix concrete and asphalt paving mix, which may be sold externally or used in our paving and related services businesses. Our vertical integration creates opportunities to increase aggregates volumes, optimize margin at each stage of production and provide customers with efficiency gains, convenience and reliability, which we believe gives us a competitive advantage.

        Since our first acquisition more than seven years ago, we have rapidly become a major participant in the U.S. construction materials industry. We believe that, by volume, we are a top 10 aggregates supplier, a top 15 cement producer and a major producer of ready-mix concrete and asphalt paving mix. Our revenue in 2015 and the six months ended July 2, 2016 was $1.4 billion and $0.7 billion, respectively, with net income (loss) for the same periods of $2.4 million and $(20.5) million, respectively. Our proven and probable aggregates reserves were 2.7 billion tons as of July 2, 2016. In the twelve months ended July 2, 2016, we sold 34.1 million tons of aggregates, 2.2 million tons of cement, 3.6 million cubic yards of ready-mix concrete and 4.3 million tons of asphalt paving mix across our more than 300 sites and plants.

        Our rapid growth achieved over the last seven years has been due in large part to our acquisitions, which we funded with equity and debt financing. During this period, we witnessed a cyclical decline followed by a slow recovery in the private construction market and nominal growth in public infrastructure spending. However, the private construction market is growing in our industry and end markets. We believe we are well positioned to capitalize on this anticipated recovery to grow our business and reduce our leverage over time. As of July 2, 2016, our total indebtedness was approximately $1,557.5 million, without giving effect to original issue discount.

        The private construction market includes residential and nonresidential new construction and the repair and remodel market. According to the Portland Cement Association ("PCA"), the number of total housing starts in the United States, a leading indicator for our residential business, is expected to grow 29% from 2017 to 2021. In addition, the PCA projects that spending in private nonresidential construction will grow 13% over the same period. The private construction market represented 59% of our revenue for the year ended January 2, 2016 and 64% for the six months ended July 2, 2016.

        Public infrastructure, which includes spending by federal, state and local governments for roads, highways, bridges, airports and other public infrastructure projects, has been a relatively stable portion of government budgets providing consistent demand to our industry and is projected by the PCA to grow approximately 10% from 2017 to 2021. With the nation's infrastructure aging, we expect U.S. infrastructure spending to grow over the long term, and we believe we are well positioned to capitalize on any such increase. Despite this projected growth, we do not believe it will be consistent across the United States, but will instead be concentrated in certain regions. The public infrastructure market

1


Table of Contents

represented 41% of our revenue in for the year ended January 2, 2016 and 36% for the six months ended July 2, 2016.

        In addition to the anticipated growth in our end markets, we expect higher volume and pricing in our core product categories. The PCA estimates that cement consumption will increase approximately 19% from 2017 to 2021, reflecting rising demand in the major end markets. At the same time, we believe that cement pricing will be driven higher by tightening production capacity in the United States, where the PCA projects consumption will exceed domestic cement capacity by 2017 driven by both increasing demand and by capacity constraints arising from the U.S. Environmental Protection Agency's ("EPA") National Emission Standards for Hazardous Air Pollutants ("NESHAP") regulation for Portland Cement Plants ("PC-MACT"), with which compliance was required in September 2015, notwithstanding certain extensions granted to individual cement plants to September 2016.

        Historically, we have sought to supplement organic growth with acquisitions, by strategically targeting attractive, new markets or expanding in existing markets. We consider population trends, employment rates, competitive landscape, private construction outlook, public funding and various other factors prior to entering a new market. In addition to analyzing macroeconomic data, we seek to establish, and believe that we have, a top three position in our local markets, which we believe supports sustainable organic growth and attractive returns. This positioning provides local economies of scale and synergies, which benefit our pricing, costs and profitability.

        Our acquisition strategy, to date, has helped us to achieve scale and rapid growth, and we believe that significant opportunities remain for growth through acquisitions. We estimate that approximately 65% of the U.S. construction materials market is privately owned. From this group, our senior management team maintains contact with over 300 private companies. These long-standing relationships, cultivated over decades, have been the primary source for our past acquisitions and, we believe, will be a key driver of our future growth. We believe the value proposition we offer to potential sellers has made us a buyer of choice and has enabled us to largely avoid competitive auctions and instead negotiate directly with sellers at attractive valuations.


Our Business Segments

        We operate in 24 U.S. states and in British Columbia, Canada and have assets in 20 U.S. states and in British Columbia, Canada through our platforms that make up our operating segments: West; East; and Cement. The platform businesses in the West and East segments have their own management teams that report to a segment president. The segment president is responsible for overseeing the operating platform, developing growth opportunities, implementing best practices and integrating acquired businesses. Acquisitions are an important element of our strategy, as we seek to enhance value through increased scale and cost savings within local markets.

        West Segment.    Our West segment includes operations in Texas, the Mountain states of Utah, Colorado, Idaho, Wyoming and Nevada and in British Columbia, Canada. We supply aggregates, ready-mix concrete, asphalt paving mix and paving and related services in the West segment. As of July 2, 2016, the West segment controlled approximately 0.8 billion tons of proven and probable aggregates reserves and $456.0 million of net property, plant and equipment and inventories ("hard assets"). During the year ended January 2, 2016, approximately 56% of our revenue and 47% of our Adjusted EBITDA, excluding corporate charges, were generated in the West segment.

        East Segment.    Our East segment serves markets extending across the midwestern and eastern United States, most notably in Kansas, Missouri, Kentucky, Virginia, North Carolina, South Carolina, Nebraska and Iowa where we supply aggregates, ready-mix concrete, asphalt paving mix and paving and related services. As of July 2, 2016, the East segment controlled approximately 1.4 billion tons of proven and probable aggregates reserves and $527.6 million of hard assets. During the year ended

2


Table of Contents

January 2, 2016, approximately 30% of our revenue and 29% of our Adjusted EBITDA, excluding corporate charges, were generated in the East segment.

        Cement Segment.    Our Cement segment consists of our Hannibal, Missouri and Davenport, Iowa cement plants and ten distribution terminals along the Mississippi River from Minnesota to Louisiana. The Hannibal, Missouri plant was commissioned in 2008 and is a highly efficient, technologically advanced, integrated manufacturing and distribution system strategically located 100 miles north of St. Louis along the Mississippi River. We utilize an on-site solid and liquid waste fuel processing facility, which can reduce the plant's fuel costs by up to 50% and is one of only 12 facilities in the United States with such capabilities. In July 2015, we acquired the cement plant in Davenport, Iowa and seven distribution terminals along the Mississippi River. The Davenport cement plant primarily serves markets in Iowa, Minnesota and Wisconsin and along the Mississippi River. Our production capacity approximately doubled with the acquisition of the Davenport Assets. As of July 2, 2016, the Cement segment controlled approximately 0.5 billion tons of proven and probable aggregates reserves, which serve its cement business, and $621.4 million of hard assets. During the year ended January 2, 2016, approximately 14% of our revenue and approximately 24% of our Adjusted EBITDA, excluding corporate charges, were generated in the Cement segment.

3


Table of Contents

Summary Regional Data
(as of July 2, 2016)
  West   East   Cement   Total  

Aggregates Details:

                   

Tonnage of Reserves (thousands of tons):

                   

Hard Rock

  324,982   1,242,596   514,159     2,081,737  

Sand and Gravel

  503,589   112,426       616,015  

Total Tonnage of Reserves (thousands of tons)

  828,571   1,355,022   514,159     2,697,752  

Annual Production Capacity (thousands of tons)

  25,893   13,029   1,856     40,778  

Average Years Until Depletion(1)

  32   104   277     66  

Ownership Details:

                   

Owned

  29 % 59 % 100 %   58 %

Leased

  71 % 41 % %   42 %

Aggregate Producing Sites

  59   105   3     167  

Ready-Mix Plants

  46   27       73  

Asphalt Plants

  22   23       45  

Primary States and Province:

  Texas   Kansas   Missouri        

  Utah   Missouri   Iowa        

  Colorado   Kentucky   Minnesota        

  British Columbia   Virginia   Wisconsin        

  Nevada   South Carolina   Louisiana        

  Idaho   North Carolina   Tennessee        

  Wyoming   Nebraska            

  Oklahoma   Tennessee            

  Arkansas                

Primary Markets:

  Houston, TX   Wichita, KS   St. Louis, MO        

  Austin, TX   Lawrence, KS   Davenport, IA        

  San Antonio, TX   Topeka, KS   Minneapolis/St. Paul, MN        

  Midland, TX   Kansas City, KS   Lacrosse, WI        

  Dallas, TX   Manhattan, KS   New Orleans, LA        

  Amarillo, TX   Louisville, KY   Memphis, TN        

  Longview, TX   Lexington, KY   Iowa City, IA        

  Texarkana, TX   Bowling Green, KY   Des Moines, IA        

  Denison, TX   Elizabethtown, KY   Baton Rouge, LA        

  Odessa, TX   Charlotte, NC            

  Grand Junction, CO   Wilmington, NC            

  Salt Lake City, UT   Fayetteville, NC            

  Las Vegas, NV   Greenville, SC            

  British Columbia, Canada   Oklahoma City, OK            

      Roanoke, VA            

      Lynchburg, VA            

Products Produced:

  Aggregates   Aggregates   Cement        

  Ready-mix concrete   Ready-mix concrete            

  Asphalt   Asphalt            

Revenue by End Market for Year ended January 2, 2016:

                   

Residential and Nonresidential

  67 % 37 % 75 %   59 %

Public

  33 % 63 % 25 %   41 %

(1)
Calculated based on total reserves divided by our average of 2014 and 2015 annual production.

4


Table of Contents


Our Competitive Strengths

        Leading market positions.    We believe each of our operating companies has a top three market share position in its local market area achieved through their respective, extensive operating histories, averaging over 35 years. We believe we are a top 10 supplier of aggregates, a top 15 producer of cement and a major producer of ready-mix concrete and asphalt paving mix in the United States by volume. We focus on acquiring companies that have leading local market positions in aggregates, which we seek to enhance by building scale with other local aggregates and downstream products and services. The construction materials industry is highly local in nature due to transportation costs from the high weight-to-value ratio of the products. Given this dynamic, we believe achieving local market scale provides a competitive advantage that drives growth and profitability for our business. We believe that our ability to prudently acquire, improve and rapidly integrate multiple businesses has enabled, and will continue to enable, us to become market leaders.

        Operations positioned to benefit from attractive industry fundamentals.    We believe the construction materials industry has attractive fundamentals, characterized by high barriers to entry and a stable competitive environment in the majority of markets. Barriers to entry are created by scarcity of raw material resources, limited efficient distribution range, asset intensity of equipment, land required for quarry operations and a time-consuming and complex regulatory and permitting process. According to the April 2014 U.S. Geological Survey, aggregates pricing in the United States had increased in 65 of the previous 70 years, with growth accelerating since 2002 as continuing resource scarcity in the industry has led companies to focus increasingly on improved pricing strategies.

        One significant factor that allows for pricing growth in periods of volume declines is that aggregates and asphalt paving mix have significant exposure to public road construction, which has demonstrated growth over the past 30 years, even during times of broader economic weakness. The majority of public road construction spending is funded at the state level through the states' respective departments of transportation. The five key states in which we operate (Texas, Kansas, Utah, Missouri and Kentucky) have funds with certain constitutional protections for revenue sources dedicated for transportation projects. These dedicated, earmarked funding sources limit the negative effect current state deficits may have on public spending. As a result, we believe our business' profitability is significantly more stable than most other building product subsectors.

        Vertically-integrated business model.    We generate revenue across a spectrum of related products and services. Approximately 80% of the aggregates used in our products and services are internally supplied. Our vertically-integrated business model enables us to operate as a single source provider of materials and paving and related services, creating cost, convenience and reliability advantages for our customers, while at the same time creating significant cross-marketing opportunities among our interrelated businesses. We believe this creates opportunities to increase aggregates volumes, optimize margin at each stage of production, foster more stable demand for aggregates through a captive demand outlet, create a competitive advantage through the efficiency gains, convenience and reliability provided to customers and enhance our acquisition strategy by allowing a greater range of target companies.

        Attractive diversity, scale and product portfolio.    We operate across 24 U.S. states and British Columbia, Canada in 40 metropolitan statistical areas. Between the year ended December 31, 2011 and the twelve months ended July 2, 2016, we grew our revenue by 96% and brought substantial additional scale and geographic diversity to our operations. A combination of increased scale and vertical integration enabled us to improve profitability with Adjusted EBITDA margins increasing 796 basis points from the year ended December 28, 2013 to the twelve months ended July 2, 2016. In the twelve months ended July 2, 2016, 29% of gross margin was derived from aggregates, 23% from the Cement segment, 35% from products and the remaining 13% from services. We have approximately 2.7 billion tons of proven and probable aggregates reserves serving our aggregates and cement business. We

5


Table of Contents

estimate that the useful life of our proven and probable reserves serving our aggregates and cement businesses are approximately 75 years and 270 years, respectively, based on the average production rates in 2015 and 2014.

        Our dry process cement plants in Hannibal, Missouri and Davenport, Iowa were commissioned in 2008 and 1981, respectively. These large capacity cement plants have technologically advanced manufacturing capabilities. According to PCA forecasts, consumption of cement in the United States is expected to exceed production capacity by 2019, creating opportunities for existing cement plants. Our plants are strategically located on the Mississippi River and, consequently, in 2015, approximately 58% and 26% of cement sold from the Hannibal and Davenport plants, respectively, was shipped by barge, which is generally more cost-effective than truck transport.

        Proven ability to incorporate new acquisitions and grow businesses.    We have acquired 46 businesses, successfully integrating the businesses into three segments through the implementation of operational improvements, industry-proven information technology systems, a comprehensive safety program and best in class management programs. A typical acquisition generally involves retaining the local management team of the acquired business, maintaining operational decisions at the local level and providing strategic insights and leadership directed by Tom Hill, our President and Chief Executive Officer, a 35-year industry veteran. These acquisitions have helped us achieve significant revenue growth, from $0.4 billion in 2010 to $1.4 billion in 2015.

        Experienced and proven leadership driving organic growth and acquisition strategy.    Our management team, led by Mr. Hill, has a proven track record of creating value. In addition to Mr. Hill, our management team, including corporate and segment operations managers, corporate development, finance executives and other heavy side industry operators, has extensive experience in the industry. Our management team has a track record of executing and successfully integrating acquisitions in the sector. Mr. Hill and his team successfully executed a similar consolidation strategy at another company in the industry, where Mr. Hill led the integration of 173 acquisitions worth, in the aggregate, approximately $6.3 billion, taking the business from less than $0.3 billion to $7.4 billion in sales from 1992 to 2008.


Our Business Strategy

        Capitalize on expected recovery in the U.S. economy and construction markets.    The residential and nonresidential markets are showing positive growth signs in varying degrees across our markets. The PCA forecasts total housing starts to accelerate to 1.63 million in the United States by 2021. The American Institute of Architects' Consensus Construction Forecast projects nonresidential construction to grow 5.6% in 2017. We believe that we have sufficient exposure to the residential and nonresidential end markets to benefit from a potential recovery in all of our markets. Given the nation's aging infrastructure and considering longstanding historical spending trends, we expect U.S. infrastructure investment to grow over time. We believe we are well positioned to capitalize on any such increase in investment.

        Expand local positions in the most attractive markets through targeted capital investments and bolt-on acquisitions.    We plan to expand our business through organic growth and bolt-on acquisitions in each of our local markets. Our acquisition strategy involves acquiring platforms that serve as the foundation for continued incremental and complementary growth via locally situated bolt-on acquisitions to these platforms. We believe that increased local market scale will drive profitable growth. Our existing platform of operations is expected to enable us to grow significantly as we expand in our existing markets. In pursuing our growth strategy, we believe that our balance sheet and liquidity position will enable us to acquire most of the bolt-on acquisitions and platforms that we seek to purchase, but we may also pursue larger acquisition transactions that may require us to raise additional equity capital and/or debt. Consistent with this strategy, we regularly evaluate potential acquisition opportunities,

6


Table of Contents

including ones that would be significant to us. We cannot predict the timing of any contemplated transactions.

        Drive profitable growth through strategic acquisitions.    Our growth to a top-five U.S. construction materials company has been a result of the successful execution of our acquisition strategy and implementation of best practices to drive organic growth. Based on aggregates sales, in volumes, we believe that we are currently a top-ten player, which we achieved within five years of our first acquisition. We believe that the relative fragmentation of our industry creates an environment in which we can continue to acquire companies at attractive valuations and increase scale and diversity over time through strategic acquisitions in markets adjacent to our existing markets within the states where we currently operate, as well as into additional states as market and competitive conditions support further growth.

        Enhance margins and free cash flow generation through implementation of operational improvements.    Our management team includes individuals with decades of experience in our industry and proven success in integrating acquired businesses and organically growing operations. This experience represents a significant source of value to us that has driven Adjusted EBITDA margins up 796 basis points from the year ended December 28, 2013 to the twelve months ended July 2, 2016. These margin improvements are accomplished through proven profit optimization plans, leveraging information technology and financial systems to control costs, managing working capital, achieving scale-driven purchasing synergies and fixed overhead control and reduction. Our segment presidents, supported by our central operations, risk management and information technology and finance team, drive the implementation of detailed and thorough profit optimization plans for each acquisition post close, which typically includes, among other things, implementation of a systematic pricing strategy and an equipment utilization analysis that assesses repair and maintenance spending, the health of each piece of equipment and a utilization review to ensure we are maximizing productivity and selling any pieces of equipment that are not needed in the business.

        Leverage vertically-integrated and strategically located operations for growth.    We believe that our vertical integration of construction materials, products and services is a significant competitive advantage that we will leverage to grow share in our existing markets and enter into new markets. A significant portion of materials used to produce our products and provide services to our customers is internally supplied, which enables us to operate as a single source provider of materials, products and paving and related services, creating cost, convenience and reliability advantages for our customers and enabling us to capture additional value throughout the supply chain, while at the same time creating significant cross-marketing opportunities among our interrelated businesses.


Our Industry

        The U.S. construction materials industry is composed of four primary sectors: aggregates; cement; ready-mix concrete; and asphalt paving mix. Each of these materials is widely used in most forms of construction activity. Participants in these sectors typically range from small, privately-held companies focused on a single material, product or market to multinational corporations that offer a wide array of construction materials and services. Competition is constrained in part by the distance materials can be transported efficiently, resulting in predominantly local or regional operations.

        Transportation infrastructure projects, driven by both federal and state funding programs, represent a significant share of the U.S. construction materials market. In addition to federal funding, highway construction and maintenance funding is also available through state, county and local agencies. Our five largest states by revenue (Texas, Kansas, Utah, Missouri and Kentucky, which represented approximately 33%, 16%, 11%, 10% and 8%, respectively, of our total revenue in 2015) each have funds whose revenue sources have certain constitutional protections and may only be spent on transportation projects.

7


Table of Contents

        Aggregates.    Aggregates are key material components used in the production of cement, ready-mix concrete and asphalt paving mixes for the residential, nonresidential and public infrastructure markets and are also widely used for various applications and products, such as road and building foundations, railroad ballast, erosion control, filtration, roofing granules and in solutions for snow and ice control. Generally extracted from the earth using surface or underground mining methods, aggregates are produced from natural deposits of various materials such as limestone, sand and gravel, granite and trap rock.

        Aggregates represent an attractive market with high profit margins, high barriers to entry and increasing resource scarcity, which, as compared to construction services, leads to relatively stable profitability through economic cycles. Production is moderately capital intensive and access to well-placed reserves is important given high transport costs and environmental permitting restrictions. Markets are typically local due to high transport costs and are generally fragmented, with numerous participants operating in localized markets. The top six players control approximately 40% of the national market. According to the August 2016 U.S. Geological Survey, the U.S. market for these products was estimated at approximately 2.5 billion tons in 2015, at a total market value of $22.1 billion. Relative to other construction materials, such as cement, aggregates consumption is more heavily weighted towards public infrastructure and maintenance and repair. However, the mix of end uses can vary widely by geographic location, based on the nature of construction activity in each market. Typically, three to six competitors comprise the majority market share of each local market because of the constraints around the availability of natural resources and transportation. Vertically-integrated players can have a competitive advantage by leveraging their aggregates for downstream operations, such as ready-mix concrete, asphalt paving mix and paving and related services.

        Cement.    Portland cement, an industry term for the common cement in general use around the world, is the basic ingredient of concrete and is made from a combination of limestone, shale, clay, silica and iron ore. Together with water, cement creates the paste that binds the aggregates together when making concrete. Cement is an input for ready-mix concrete and concrete products and commands significantly higher prices relative to aggregates, reflecting the more intensive capital investment required. Cement production in the United States is distributed among 107 production facilities located across 36 states and is a capital-intensive business with variable costs dominated by raw materials and energy required to fuel the kiln. Building new plants is challenging given the extensive permitting requirements and capital investment requirements. We estimate the cost of purchasing or building a new plant in the United States to be approximately $400 per ton, not including costs for property or securing raw materials and the required distribution network. Assuming construction costs of $400 per ton, a 1.0 million ton facility would cost approximately $400.0 million. Establishing a distribution network, such as the seven terminals included in the Davenport Assets, adds significant cost to a cement plant investment.

        Ready-mix concrete.    Ready-mix concrete is one of the most versatile and widely used materials in construction today. It is created through the combination of coarse and fine aggregates, which make up approximately 60 to 75% of the mix by volume, with water, various chemical admixtures and cement making up the remainder. Given the high weight-to-value ratio, delivery of ready-mix concrete is typically limited to a one-hour haul from a production plant and is further limited by a 90 minute window in which newly-mixed concrete must be poured to maintain quality and performance. As a result of the transportation constraints, the ready-mix concrete market is highly localized, with an estimated 5,500 ready-mix concrete plants in the United States, according to the National Ready Mixed Concrete Association (the "NRMCA"). We participate selectively in ready-mix concrete markets where we provide our own aggregates for production, which we believe provides us a competitive advantage.

        Asphalt paving mix.    Asphalt paving mix is the most common roadway material used today, covering 94% of the more than 2.7 million miles of paved roadways in the United States, according to

8


Table of Contents

the National Asphalt Pavement Association ("NAPA"). Major inputs include aggregates and liquid asphalt (the refined residue from the distillation process of crude oils by refineries). Given the significant aggregates component in asphalt paving mix (up to 95% by weight), local aggregates producers often participate in the asphalt paving mix business to secure captive demand for aggregates. Asphalt and paving is highly fragmented in the United States, with end markets skewed towards new road construction and maintenance and repair of roads. Barriers to entry include permit requirements, access to aggregates (where possible, asphalt plants are typically located at quarries) and access to liquid asphalt.

9


Table of Contents


Corporate Structure

        The following chart summarizes our organizational structure, equity ownership and our principal indebtedness as of September 27, 2016. This chart is provided for illustrative purposes only and does not show all of our legal entities or all obligations of such entities.

GRAPHIC


(1)
SEC registrant with respect to the registration statement of which this prospectus forms a part.

10


Table of Contents

(2)
As of September 27, 2016, entities affiliated with Blackstone and certain members of management or their family trusts that directly hold LP Units held all of the issued shares of Class B Common Stock of Summit Inc. The Class B Common Stock provides holders of LP Units with a number of votes equal to the number of LP Units held. For additional details, see "Security Ownership of Certain Beneficial Owners and Management."

(3)
Guarantor under the senior secured credit facilities, but not the Senior Notes.

(4)
Summit LLC and Finance Corp. are the issuers of the Senior Notes and Summit LLC is the borrower under our senior secured credit facilities. Finance Corp. is an indirect wholly-owned subsidiary of Summit LLC and was formed solely for the purpose of serving as co-issuer of certain indebtedness, including the Senior Notes. Finance Corp. does not and will not have operations of any kind and does not and will not have revenue or assets other than as may be incidental to its activities as a co-issuer of the Senior Notes.


Corporate Information

        Summit LLC was formed under the laws of the State of Delaware in September 2008. Finance Corp. was incorporated under the laws of the State of Delaware in December 2011. Our principal executive office is located at 1550 Wynkoop Street, 3rd Floor, Denver, Colorado 80202. Our telephone number is (303) 893-0012.

11


Table of Contents

 


The Exchange Offer

        The following summary is provided solely for your convenience and is not intended to be complete. You should read the full text and more specific details contained elsewhere in this prospectus for a more detailed description of the notes.

General

  On March 8, 2016, the Issuers issued an aggregate of $250.0 million principal amount of 8.500% Senior Notes due 2022 in a private offering. In connection with the private offering of the outstanding notes, the Issuers and the guarantors entered into a registration rights agreement with the initial purchasers in which they agreed, among other things, to deliver this prospectus to you and to complete the exchange offer within 270 days after the date of issuance and sale of the outstanding notes. You are entitled to exchange in the exchange offer your outstanding notes for the exchange notes which are identical in all material respects to the outstanding notes except:

 

the exchange notes have been registered under the Securities Act;

 

the exchange notes are not entitled to any registration rights which are applicable to the outstanding notes under the registration rights agreement; and

 

the additional interest provisions of the registration rights agreement are no longer applicable.

The Exchange Offer

 

The Issuers are offering to exchange up to $250.0 million aggregate principal amount of 8.500% Senior Notes due 2022, which have been registered under the Securities Act, for a like amount of outstanding notes.

 

You may only exchange outstanding notes in denominations of $2,000 and integral multiples of $1,000, in excess thereof.

Resale

 

Based on an interpretation by the staff of the SEC set forth in no-action letters issued to third parties, the Issuers believe that the exchange notes issued pursuant to the exchange offer in exchange for outstanding notes may be offered for resale, resold and otherwise transferred by you (unless you are our "affiliate" within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that:

 

you are acquiring the exchange notes in the ordinary course of your business; and

 

you have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of the exchange notes.

 

If you are a broker-dealer and receive exchange notes for your own account in exchange for outstanding notes that you acquired as a result of market making activities or other trading activities, you must acknowledge that you will deliver this prospectus in connection with any resale of the exchange notes. See "Plan of Distribution."

12


Table of Contents

 

Any holder of outstanding notes who:

 

is our affiliate;

 

does not acquire exchange notes in the ordinary course of its business; or

 

tenders its outstanding notes in the exchange offer with the intention to participate, or for the purpose of participating, in a distribution of exchange notes cannot rely on the position of the staff of the SEC enunciated in Morgan Stanley & Co. Inc. (available June 5, 1991) and Exxon Capital Holdings Corp. (available May 13, 1988), as interpreted in the SEC's letter to Shearman & Sterling (available July 2, 1993), or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes.

Expiration Date

 

The exchange offer will expire at 5:00 p.m., New York City time, on November 4, 2016, which is the 21st business day after the date of this prospectus, unless extended by the Issuers. The Issuers do not currently intend to extend the expiration date.

Withdrawal

 

You may withdraw the tender of your outstanding notes at any time prior to the expiration of the exchange offer. The Issuers will return to you any of your outstanding notes that are not accepted for any reason for exchange, without expense to you, promptly after the expiration or termination of the exchange offer.

Interest on the Exchange Notes and the Outstanding Notes

 

The exchange notes will bear interest at the rate per annum set forth on the cover page of this prospectus from the most recent date to which interest has been paid on the outstanding notes. The interest will be payable semi-annually on April 15 and October 15. No interest will be paid on outstanding notes following their acceptance for exchange.

Conditions to the Exchange Offer

 

The exchange offer is subject to customary conditions, which the Issuers may waive. See "The Exchange Offer—Conditions to the Exchange Offer."

Procedures for Tendering Outstanding Notes

 

If you wish to participate in the exchange offer, you must complete, sign and date the accompanying letter of transmittal, or a facsimile of such letter of transmittal, according to the instructions contained in this prospectus and the letter of transmittal. You must then mail or otherwise deliver the letter of transmittal, or a facsimile of such letter of transmittal, together with the outstanding notes and any other required documents, to the exchange agent at the address set forth on the cover page of the letter of transmittal.

13


Table of Contents

 

If you hold outstanding notes through The Depository Trust Company ("DTC") and wish to participate in the exchange offer, you must comply with the Automated Tender Offer Program procedures of DTC by which you will agree to be bound by the letter of transmittal. By signing, or agreeing to be bound by, the letter of transmittal, you will represent to us that, among other things:

 

you are not our "affiliate" within the meaning of Rule 405 under the Securities Act;

 

you do not have an arrangement or understanding with any person or entity to participate in the distribution of the exchange notes;

 

you are acquiring the exchange notes in the ordinary course of your business; and

 

if you are a broker-dealer that will receive exchange notes for your own account in exchange for outstanding notes that were acquired as a result of market making activities, that you will deliver a prospectus, as required by law, in connection with any resale of such exchange notes.

Special Procedures for Beneficial Owners

 

If you are a beneficial owner of outstanding notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender those outstanding notes in the exchange offer, you should contact the registered holder promptly and instruct the registered holder to tender those outstanding notes on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your outstanding notes, either make appropriate arrangements to register ownership of the outstanding notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date.

Guaranteed Delivery Procedures

 

If you wish to tender your outstanding notes and your outstanding notes are not immediately available or you cannot deliver your outstanding notes, the letter of transmittal or any other required documents, or you cannot comply with the procedures under DTC's Automated Tender Offer Program for transfer of book-entry interests, prior to the expiration date, you must tender your outstanding notes according to the guaranteed delivery procedures set forth in this prospectus under "The Exchange Offer—Guaranteed Delivery Procedures."

14


Table of Contents

Effect on Holders of Outstanding Notes

 

As a result of the making of, and upon acceptance for exchange of, all validly tendered outstanding notes pursuant to the terms of the exchange offer, the Issuers and the guarantors will have fulfilled a covenant under the registration rights agreement. Accordingly, there will be no increase in the interest rate on the outstanding notes under the circumstances described in the registration rights agreement. If you do not tender your outstanding notes in the exchange offer, you will continue to be entitled to and bear all the rights and limitations applicable to the outstanding notes as set forth in the indenture; however, as a result of the making of, and upon acceptance for exchange of, all validly tendered outstanding notes pursuant to the terms of the exchange offer, the Issuers will not have any further obligation to you to provide for the exchange and registration of the outstanding notes under the registration rights agreement. To the extent that the outstanding notes are tendered and accepted in the exchange offer, the trading market for the remaining outstanding notes that are not so tendered and exchanged could be adversely affected.

Consequences of Failure to Exchange

 

All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the indenture. In general, the outstanding notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, the Issuers do not currently anticipate that they will register the outstanding notes under the Securities Act.

Certain U.S. Federal Income Tax Considerations

 

The exchange of outstanding notes for exchange notes in the exchange offer will not constitute a taxable event to holders for U.S. federal income tax purposes. See "Certain U.S. Federal Income Tax Considerations."

Fungibility

 

The exchange notes will be treated as fungible with the existing notes for United States federal income tax purposes.

Use of Proceeds

 

The Issuers will not receive any cash proceeds from the issuance of the exchange notes in the exchange offer. See "Use of Proceeds."

Exchange Agent

 

Wilmington Trust, National Association is the exchange agent for the exchange offer. The addresses and telephone numbers of the exchange agent are set forth in the section captioned "The Exchange Offer—Exchange Agent" of this prospectus.

15


Table of Contents



Summary Historical Consolidated Financial and Other Data

        The following table sets forth, for the periods and as of the dates indicated, our summary historical consolidated financial and other data. The summary historical consolidated financial information as of July 2, 2016 and for the six months ended July 2, 2016 and June 27, 2015 was derived from the unaudited consolidated financial statements included elsewhere in this prospectus. The summary historical consolidated financial information as of January 2, 2016 and December 27, 2014 and for each of the three years ended January 2, 2016 has been derived from our audited consolidated financial statements included elsewhere in this prospectus. We have derived the summary historical consolidated balance sheet data at December 28, 2013 from our audited consolidated balance sheet as of December 28, 2013, which is not included in this prospectus. We have prepared our unaudited consolidated financial statements on the same basis as our audited consolidated financial statements and, in our opinion, have included all adjustments, which include normal recurring adjustments, necessary to present fairly in all material respects our financial position and results of operations. The results for any historical or interim period are not necessarily indicative of the results that may be expected for the full year or any future period.

        You should read the following information together with the more detailed information contained in "Selected Historical Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and the accompanying notes included elsewhere in this prospectus.

16


Table of Contents

(in thousands)
  Six Months
Ended
July 2, 2016
  Six Months
Ended
June 27, 2015
  Year Ended
January 2,
2016
  Year Ended
December 27,
2014
  Year Ended
December 28,
2013
 

Statement of Operations Data:

                               

Total revenue

  $ 673,653   $ 558,930   $ 1,432,297   $ 1,204,231   $ 916,201  

Total cost of revenue (excluding items shown separately below)

    462,088     407,439     990,645     887,160     677,052  

General and administrative expenses

    121,014     106,945     177,769     150,732     142,000  

Goodwill impairment

                    68,202  

Depreciation, depletion, amortization and accretion

    69,768     53,512     119,723     87,826     72,934  

Transaction costs

    3,606     7,740     9,519     8,554     3,990  

Operating income (loss)

    17,177     (16,706 )   134,641     69,959     (47,977 )

Other expense (income), net

    217     493     (2,425 )   (3,447 )   (1,737 )

Loss on debt financings

        31,672     71,631         3,115  

Interest expense

    46,649     41,213     83,757     86,742     56,443  

Loss from continuing operations before taxes

    (29,689 )   (90,084 )   (18,322 )   (13,336 )   (105,798 )

Income tax benefit

    (9,205 )   (9,813 )   (18,263 )   (6,983 )   (2,647 )

Loss from continuing operations

  $ (20,484 ) $ (79,513 ) $ (59 ) $ (6,353 ) $ (103,151 )

Cash Flow Data:

                               

Net cash (used for) provided by:

                               

Operating activities

  $ (26,500 ) $ (80,224 ) $ 98,203   $ 79,238   $ 66,412  

Investing activities

    (377,391 )   (52,593 )   (584,347 )   (461,280 )   (111,515 )

Financing activities

    226,156     132,032     659,320     380,489     32,589  

Balance Sheet Data (as of period end):

                               

Cash and cash equivalents

  $ 8,151         $ 185,388   $ 13,215   $ 14,917  

Total assets

    2,701,478           2,395,162     1,712,653     1,234,414  

Long-term debt, including current portion

    1,543,500           1,296,750     1,040,670     695,890  

Capital leases

    41,439           44,822     31,210     8,026  

Total member's interest

    786,419           778,292     286,983     283,551  

Other Financial Data (as of period end):

                               

Total hard assets

  $ 1,613,933         $ 1,399,088   $ 1,062,154   $ 928,210  

Ratio of earnings to fixed charges(1)

    0.4x     N/A     0.8x     0.8x     N/A  

(1)
The ratio of earnings to fixed charges is determined by dividing earnings, as adjusted, by fixed charges. Fixed charges consist of interest on all indebtedness plus that portion of operating lease rentals representative of the interest factor (deemed to be 33% of operating lease rentals). For the six months ended July 2, 2016 and June 27, 2015 and the years ended January 2, 2016, December 27, 2014 and December 28, 2013, our earnings were insufficient to cover fixed charges by $29.2 million, $89.2 million, $20.0 million, $14.0 million and $107.5 million, respectively.

17


Table of Contents

 


The Exchange Notes

        The terms of the exchange notes are identical in all material respects to the terms of the outstanding notes, except that the exchange notes will not contain terms with respect to transfer restrictions or additional interest upon a failure to fulfill certain of our obligations under the registration rights agreement. The exchange notes will evidence the same debt as the outstanding notes. The exchange notes will be governed by the same indenture under which the outstanding notes were issued. The following summary is not intended to be a complete description of the terms of the exchange notes. For a more detailed description of the exchange notes, see "Description of the Notes" in this prospectus.

Issuers

  Summit Materials, LLC and Summit Materials Finance Corp.

Notes Offered

 

Up to $250.0 million aggregate principal amount of 8.500% Senior Notes due 2022.

Maturity Date

 

April 15, 2022, unless earlier redeemed or repurchased.

Interest

 

The exchange notes will accrue interest at a rate of 8.500% per annum, payable on April 15 and October 15 of each year.

Guarantees

 

The exchange notes will be fully and unconditionally guaranteed on a joint and several senior unsecured basis by all of our existing and future wholly-owned domestic restricted subsidiaries that guarantee indebtedness under our senior secured credit facilities and the existing notes. These guarantees are subject to release under specified circumstances. See "Description of the Notes—Guarantees." The guarantee of each guarantor will be an unsecured senior obligation of that guarantor and will rank:

 

equal in right of payment with all existing and future senior indebtedness of that guarantor;

 

senior in right of payment with all existing and future subordinated indebtedness of that guarantor;

 

effectively subordinated to all existing and future secured obligations of that guarantor, including any such guarantor's guarantee of indebtedness under our senior secured credit facilities, to the extent of the value of the assets securing such indebtedness; and

 

structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, of our non-guarantor subsidiaries, including any foreign subsidiaries.

 

See "Description of the Notes—Guarantees."

Ranking

 

The exchange notes are our senior unsecured obligations and will:

 

rank equally in right of payment with all of our existing and future senior obligations (including the existing notes);

 

rank senior in right of payment to all of our existing and future subordinated obligations;

18


Table of Contents

 

be effectively subordinated to all of our existing and future secured obligations, including borrowings under our senior secured credit facilities, to the extent of the value of the assets securing such obligations; and

 

be structurally subordinated to all of our existing and future indebtedness and other liabilities of our non-guarantor subsidiaries, including any foreign subsidiaries.

 

As of July 2, 2016, we had outstanding:

 

$657.5 million of indebtedness under our senior secured credit facilities;

 

$650.0 million aggregate principal amount of 2023 notes;

 

$250.0 million aggregate principal amount of existing notes; and

 

$41.4 million in capital leases and other obligations.

Optional Redemption

 

We may redeem some or all of the exchange notes at any time prior to April 15, 2019 at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date and the "applicable premium" described under the caption "Description of the Notes—Optional Redemption." We may redeem some or all of the exchange notes at any time on or after April 15, 2019 at the redemption prices and as described under the caption "Description of the Notes—Optional Redemption."

Change of Control and Asset Sale Offers

 

Upon the occurrence of a change of control or upon the sale of certain of our assets in which we do not apply the proceeds as required, the holders of the exchange notes will have the right to require us to make an offer to repurchase each holder's notes at a price equal to 101% (in the case of a change of control) or 100% (in the case of an asset sale) of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date. See "Description of the Notes—Repurchase at the Option of Holders—Change of Control," and "Description of the Notes—Repurchase at the Option of Holders—Asset Sales."

Certain Covenants

 

The exchange notes will be governed by the same indenture under which the existing notes and the outstanding notes were issued. The indenture governing the exchange notes contains covenants that, among other things, limit the ability of the Issuers and their restricted subsidiaries to:

 

incur additional indebtedness or issue certain preferred shares;

 

pay dividends, redeem our membership interests or make other distributions;

 

make certain investments;

 

create restrictions on the ability of our restricted subsidiaries to pay dividends to us or make other intercompany transfers;

19


Table of Contents

 

create liens;

 

sell or transfer certain assets;

 

consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

 

enter into certain transactions with our affiliates; and

 

designate subsidiaries as unrestricted subsidiaries.

 

These covenants are subject to a number of important limitations, exceptions and qualifications. See "Description of the Notes—Certain Covenants."

Use of Proceeds

 

We will not receive any proceeds from the exchange offer. See "Use of Proceeds."

No Prior Market

 

The exchange notes will generally be freely transferable but will be new securities for which there will not initially be a market. Accordingly, we cannot assure you whether a market for the exchange notes will develop or as to the liquidity of any such market that may develop.

Governing Law

 

The exchange notes will be governed by the laws of the State of New York.

Risk Factors

        You should carefully consider all the information in the prospectus prior to exchanging your outstanding notes. In particular, we urge you to carefully consider the factors set forth under the caption "Risk Factors" beginning on page 21 of this prospectus before participating in the exchange offer.

20


Table of Contents


RISK FACTORS

        You should carefully consider the following risk factors and all other information contained in this prospectus before participating in the exchange offer. The risks and uncertainties described below are not the only risks facing us and your investment in the exchange notes. Additional risks and uncertainties that we are unaware of, or those we currently deem less significant, also may become important factors that affect us. The following risks could materially and adversely affect our business, financial condition, results of operations or liquidity. The value of the exchange notes could decline due to any of these risks, and you may lose all or part of your investment.

Risks Related to the Exchange Offer

If you choose not to exchange your outstanding notes in the exchange offer, the transfer restrictions currently applicable to your outstanding notes will remain in force and the market price of your outstanding notes could decline.

        If you do not exchange your outstanding notes for exchange notes in the exchange offer, then you will continue to be subject to the transfer restrictions on the outstanding notes as set forth in the offering memorandum distributed in connection with the private offering of the outstanding notes. In general, the outstanding notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreement, we do not intend to register resales of the outstanding notes under the Securities Act. You should refer to "Prospectus Summary—The Exchange Offer" and "The Exchange Offer" for information about how to tender your outstanding notes.

        The tender of outstanding notes under the exchange offer will reduce the remaining principal amount of the outstanding notes, which may have an adverse effect upon, and increase the volatility of, the market price of the outstanding notes not exchanged in the exchange offer due to a reduction in liquidity.

Your ability to transfer the exchange notes may be limited by the absence of an active trading market, and an active trading market may not develop for the exchange notes.

        The exchange notes are a new issue of securities for which there is no established trading market. We do not intend to have the exchange notes listed on a national securities exchange or to arrange for quotation on any automated quotation system. The initial purchasers have advised us that they intend to make a market in the exchange notes, as permitted by applicable laws and regulations; however, the initial purchasers are not obligated to make a market in the exchange notes, and they may discontinue their market-making activities at any time without notice. Therefore, we cannot assure you as to the development or liquidity of any trading market for the exchange notes. The liquidity of any market for the exchange notes will depend on a number of factors, including:

    the number of holders of exchange notes;

    our operating performance and financial condition;

    the market for similar securities;

    the interest of securities dealers in making a market for the exchange notes;

    the conditions of the financial markets; and

    prevailing interest rates.

        Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the exchange notes. The market, if any, for the exchange notes may face similar disruptions that may adversely affect the prices at which you

21


Table of Contents

may sell your exchange notes. Therefore, you may not be able to sell your exchange notes at a particular time and the price that you receive when you sell may not be favorable.

Certain persons who participate in the exchange offer must deliver a prospectus in connection with resales of the exchange notes.

        Based on interpretations of the staff of the SEC contained in Exxon Capital Holdings Corp., SEC no-action letter (available May 13, 1988), Morgan Stanley & Co. Inc., SEC no-action letter (available June 5, 1991) and Shearman & Sterling, SEC no-action letter (available July 2, 1993), we believe that you may offer for resale, resell or otherwise transfer the exchange notes without compliance with the registration and prospectus delivery requirements of the Securities Act. However, in some instances described in this prospectus under "Plan of Distribution," certain holders of exchange notes will remain obligated to comply with the registration and prospectus delivery requirements of the Securities Act to transfer the exchange notes. If such a holder transfers any exchange notes without delivering a prospectus meeting the requirements of the Securities Act or without an applicable exemption from registration under the Securities Act, such a holder may incur liability under the Securities Act. We do not and will not assume, or indemnify such a holder against, this liability.

Risks Related to Our Indebtedness and the Exchange Notes

Our substantial leverage could adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business, our ability to react to changes in the economy or our industry and pay our debts, including our obligations under the exchange notes, and could divert our cash flow from operations to debt payments.

        We are highly leveraged. As of July 2, 2016, (i) our total debt was approximately $1,557.5 million, (ii) the outstanding notes and related guarantees ranked equally with $650.0 million of 2023 notes outstanding, (iii) the notes offered hereby and related guarantees ranked effectively subordinated to approximately $657.5 million of senior secured indebtedness under our senior secured credit facilities to the extent of the value of the collateral securing such facilities and (iv) we had an additional $195.4 million of unutilized capacity under our senior secured revolving credit facility (after giving effect to approximately $25.6 million of letters of credit outstanding).

        Our high degree of leverage could have important consequences for you, including:

    making it more difficult for us to make payments on the exchange notes;

    increasing our vulnerability to general economic and industry conditions;

    requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations, capital expenditures and future business opportunities;

    subject us to the risk of increased interest rates as a portion of our borrowings under our senior secured credit facilities are exposed to variable rates of interest;

    restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;

    limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; and

    limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged.

        Borrowings under our senior secured credit facilities are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness will increase even though the amount borrowed remained the same, and our net income

22


Table of Contents

and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. We have and may in the future enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk.

        In addition, the indentures that govern the 2023 notes and the exchange notes and the amended and restated credit agreement governing our senior secured credit facilities contain restrictive covenants that limit our ability to engage in activities that may be in our long-term best interest. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all our debt.

The pro forma financial information in this prospectus may not be reflective of our operating results and financial condition following the transactions described therein.

        The pro forma financial information included in this prospectus is derived from our historical consolidated financial statements and from the historical financial statements related to the Davenport Assets. The preparation of this pro forma information is based on certain assumptions and estimates. This pro forma information may not necessarily reflect what our financial condition, results of operations and cash flows would have been had the transactions specified occurred during the periods presented or will be in the future.

Despite our current level of indebtedness, we and our subsidiaries may still be able to incur substantially more debt. This could reduce our ability to satisfy our obligations under the exchange notes and further exacerbate the risks to our financial condition described above.

        We and our subsidiaries may be able to incur significant additional indebtedness in the future, and we may do so, among other reasons, to fund acquisitions as part of our growth strategy. Although the indentures governing the 2023 notes and the notes and the credit agreement governing our senior secured credit facilities contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and we could incur substantial additional indebtedness in compliance with these restrictions. If we incur any additional indebtedness that ranks equally with the exchange notes, subject to collateral arrangements, the holders of that debt will be entitled to share ratably with you in any proceeds distributed in connection with any insolvency, liquidation, reorganization, dissolution or other winding up of our company. Such additional indebtedness may have the effect of reducing the amount of proceeds paid to you. These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness. Our senior secured credit facilities include an uncommitted incremental facility that allows us the option to increase the amount available under the term loan facility and/or the senior secured revolving credit facility by (i) $225.0 million plus (ii) an additional amount so long as we are in pro forma compliance with a consolidated first lien net leverage ratio. Availability of such incremental facilities will be subject to, among other conditions, the absence of an event of default and the receipt of commitments by existing or additional financial institutions. All of those borrowings would be secured indebtedness and, therefore, effectively senior to the exchange notes and the guarantees of the exchange notes by the guarantors to the extent of the value of the assets securing such debt. See "Description of Certain Other Indebtedness" and "Description of the Notes."

We may not be able to generate sufficient cash to service all of our indebtedness, including the exchange notes, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

        Our ability to make scheduled payments on or to refinance our debt obligations and to fund planned capital expenditures and other corporate expenses depends on our financial condition and

23


Table of Contents

operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors and any legal and regulatory restrictions on the payment of distributions and dividends to which we may be subject. Many of these factors are beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness, including the exchange notes. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources." If our cash flows and capital resources are insufficient to fund our debt service obligations or our other needs, we may be forced to reduce or delay investments and capital expenditures, seek additional capital, restructure or refinance our indebtedness, including the exchange notes, or sell assets. These alternative measures may not be successful and may not permit us to meet our scheduled debt service obligations or fund planned capital expenditures. Significant delays in our planned capital expenditures may materially and adversely affect our future revenue prospects. In addition, our ability to restructure or refinance our debt will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The senior secured credit facilities and the indentures governing the 2023 notes and the notes restrict our ability to use the proceeds from asset sales. We may not be able to consummate those asset sales to raise capital or sell assets at prices that we believe are fair and proceeds that we do receive may not be adequate to meet any debt service obligations then due. In addition, any failure to make payments of interest and principal on our outstanding indebtedness on a timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. See "Description of Certain Other Indebtedness" and "Description of the Notes."

The exchange notes will not be secured by any of our assets and are effectively subordinated to our secured debt. The senior secured credit facilities are secured and, therefore, the related lenders will have a prior claim on substantially all of our assets.

        The exchange notes will not be secured by any of our assets. The senior secured credit facilities, however, are secured by (i) a perfected security interest in certain stock, other equity interests and promissory notes owned by us and (ii) a perfected security interest in all other tangible and intangible assets (including, without limitation, equipment, aggregate reserves, contract rights, securities, patents, trademarks, other intellectual property, cash and real estate) owned by us subject to certain limited exceptions. The lenders under the senior secured credit facilities are entitled to accelerate all obligations thereunder if we become insolvent or are liquidated, or if we otherwise default on any of our obligations and agreements under the senior secured credit facilities. In addition, the indentures governing the 2023 notes and the notes permit us and our subsidiaries to incur secured debt under specified circumstances. If we incur any additional secured debt, our assets and the assets of our subsidiaries will be subject to prior claims by such secured creditors as well. If payment under any of the instruments governing our secured debt is accelerated, the lenders under these instruments will be entitled to exercise the remedies available to a secured lender under applicable law and pursuant to instruments governing such debt. Accordingly, the lenders under the senior secured credit facilities and any future secured debt will have a prior claim on our assets in the event of our bankruptcy, liquidation, reorganization, dissolution or other winding up. In that event, because the exchange notes will not be secured by any of our assets, it is possible that our remaining assets might be insufficient to satisfy your claims in full. Any such exercise of the lenders' remedies under the senior secured credit facilities and any future secured debt could impede or preclude our ability to continue to operate as a going concern. Holders of the exchange notes will participate in our remaining assets ratably with all of our unsecured and unsubordinated creditors, including our trade creditors.

        If we incur any additional obligations that rank equally with the exchange notes, including trade payables, the holders of those obligations will be entitled to share ratably with the holders of the

24


Table of Contents

exchange notes in any proceeds distributed upon our bankruptcy, liquidation, reorganization, dissolution or other winding up. This may have the effect of reducing the amount of proceeds paid to you. If there are not sufficient assets remaining to pay all these creditors, all or a portion of the exchange notes then outstanding would remain unpaid.

        As of July 2, 2016, we had $1,557.5 million of total consolidated indebtedness, of which $657.5 million was secured. Under our senior secured credit facilities, we also had available to us an uncommitted incremental loan facility in an amount not to exceed (i) $225.0 million plus (ii) an additional amount so long as we are in pro forma compliance with a consolidated first lien net leverage ratio. All of those borrowings could be secured, and as a result, would be effectively senior to the exchange notes and the guarantees of the exchange notes. We may incur additional secured indebtedness as permitted under our senior secured credit agreement and other existing instruments governing our indebtedness.

The indentures governing the 2023 notes and the exchange notes and the credit agreement governing our senior secured credit facilities restrict our ability to engage in some business and financial transactions.

        Indentures governing the 2023 notes and the exchange notes.    The indentures governing the 2023 notes and the exchange notes contain covenants that, among other things, limit the ability of our restricted subsidiaries to:

    incur additional indebtedness or issue certain preferred shares;

    pay dividends, redeem our membership interests or Summit Inc.'s stock or make other distributions;

    make investments;

    create liens;

    transfer or sell assets;

    merge or consolidate;

    enter into certain transactions with our affiliates; and

    designate subsidiaries as unrestricted subsidiaries.

        Senior secured credit facilities.    The amended and restated credit agreement governing our senior secured credit facilities contains a number of covenants that limit the ability of our restricted subsidiaries to:

    incur additional indebtedness or guarantees;

    create liens on assets;

    change our fiscal year;

    enter into sale and leaseback transactions;

    engage in mergers or consolidations;

    sell assets;

    incur additional liens;

    pay dividends or distributions and make other restricted payments;

    make investments, loans or advances;

    repay subordinated indebtedness;

25


Table of Contents

    make certain acquisitions;

    engage in certain transactions with affiliates; and

    change our lines of business.

        The senior secured credit facilities also require us to maintain a maximum first lien net leverage ratio.

        The amended and restated credit agreement governing our senior secured credit facilities also contains certain customary representations and warranties, affirmative covenants and events of default (including, among others, an event of default upon a change of control). If an event of default occurs, the lenders under our senior secured credit facilities will be entitled to take various actions, including the acceleration of amounts due under our senior secured credit facilities and all actions permitted to be taken by a secured creditor.

        Our failure to comply with obligations under the indentures governing the 2023 notes and the exchange notes and the amended and restated credit agreement governing our senior secured credit facilities may result in an event of default under the indentures or the amended and restated credit agreement. A default, if not cured or waived, may permit acceleration of our indebtedness. If our indebtedness is accelerated, we cannot be certain that we will have sufficient funds available to pay the accelerated indebtedness or that we will have the ability to refinance the accelerated indebtedness on terms favorable to us or at all.

The exchange notes will be structurally subordinated to the liabilities of our non-guarantor subsidiaries.

        Payments on the exchange notes are only required to be made by the guarantors. The exchange notes will only be guaranteed by our domestic subsidiaries that guarantee our obligations under the senior secured credit facilities. Accordingly, holders of the exchange notes will be structurally subordinated to the claims of creditors of non-guarantor subsidiaries, including trade creditors. All obligations of our non-guarantor subsidiaries, including trade payables, will have to be satisfied before any of the assets of such subsidiaries would be available for distribution, upon liquidation or otherwise, to a guarantor of the exchange notes. The non-guarantor subsidiaries will be permitted to incur additional debt in the future under the indentures governing the 2023 notes and the notes.

A default on our obligations to pay our other indebtedness could result in the acceleration of such other indebtedness, and we could be forced into bankruptcy or liquidation and may not be able to make payments on the exchange notes.

        Any default under the agreements governing our indebtedness, including a default under the credit agreement governing our senior secured credit facilities that is not waived by the required lenders, and the remedies sought by the lenders could prevent us from paying principal, premium, if any, and interest on the exchange notes and substantially decrease the market value of the exchange notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness, including covenants in the credit agreement governing our senior secured credit facilities, we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness may be able to cause all of our available cash flow to be used to pay such indebtedness and, in any event could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest; the lenders under our senior secured credit facilities could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against our assets and we could be forced into bankruptcy or liquidation. Upon any such bankruptcy filing, we

26


Table of Contents

would be stayed from making any ongoing payments on the exchange notes, and the holders of the exchange notes would not be entitled to receive post-petition interest or applicable fees, costs or charges, or any "adequate protection" under Title 11 of the United States Code (the "Bankruptcy Code"). Furthermore, if a bankruptcy case were to be commenced under the Bankruptcy Code, we could be subject to claims, with respect to any payments made within 90 days prior to commencement of such a case, that we were insolvent at the time any such payments were made and that all or a portion of such payments, which could include repayments of amounts due under the exchange notes, might be deemed to constitute a preference, under the Bankruptcy Code, and that such payments should be voided by the bankruptcy court and recovered from the recipients for the benefit of the entire bankruptcy estate. Also, in the event that we were to become a debtor in, a bankruptcy case seeking reorganization or other relief under the Bankruptcy Code, a delay and/or substantial reduction in payments under the exchange notes may otherwise occur. If our operating performance declines, we may in the future need to obtain waivers from the required lenders under our senior secured credit facilities to avoid being in default. If we breach our covenants under our senior secured credit facilities and seek a waiver, we may not be able to obtain a waiver from the required lenders and holders. If this occurs, we would be in default under the credit agreement governing our senior secured credit facilities, the lenders could exercise their rights, as described above, and we could be forced into bankruptcy or liquidation. See "Description of Certain Other Indebtedness" and "Description of the Notes."

We may not be able to repurchase the exchange notes upon a change of control.

        Upon the occurrence of specific kinds of change of control events, we will be required to offer to repurchase all outstanding notes at 101% of their principal amount plus accrued and unpaid interest, unless such notes have been previously called for redemption. The source of funds for any such purchase of the exchange notes will be our available cash or cash generated from our operations or other sources, including borrowings, sales of assets or sales of equity. We may not be able to repurchase the exchange notes upon a change of control because we may not have sufficient financial resources to purchase all of the exchange notes that are tendered upon a change of control. Further, we will be contractually restricted under the terms of the amended and restated credit agreement governing our senior secured credit facilities from repurchasing all of the exchange notes tendered by holders upon a change of control. Accordingly, we may not be able to satisfy our obligations to purchase the exchange notes unless we are able to refinance or obtain waivers under the amended and restated credit agreement governing our senior secured credit facilities. Our failure to repurchase the exchange notes upon a change of control would cause a default under the indenture governing the exchange notes and the notes and a cross-default under the indenture governing the 2023 notes and the amended and restated credit agreement governing our senior secured credit facilities. See "Description of the Notes—Repurchase at the Option of Holders—Change of Control." The amended and restated credit agreement governing our senior secured credit facilities also provides that a change of control will be a default that permits lenders to accelerate the maturity of borrowings thereunder. Any of our future debt agreements may contain similar provisions.

        Courts interpreting change of control provisions under New York law (which is the governing law of the indentures governing the 2023 notes and the exchange notes) have not provided clear and consistent meanings of such change of control provisions which leads to subjective judicial interpretation. In addition, a court case in Delaware has questioned whether a change of control provision contained in an indenture could be unenforceable on public policy grounds. No assurances can be given that another court would enforce the change of control provisions in the indenture governing the exchange notes as written for the benefit of the holders, or as to how these change of control provisions would be affected were we to become a debtor in a bankruptcy case.

27


Table of Contents

Federal and state fraudulent transfer laws may permit a court to void the exchange notes and the guarantees, subordinate claims in respect of the exchange notes and the guarantees and require noteholders to return payments received and, if that occurs, you may not receive any payments on the exchange notes.

        Federal and state fraudulent transfer and conveyance statutes may apply to the issuance of the exchange notes and the incurrence of any guarantees of the exchange notes, including the guarantee by the guarantors entered into upon issuance of the exchange notes and subsidiary guarantees (if any) that may be entered into thereafter under the terms of the indenture governing the exchange notes. Under federal bankruptcy law and comparable provisions of state fraudulent transfer or conveyance laws, which may vary from state to state, the exchange notes or guarantees could be voided as a fraudulent transfer or conveyance if (i) the Issuers or any of the guarantors, as applicable, issued the exchange notes or incurred the guarantees with the intent of hindering, delaying or defrauding creditors or (ii) the Issuers or any of the guarantors, as applicable, received less than reasonably equivalent value or fair consideration in return for either issuing the exchange notes or incurring the guarantees and, in the case of (ii) only, one of the following is also true at the time thereof:

    the Issuers or any of the guarantors, as applicable, were insolvent or rendered insolvent by reason of the issuance of the exchange notes or the incurrence of the guarantees;

    the issuance of the exchange notes or the incurrence of the guarantees left the Issuers or any of the guarantors, as applicable, with an unreasonably small amount of capital to carry on the business;

    the Issuers or any of the guarantors intended to, or believed that the Issuers or such guarantor would, incur debts beyond the Issuers' or such guarantor's ability to pay such debts as they mature; or

    the Issuers or any of the guarantors were a defendant in an action for money damages, or had a judgment for money damages docketed against it or such guarantor if, in either case, after final judgment, the judgment is unsatisfied.

        A court would likely find that we did not receive reasonably equivalent value or fair consideration for the exchange notes or such guarantee if we did not substantially benefit directly or indirectly from the issuance of the exchange notes or the applicable guarantee. As a general matter, value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or an antecedent debt is secured or satisfied. A debtor will generally not be considered to have received value in connection with a debt offering if the debtor uses the proceeds of that offering to make a dividend payment or otherwise retire or redeem equity securities issued by the debtor.

        We cannot be certain as to the standards a court would use to determine whether or not we were solvent at the relevant time or, regardless of the standard that a court uses, that the issuance of the guarantees would not be further subordinated to our or any of our guarantors' other debt. Generally, however, an entity would be considered insolvent if, at the time it incurred indebtedness:

    the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all its assets;

    the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or

    it could not pay its debts as they become due.

28


Table of Contents

        If a court were to find that the issuance of the exchange notes or the incurrence of the guarantee was a fraudulent transfer or conveyance, the court could void the payment obligations under the exchange notes or such guarantee or further subordinate the exchange notes or such guarantee to our presently existing and future indebtedness, or require the holders of the exchange notes to repay any amounts received with respect to such guarantee. In the event of a finding that a fraudulent transfer or conveyance occurred, you may not receive any repayment on the exchange notes or such guarantee, as applicable. Sufficient funds to repay the exchange notes may not be available from other sources, including any remaining guarantor, if any. In addition, the court might direct you to repay any amounts that you already received from us. Further, the voidance of the exchange notes could result in an event of default with respect to the Issuers' and their subsidiaries' other debt that could result in acceleration of such debt.

        If the guarantees were legally challenged, any guarantee could also be subject to the claim that, since the guarantee was incurred for the Issuers' benefit, and only indirectly for the benefit of the applicable guarantor, the obligations of the applicable guarantor were incurred for less than fair consideration. A court could thus void the obligations under the guarantees, subordinate them to the applicable guarantor's other debt or take other action detrimental to the holders of the exchange notes.

        Although each guarantee entered into by a subsidiary will contain a provision intended to limit that guarantor's liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent transfer, this provision may not be effective to protect those guarantees from being voided under fraudulent transfer law, or may reduce that guarantor's obligation to an amount that effectively makes its guarantee worthless. In a Florida bankruptcy case, this kind of provision was found to be ineffective to prohibit the guarantees.

        In addition, any payment by us pursuant to the exchange notes made at a time we were found to be insolvent could be voided and required to be returned to us or to a fund for the benefit of our creditors if such payment is made to an insider within a one-year period prior to a bankruptcy filing or within 90 days for any outside party and such payment would give such insider or outsider party more than such creditors would have received in a distribution under the Bankruptcy Code.

        Finally, as a court of equity, the bankruptcy court may otherwise subordinate the claims in respect of the exchange notes to other claims against us under the principle of equitable subordination, if the court determines that: (i) the holder of the exchange notes engaged in some type of inequitable conduct; (ii) such inequitable conduct resulted in injury to our other creditors or conferred an unfair advantage upon the holder of the exchange notes; and (iii) equitable subordination is not inconsistent with the provisions of the Bankruptcy Code.

Many of the covenants in the indenture that will govern the exchange notes will not apply during any period in which the exchange notes are rated investment grade by both Moody's and Standard & Poor's.

        Many of the covenants in the indenture that will govern the exchange notes will not apply to us during any period in which the exchange notes are rated investment grade by both Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("Standard & Poor's") provided at such time no default or event of default has occurred and is continuing. These covenants restrict among other things, our ability to pay distributions, incur debt and to enter into certain other transactions. There can be no assurance that the exchange notes will ever be rated investment grade, or that if they are rated investment grade, that the exchange notes will maintain these ratings. However, suspension of these covenants would allow us to incur debt, pay dividends and make other distributions and engage in certain other transactions that would not be permitted while these covenants were in force. To the extent the covenants are subsequently reinstated, any such actions taken while the covenants were suspended would not result in an event of default

29


Table of Contents

under the indenture that will govern the exchange notes. See "Description of the Notes—Certain Covenants."

A downgrade, suspension or withdrawal of the rating assigned by a rating agency to our company or the exchange notes, if any, could cause the liquidity or market value of the exchange notes to decline.

        The exchange notes have been rated by nationally recognized rating agencies and may in the future be rated by additional rating agencies. We cannot assure you that any rating assigned will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in that rating agency's judgment, circumstances relating to the basis of the rating, such as adverse changes in our business, so warrant. Any downgrade, suspension or withdrawal of a rating by a rating agency (or any anticipated downgrade, suspension or withdrawal) could reduce the liquidity or market value of the exchange notes. Any future lowering of our ratings may make it more difficult or more expensive for us to obtain additional debt financing. If any credit rating initially assigned to the exchange notes is subsequently lowered or withdrawn for any reason, you may lose some or all of the value of your investment.

Risks Related to Our Industry and Our Business

Industry Risks

Our business depends on activity within the construction industry and the strength of the local economies in which we operate.

        We sell most of our construction materials and products and provide all of our paving and related services to the construction industry, so our results are significantly affected by the strength of the construction industry. Demand for our products, particularly in the residential and nonresidential construction markets, could decline if companies and consumers cannot obtain credit for construction projects. In addition, a slow pace of economic activity results in delays or cancellations of capital projects. Federal and state budget issues may hurt the funding available for infrastructure spending, particularly highway construction, which constitutes a significant portion of our business.

        Our earnings depend on the strength of the local economies in which we operate because of the high cost to transport our products relative to their price. In recent years, although some states, such as Texas, have increased their budgets for road construction, maintenance, rehabilitation and acquiring right of way for public roads, certain other states have reduced their construction spending due to budget shortfalls from lower tax revenue, as well as uncertainty in recent years relating to long-term federal highway funding, prior to the FAST Act, which was signed into law on December 4, 2015, the first law with long-term transportation funding in ten years. As a result, there has been a reduction in certain states' investment in infrastructure spending. If economic and construction activity diminishes in one or more areas, particularly in our top revenue-generating markets of Texas, Kansas, Utah, Missouri and Kentucky, our financial condition, results of operations and liquidity could be materially adversely affected.

Our business is cyclical and requires significant working capital to fund operations.

        Our business is cyclical and requires that we maintain significant working capital to fund our operations. Our ability to generate sufficient cash flow depends on future performance, which will be subject to general economic conditions, industry cycles and financial, business and other factors affecting our operations, many of which are beyond our control. If we are unable to generate sufficient cash to operate our business and service our outstanding debt and other obligations, we may be required, among other things, to further reduce or delay planned capital or operating expenditures, sell assets or take other measures, including the restructuring of all or a portion of our debt, which may only be available, if at all, on unsatisfactory terms.

30


Table of Contents

Weather can materially affect our business and we are subject to seasonality.

        Nearly all of the products we sell and the services we provide are used or performed outdoors. Therefore, seasonal changes and other weather-related conditions can adversely affect our business and operations through a decline in both the use and production of our products and demand for our services. Adverse weather conditions such as extended rainy and cold weather in the spring and fall can reduce demand for our products and reduce sales or render our contracting operations less efficient. Major weather events such as hurricanes, tornadoes, tropical storms and heavy snows could adversely affect sales in the near term.

        Construction materials production and shipment levels follow activity in the construction industry, which typically occurs in the spring, summer and fall. Warmer and drier weather during the second and third quarters of our fiscal year typically result in higher activity and revenue levels during those quarters. The first quarter of our fiscal year has typically lower levels of activity due to the weather conditions. Our second quarter varies greatly with spring rains and wide temperature variations. A cool wet spring increases drying time on projects, which can delay sales in the second quarter, while a warm dry spring may enable earlier project startup.

Our industry is capital intensive and we have significant fixed and semi-fixed costs. Therefore, our earnings are sensitive to changes in volume.

        The property and machinery needed to produce our products can be very expensive. Therefore, we need to spend a substantial amount of capital to purchase and maintain the equipment necessary to operate our business. Although we believe that our current cash balance, along with our projected internal cash flows and our available financing resources, will provide sufficient cash to support our currently anticipated operating and capital needs, if we are unable to generate sufficient cash to purchase and maintain the property and machinery necessary to operate our business, we may be required to reduce or delay planned capital expenditures or incur additional debt. In addition, given the level of fixed and semi-fixed costs within our business, particularly at our cement production facilities, decreases in volumes could have a material adverse effect on our financial condition, results of operations and liquidity.

Within our local markets, we operate in a highly competitive industry.

        The U.S. construction aggregates industry is highly fragmented with a large number of independent local producers in a number of our markets. Additionally, in most markets, we compete against large private and public infrastructure companies, some of which are also vertically-integrated. Therefore, there is intense competition in a number of the markets in which we operate. This significant competition could lead to lower prices, lower sales volumes and higher costs in some markets, negatively affecting our financial condition, results of operations and liquidity.

Growth Risks

The success of our business depends, in part, on our ability to execute on our acquisition strategy, to successfully integrate acquisitions and to retain key employees of our acquired businesses.

        A significant portion of our historical growth has occurred through acquisitions, and we will likely enter into acquisitions in the future. We are presently evaluating, and we expect to continue to evaluate on an ongoing basis, possible acquisition transactions. We are presently engaged, and at any time in the future we may be engaged, in discussions or negotiations with respect to possible acquisitions, including larger transactions that would be significant to us. We regularly make, and we expect to continue to make, non-binding acquisition proposals, and we may enter into letters of intent, in each case allowing us to conduct due diligence on a confidential basis. We cannot predict the timing of any contemplated transactions. To successfully acquire a significant target, we may need to raise additional equity capital

31


Table of Contents

and/or indebtedness, which could increase our leverage level. There can be no assurance that we will enter into definitive agreements with respect to any contemplated transactions or that they will be completed. Our growth has placed, and will continue to place, significant demands on our management and operational and financial resources. Acquisitions involve risks that the businesses acquired will not perform as expected and that business judgments concerning the value, strengths and weaknesses of businesses acquired will prove incorrect.

        Acquisitions may require integration of the acquired companies' sales and marketing, distribution, engineering, purchasing, finance and administrative organizations. We may not be able to integrate successfully any business we may acquire or have acquired into our existing business and any acquired businesses may not be profitable or as profitable as we had expected. Our inability to complete the integration of new businesses in a timely and orderly manner could increase costs and lower profits. Factors affecting the successful integration of acquired businesses include, but are not limited to, the following:

    We may become liable for certain liabilities of any acquired business, whether or not known to us. These risks could include, among others, tax liabilities, product liabilities, environmental liabilities and liabilities for employment practices, and they could be significant.

    Substantial attention from our senior management and the management of the acquired business may be required, which could decrease the time that they have to service and attract customers.

    We may not effectively utilize new equipment that we acquire through acquisitions or otherwise at utilization and rental rates consistent with that of our existing equipment.

    The complete integration of acquired companies depends, to a certain extent, on the full implementation of our financial systems and policies.

    We may actively pursue a number of opportunities simultaneously and we may encounter unforeseen expenses, complications and delays, including difficulties in employing sufficient staff and maintaining operational and management oversight.

        We cannot assure you that we will achieve synergies and cost savings in connection with acquisitions. In addition, many of the businesses that we have acquired and will acquire have unaudited financial statements that have been prepared by the management of such companies and have not been independently reviewed or audited. We cannot assure you that the financial statements of companies we have acquired or will acquire would not be materially different if such statements were independently reviewed or audited. Finally, we cannot assure you that we will continue to acquire businesses at valuations consistent with our prior acquisitions or that we will complete future acquisitions at all. We cannot assure you that there will be attractive acquisition opportunities at reasonable prices, that financing will be available or that we can successfully integrate such acquired businesses into our existing operations. In addition, our results of operations from these acquisitions could, in the future, result in impairment charges for any of our intangible assets, including goodwill, or other long-lived assets, particularly if economic conditions worsen unexpectedly. As a result of these changes, our financial condition, results of operations and liquidity could be materially adversely affected.

Our long-term success is dependent upon securing and permitting aggregate reserves in strategically located areas. The inability to secure and permit such reserves could negatively affect our earnings in the future.

        Aggregates are bulky and heavy and therefore difficult to transport efficiently. Because of the nature of the products, the freight costs can quickly surpass production costs. Therefore, except for geographic regions that do not possess commercially viable deposits of aggregates and are served by rail, barge or ship, the markets for our products tend to be localized around our quarry sites and are served by truck. New quarry sites often take a number of years to develop. Our strategic planning and

32


Table of Contents

new site development must stay ahead of actual growth. Additionally, in a number of urban and suburban areas in which we operate, it is increasingly difficult to permit new sites or expand existing sites due to community resistance. Therefore, our future success is dependent, in part, on our ability to accurately forecast future areas of high growth in order to locate optimal facility sites and on our ability to either acquire existing quarries or secure operating and environmental permits to open new quarries. If we are unable to accurately forecast areas of future growth, acquire existing quarries or secure the necessary permits to open new quarries, our financial condition, results of operations and liquidity could be materially adversely affected.

Economic Risks

Our business relies on private investment in infrastructure, and periods of economic stagnation or recession may adversely affect our earnings in the future.

        A significant portion of our sales are for projects with non-public owners. Construction spending is affected by developers' ability to finance projects. Residential and nonresidential construction could decline if companies and consumers are unable to finance construction projects or in periods of economic stagnation or recession, which could result in delays or cancellations of capital projects. If housing starts and nonresidential projects stagnate or decline, sale of our construction materials, downstream products and paving and related services may decline and our financial condition, results of operations and liquidity could be materially adversely affected.

A decline in public infrastructure construction and reductions in governmental funding could adversely affect our earnings in the future.

        A significant portion of our revenue is generated from publicly-funded construction projects. As a result, if publicly-funded construction decreases due to reduced federal or state funding or otherwise, our financial condition, results of operations and liquidity could be materially adversely affected.

        In January 2011, the U.S. House of Representatives passed a new rules package that repealed a transportation law dating back to 1998, which protected annual funding levels from amendments that could reduce such funding. This rule change subjects funding for highways to yearly appropriation reviews. The change in the funding mechanism increases the uncertainty of many state departments of transportation regarding funds for highway projects. This uncertainty could result in states being reluctant to undertake large multi-year highway projects which could, in turn, negatively affect our sales. The FAST Act was signed into law on December 4, 2015 and authorizes $305 billion of funding between 2016 and 2020. It extends five years and provides funding for surface transportation infrastructure, including roads, bridges, transit systems and the rail transportation network.

        We cannot be assured of the existence, amount and timing of appropriations for spending on federal, state or local projects. Federal support for the cost of highway maintenance and construction is dependent on congressional action. In addition, each state funds its infrastructure spending from specially allocated amounts collected from various taxes, typically gasoline taxes and vehicle fees, along with voter-approved bond programs. Shortages in state tax revenues can reduce the amounts spent on state infrastructure projects, even below amounts awarded under legislative bills. In recent years, certain states have experienced state-level funding pressures caused by lower tax revenues and an inability to finance approved projects. Delays or cancellations of state infrastructure spending could have a material adverse effect on our financial condition, results of operations and liquidity.

33


Table of Contents

Environmental, health and safety laws and regulations and any changes to, or liabilities arising under, such laws and regulations could have a material adverse effect on our financial condition, results of operations and liquidity.

        We are subject to a variety of federal, state, provincial and local laws and regulations relating to, among other things: (i) the release or discharge of materials into the environment; (ii) the management, use, generation, treatment, processing, handling, storage, transport or disposal of hazardous materials, including the management of hazardous waste used as a fuel substitute in our cement kiln in Hannibal, Missouri; (iii) the management, use, generation, treatment, processing, handling, storage, transport or disposal of non-hazardous solid waste used as a fuel substitute in our cement kiln in Davenport, Iowa; and (iv) the protection of public and employee health and safety and the environment. These laws and regulations impose strict liability in some cases without regard to negligence or fault and expose us to liability for the environmental condition of our currently or formerly owned, leased or operated facilities or third-party waste disposal sites, and may expose us to liability for the conduct of others or for our actions, even if such actions complied with all applicable laws at the time these actions were taken. In particular, we may incur remediation costs and other related expenses because our facilities were constructed and operated before the adoption of current environmental laws and the institution of compliance practices or because certain of our processes are regulated. These laws and regulations may also expose us to liability for claims of personal injury or property or natural resource damage related to alleged exposure to, or releases of, regulated or hazardous materials. The existence of contamination at properties we own, lease or operate could also result in increased operational costs or restrictions on our ability to use those properties as intended, including for purposes of mining.

        Despite our compliance efforts, there is an inherent risk of liability in the operation of our business, especially from an environmental standpoint, or from time to time, we may be in noncompliance with environmental, health and safety laws and regulations. These potential liabilities or noncompliances could have a material adverse effect on our operations and profitability. In many instances, we must have government approvals, certificates, permits or licenses in order to conduct our business, which often require us to make significant capital, operating and maintenance expenditures to comply with environmental, health and safety laws and regulations. Our failure to obtain and maintain required approvals, certificates, permits or licenses or to comply with applicable governmental requirements could result in sanctions, including substantial fines or possible revocation of our authority to conduct some or all of our operations. Governmental requirements that affect our operations also include those relating to air and water quality, waste management, asset reclamation, the operation and closure of municipal waste and construction and demolition debris landfills, remediation of contaminated sites and worker health and safety. These requirements are complex and subject to frequent change. Stricter laws and regulations, more stringent interpretations of existing laws or regulations or the future discovery of environmental conditions may impose new liabilities on us, reduce operating hours, require additional investment by us in pollution control equipment or impede our opening new or expanding existing plants or facilities. We have incurred, and may in the future incur, significant capital and operating expenditures to comply with such laws and regulations. In addition, we have recorded liabilities in connection with our reclamation and landfill closure obligations, but there can be no assurances that the costs of our obligations will not exceed our accruals. The cost of complying with such laws could have a material adverse effect on our financial condition, results of operations and liquidity.

34


Table of Contents

Financial Risks

Difficult and volatile conditions in the credit markets could affect our financial condition, results of operations and liquidity.

        Demand for our products is primarily dependent on the overall health of the economy, and federal, state and local public infrastructure funding levels. A stagnant or declining economy tends to produce less tax revenue for public infrastructure agencies, thereby decreasing a source of funds available for spending on public infrastructure improvements, which constitute a significant part of our business.

        There is a likelihood that we will not be able to collect on certain of our accounts receivable from our customers. Although we are protected in part by payment bonds posted by some of our customers, delays and defaults could have a material adverse effect on our financial condition, results of operations and liquidity.

If we are unable to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us, we may achieve lower than anticipated profits or incur contract losses.

        Even though the majority of our government contracts contain raw material escalators to protect us from certain price increases, a portion or all of the contracts are often on a fixed cost basis. Pricing on a contract with a fixed unit price is based on approved quantities irrespective of our actual costs and contracts with a fixed total price require that the total amount of work be performed for a single price irrespective of our actual costs. We realize profit on our contracts only if our revenue exceeds actual costs, which requires that we successfully estimate our costs and then successfully control actual costs and avoid cost overruns. If our cost estimates for a contract are inadequate, or if we do not execute the contract within our cost estimates, then cost overruns may cause us to incur a loss or cause the contract not to be as profitable as we expected. The costs incurred and profit realized, if any, on our contracts can vary, sometimes substantially, from our original projections due to a variety of factors, including, but not limited to:

    failure to include materials or work in a bid, or the failure to estimate properly the quantities or costs needed to complete a lump sum contract;

    delays caused by weather conditions or otherwise failing to meet scheduled acceptance dates;

    contract or project modifications creating unanticipated costs not covered by change orders;

    changes in availability, proximity and costs of materials, including liquid asphalt, cement, aggregates and other construction materials (such as stone, gravel, sand and oil for asphalt paving), as well as fuel and lubricants for our equipment;

    to the extent not covered by contractual cost escalators, variability and inability to predict the costs of purchasing diesel, liquid asphalt and cement;

    availability and skill level of workers;

    failure by our suppliers, subcontractors, designers, engineers or customers to perform their obligations;

    fraud, theft or other improper activities by our suppliers, subcontractors, designers, engineers, customers or our own personnel;

    mechanical problems with our machinery or equipment;

    citations issued by any governmental authority, including the Occupational Safety and Health Administration ("OSHA") and Mine Safety and Health Administration ("MSHA");

35


Table of Contents

    difficulties in obtaining required governmental permits or approvals;

    changes in applicable laws and regulations;

    uninsured claims or demands from third parties for alleged damages arising from the design, construction or use and operation of a project of which our work is part; and

    public infrastructure customers may seek to impose contractual risk-shifting provisions more aggressively, that result in us facing increased risks.

        These factors, as well as others, may cause us to incur losses, which could have a material adverse effect on our financial condition, results of operations and liquidity.

We could incur material costs and losses as a result of claims that our products do not meet regulatory requirements or contractual specifications.

        We provide our customers with products designed to meet building code or other regulatory requirements and contractual specifications for measurements such as durability, compressive strength, weight-bearing capacity and other characteristics. If we fail or are unable to provide products meeting these requirements and specifications, material claims may arise against us and our reputation could be damaged. Additionally, if a significant uninsured, non-indemnified or product-related claim is resolved against us in the future, that resolution could have a material adverse effect on our financial condition, results of operations and liquidity.

The cancellation of a significant number of contracts or our disqualification from bidding for new contracts could have a material adverse effect on our financial condition, results of operations and liquidity.

        We could be prohibited from bidding on certain governmental contracts if we fail to maintain qualifications required by those entities. In addition, contracts with governmental entities can usually be canceled at any time by them with payment only for the work completed. A cancellation of an unfinished contract or our disqualification from the bidding process could result in lost revenue and cause our equipment to be idled for a significant period of time until other comparable work becomes available, which could have a material adverse effect on our financial condition, results of operations and liquidity.

Our operations are subject to special hazards that may cause personal injury or property damage, subjecting us to liabilities and possible losses which may not be covered by insurance.

        Operating hazards inherent in our business, some of which may be outside our control, can cause personal injury and loss of life, damage to or destruction of property, plant and equipment and environmental damage. We maintain insurance coverage in amounts and against the risks we believe are consistent with industry practice, but this insurance may not be adequate or available to cover all losses or liabilities we may incur in our operations. Our insurance policies are subject to varying levels of deductibles. Losses up to our deductible amounts are accrued based upon our estimates of the ultimate liability for claims incurred and an estimate of claims incurred but not reported. However, liabilities subject to insurance are difficult to estimate due to unknown factors, including the severity of an injury, the determination of our liability in proportion to other parties, the number of incidents not reported and the effectiveness of our safety programs. If we were to experience insurance claims or costs above our estimates, we might also be required to use working capital to satisfy these claims rather than using working capital to maintain or expand our operations.

Unexpected factors affecting self-insurance claims and reserve estimates could adversely affect our business.

        We use a combination of third-party insurance and self-insurance to provide for potential liabilities for workers' compensation, general liability, vehicle accident, property and medical benefit claims.

36


Table of Contents

Although we believe we have minimized our exposure on individual claims, for the benefit of costs savings we have accepted the risk of multiple independent material claims arising. We estimate the projected losses and liabilities associated with the risks retained by us, in part, by considering historical claims experience, demographic and severity factors and other actuarial assumptions which, by their nature, are subject to a high degree of variability. Among the causes of this variability are unpredictable external factors affecting future inflation rates, discount rates, litigation trends, legal interpretations, benefit level changes and claim settlement patterns. Any such matters could have a material adverse effect on our financial condition, results of operations and liquidity.

Other Risks

Our success is dependent on our Chief Executive Officer and other key personnel.

        Our success depends on the continuing services of our Chief Executive Officer, Tom Hill, and other key personnel. We believe that Mr. Hill possesses valuable knowledge and skills that are crucial to our success and would be very difficult to replicate. Our senior management team was assembled under the leadership of Mr. Hill. Not all of our senior management team resides near or works at our headquarters. The geographic distance of the members of our senior management team may impede the team's ability to work together effectively. Our success will depend, in part, on the efforts and abilities of our senior management and their ability to work together. We cannot assure you that they will be able to do so.

        Over time, our success will depend on attracting and retaining qualified personnel. Competition for senior management is intense, and we may not be able to retain our management team or attract additional qualified personnel. The loss of a member of senior management could require certain of our remaining senior officers to divert immediate attention, which could be substantial or require costly external resources in the short term. The inability to adequately fill vacancies in our senior executive positions on a timely basis could negatively affect our ability to implement our business strategy, which could have a material adverse effect on our results of operations, financial condition and liquidity.

We use large amounts of electricity, diesel fuel, liquid asphalt and other petroleum-based resources that are subject to potential reliability issues, supply constraints and significant price fluctuation, which could have a material adverse effect on our financial condition, results of operations and liquidity.

        In our production and distribution processes, we consume significant amounts of electricity, diesel fuel, liquid asphalt and other petroleum-based resources. The availability and pricing of these resources are subject to market forces that are beyond our control. Furthermore, we are vulnerable to any reliability issues experienced by our suppliers, which also are beyond our control. Our suppliers contract separately for the purchase of such resources and our sources of supply could be interrupted should our suppliers not be able to obtain these materials due to higher demand or other factors that interrupt their availability. Variability in the supply and prices of these resources could have a material adverse effect on our financial condition, results of operations and liquidity.

Climate change and climate change legislation or regulations may adversely affect our business.

        A number of governmental bodies have finalized or proposed or are contemplating legislative and regulatory changes in response to the potential effects of climate change, and international negotiations are continuing with respect to a successor treaty to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, which negotiations could lead to additional legislative and regulatory changes in the United States and Canada if either country becomes signatory to such successor treaty. Such legislation or regulation has and potentially could include provisions for a "cap and trade" system of allowances and credits, among other provisions. The EPA promulgated a mandatory reporting rule covering greenhouse gas ("GHG") emissions from sources considered to be

37


Table of Contents

large emitters. The EPA has also promulgated a GHG emissions permitting rule, referred to as the "Tailoring Rule" which sets forth criteria for determining which facilities are required to obtain permits for GHG emissions pursuant to the U.S. Clean Air Act's Prevention of Significant Deterioration ("PSD") and Title V operating permit programs. The U.S. Supreme Court ruled in June 2014 that the EPA exceeded its statutory authority in issuing the Tailoring Rule but upheld the Best Available Control Technology ("BACT") requirements for GHGs emitted by sources already subject to PSD requirements for other pollutants. Our cement plants and one of our landfills hold Title V Permits. If future modifications to our facilities require PSD review for other pollutants, GHG BACT requirements may also be triggered, which could require significant additional costs.

        Other potential effects of climate change include physical effects such as disruption in production and product distribution as a result of major storm events and shifts in regional weather patterns and intensities. There is also a potential for climate change legislation and regulation to adversely affect the cost of purchased energy and electricity.

        The effects of climate change on our operations are highly uncertain and difficult to estimate. However, because a chemical reaction inherent to the manufacture of Portland cement releases carbon dioxide, a GHG, cement kiln operations may be disproportionately affected by future regulation of GHGs. Climate change and legislation and regulation concerning GHGs could have a material adverse effect on our financial condition, results of operations and liquidity.

Unexpected operational difficulties at our facilities could disrupt operations, raise costs, and reduce revenue and earnings in the affected locations.

        The reliability and efficiency of certain of our facilities is dependent upon vital pieces of equipment, such as our cement manufacturing kilns in Hannibal, Missouri and Davenport, Iowa. Although we have scheduled outages to perform maintenance on certain of our facilities, vital equipment may periodically experience unanticipated disruptions due to accidents, mechanical failures or other unanticipated events such as fires, explosions, violent weather conditions or other unexpected operational difficulties. A substantial interruption of one of our facilities could require us to make significant capital expenditures to restore operations and could disrupt our operations, raise costs, and reduce revenue and earnings in the affected locations.

We are dependent on information technology. Our systems and infrastructure face certain risks, including cyber security risks and data leakage risks.

        We are dependent on information technology systems and infrastructure. Any significant breakdown, invasion, destruction or interruption of these systems by employees, others with authorized access to our systems, or unauthorized persons could negatively affect operations. There is also a risk that we could experience a business interruption, theft of information or reputational damage as a result of a cyber attack, such as an infiltration of a data center, or data leakage of confidential information either internally or at our third-party providers. While we have invested in the protection of our data and information technology to reduce these risks and periodically test the security of our information systems network, there can be no assurance that our efforts will prevent breakdowns or breaches in our systems that could have a material adverse effect on our financial condition, results of operations and liquidity.

Labor disputes could disrupt operations of our businesses.

        As of July 2, 2016, labor unions represented approximately 6% of our total employees, substantially all at Continental Cement and Mainland. Our collective bargaining agreements for employees generally expire between 2016 and 2020. Although we believe we have good relations with our employees and unions, disputes with our trade unions, or the inability to renew our labor agreements, could lead to strikes or other actions that could disrupt our operations and, consequently, have a material adverse effect on our financial condition, results of operations and liquidity.

38


Table of Contents


USE OF PROCEEDS

        We will not receive any proceeds from the issuance of the exchange notes in the exchange offer. The exchange offer is intended to satisfy our obligations under the registration rights agreement that we entered into in connection with the private offering of the outstanding notes. As consideration for issuing the exchange notes as contemplated in this prospectus, we will receive in exchange a like principal amount of outstanding notes, the terms of which are identical in all material respects to the exchange notes, except that the exchange notes will not contain terms with respect to transfer restrictions or additional interest upon a failure to fulfill certain of our obligations under the registration rights agreement. The outstanding notes that are surrendered in exchange for the exchange notes will be retired and cancelled and cannot be reissued. As a result, the issuance of the exchange notes will not result in any change in our capitalization.

39


Table of Contents


CAPITALIZATION

        The following table sets forth our consolidated cash and cash equivalents and capitalization as of July 2, 2016. You should read this table together with the information contained in "Prospectus Summary—Summary Historical Consolidated Financial and Other Data," "Unaudited Pro Forma Condensed Consolidated Financial Information" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes thereto included elsewhere in this prospectus.

        The outstanding notes that are surrendered in exchange for the exchange notes will be retired and cancelled and cannot be reissued. As a result, the issuance of the exchange notes will not result in any change in our capitalization.

 
  As of
July 2, 2016
 
 
  (in millions)
 

Cash and cash equivalents(1)

  $ 8.2  

Debt:

       

Senior secured credit facilities(2)

    657.5  

Capital leases and other

    41.4  

6.125% senior notes due 2023(3)

    650.0  

8.500% senior notes due 2022(4)

    250.0  

Total debt

    1,598.9  

Total member's interest

    785.1  

Total capitalization

  $ 2,384.0  

(1)
Cash and cash equivalents as of July 2, 2016 excludes $1.0 million of cash and cash equivalents at Summit Inc., which is excluded from Summit LLC's covenant calculations.

(2)
The senior secured credit facilities provide for a term loan facility in an aggregate amount of $650.0 million, with a maturity date of July 17, 2022, and revolving credit commitments in an aggregate amount of $235.0 million, with a maturity date of March 11, 2020. See "Description of Other Indebtedness—Senior Secured Credit Facilities." Amount shown represents the principal amount of loans without giving effect to original issue discount.

(3)
Represents the aggregate principal amount of the 2023 notes, without giving effect to any original issuance discounts or commissions to the initial purchasers.

(4)
Represents the aggregate principal amount of the outstanding notes, without giving effect to any commissions to the initial purchasers.

40


Table of Contents


UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

        The following unaudited pro forma consolidated financial information has been derived by applying pro forma adjustments to our historical financial statements and those of an acquired cement plant and quarry in Davenport, Iowa and seven cement distribution terminals along the Mississippi River (collectively, the "Lafarge Target Business" or "Davenport Assets"), included elsewhere in this prospectus.

        The pro forma adjustments are based on currently available information, accounting judgments and assumptions that we believe are reasonable. The unaudited pro forma consolidated statement of operations is presented for illustrative purposes only and does not purport to represent our results of operations that would actually have occurred had the transactions referred to below been consummated on December 28, 2014, or to project our financial position or results of operations for any future date or period. The adjustments are described in the notes to the unaudited pro forma consolidated financial information.

        The Davenport Assets' predecessor results included in the pro forma statements are presented based on their fiscal year, which is based on calendar period ends. Summit LLC's fiscal year is based on a 52-53 week year. The resulting difference is not considered material to the pro forma consolidated financial statements.

        The unaudited pro forma consolidated statement of operations for the year ended January 2, 2016 is presented on a pro forma adjusted basis to give effect to the following items:

    the closing of the Davenport Acquisition (as defined below);

    debt and equity transactions consummated in the year ended January 2, 2016; and

    payment of actual and estimated premiums, fees and expenses in connection with the foregoing.

        Summit LLC entered into a supply agreement with Lafarge concurrent with the closing of the Davenport Acquisition (the "Davenport Supply Agreement"). The Davenport Supply Agreement provided us with the option to purchase up to a certain quantity of cement from Lafarge at an agreed-upon price. There was no minimum purchase requirement in the supply agreement, which expired on March 31, 2016. Due to the number of estimates required to determine the effect of the supply agreement on our results of operations, the estimated $13.4 million of revenue and $10.9 million of cost of revenue in 2015 prior to the acquisition on July 17, 2015 (the "Davenport Acquisition") are not included in the pro forma consolidated financial information below. These estimated revenues and cost of revenues represent estimates we developed based on our understanding of historical volumes and our forecast of future activities, including among other things, volumes, selling prices and freight costs. While we believe that our assumptions are reasonable, important factors could affect our results and could cause these amounts to differ materially, including without limitation variances in capacity and demand from period to period.

        The unaudited pro forma consolidated financial information should be read in conjunction with the information contained in "Selected Historical Consolidated Financial Data" and the consolidated financial statements for Summit LLC and the Davenport Assets included elsewhere in this prospectus.

41


Table of Contents


Summit Materials, LLC and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Operations
Year Ended January 2, 2016
(Amounts in thousands)

 
  Summit
Materials,
LLC
  Pre-acquisition
results of
Davenport
Acquisition
(a)
  Pro Forma
Davenport
Adjustments
  Pro Forma
Adjustments
for Debt and
Equity
Transactions
Consummated
in the year
ended
January 2,
2016
  Pro Forma
Total
 

Revenue

  $ 1,432,297   $ 42,671   $ 7,577   (b) $   $ 1,482,635  

Cost of revenue

    990,645     29,356     5,511   (c)       1,025,512  

General and administrative expenses

    177,769     6,615     281         184,665  

Depreciation, depletion, amortization and accretion

    119,723     3,632     7,467   (d)       130,822  

Transaction costs

    9,519                 9,519  

Operating income

    134,641     3,158     (5,682 )       132,117  

Other income, net

    (2,425 )               (2,425 )

Loss on debt financings

    71,631                 71,631  

Interest expense

    83,757             (2,533 )(e)   81,224  

(Loss) income from continuing operations before taxes

    (18,322 )   3,158     (5,682 )   2,533     (18,313 )

Income tax (benefit) expense

    (18,263 )   1,073         963   (f)   (16,227 )

(Loss) income from continuing operations

    (59 )   2,085     (5,682 )   1,570     (2,086 )

Income from discontinued operations

    (2,415 )               (2,415 )

Net income (loss)

    2,356     2,085     (5,682 )   1,570     329  

Net loss attributable to noncontrolling interests

    (1,826 )               (1,826 )

Net income (loss) attributable to Summit LLC

  $ 4,182   $ 2,085   $ (5,682 ) $ 1,570   $ 2,155  

See accompanying notes to unaudited pro forma consolidated statement of operations
for the year ended January 2, 2016.

(a)
The pre-acquisition results of the Davenport Acquisition reflect the results of the Davenport Assets for the six months ended June 30, 2015 included elsewhere in this prospectus.

(b)
Represents the $7.6 million of revenue from the Davenport Assets from July 1, 2015 to the acquisition date of July 17, 2015.

(c)
Represents the $5.5 million cost of revenue for the Davenport Assets for the period between July 1, 2015 to the acquisition date of July 17, 2015.

(d)
Represents the estimated incremental depreciation expense of approximately $1.1 million per month related to the step-up in value of the Davenport Assets recognized through purchase

42


Table of Contents

    accounting during the period between December 28, 2014 and July 17, 2015 (approximately seven months of incremental depreciation expense). As the purchase price allocation has not been finalized due to the recent timing of the acquisition, actual values may differ from estimates made.

(e)
Represents the adjustment to interest expense from our August 2015 term loan refinancing, our redemptions of all our outstanding 2020 notes during the year ended January 2, 2016 and our issuances our 2023 notes during the year ended January 2, 2016 as follows:

($ in millions)
   
 

Estimated interest expense after consummation of the above mentioned debt transactions(1)

  $ 20.4  

Elimination of historical interest expense(2)

    (24.7 )

Estimated incremental interest expense related to the amortization of new deferred financing fees and discount(3)

    1.8  

  $ (2.5 )
(1)
This adjustment is to reflect the estimated interest expense from the term loan facility of $650.0 million (interest rate of 4.25%), the $350.0 million of 2023 notes (interest rate of 6.125%) issued on July 8, 2015 and the incremental interest expense on an additional $300.0 million of 2023 notes issued on November 19, 2015, as compared to $153.8 million of 10.5% 2020 notes redeemed.

(2)
Historical interest expense includes expense related to the historical $414.6 million term loans at approximately 5.1% interest ($5.3 million) and $625.0 million of 2020 notes at 10.5% interest ($19.4 million).

(3)
The incremental amortization expense related to deferred financing fees and original issuance discount (premium) was calculated as follows:

($ in millions)
   
 

Estimated amortization of deferred financing fees after consummation of the above mentioned debt transactions

  $ 1.9  

Elimination of historical amortization of deferred financing fees

    (0.8 )

Estimated amortization of original issue discount (premium)

    0.1  

Elimination of historical amortization of original issue discount (premium)

    0.6  

  $ 1.8  
(f)
The income tax expense adjustment relates to the income tax benefit related to the incremental interest expense and write-off of the net premium on the redeemed 2020 notes.

43


Table of Contents


SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

        The following table sets forth, for the periods and as of the dates indicated, our selected consolidated financial data. The selected statements of operations data for the three years ended January 2, 2016, December 27, 2014 and December 28, 2013 and the selected balance sheet data as of January 2, 2016 and December 27, 2014 are derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected balance sheet data as of December 28, 2013 and as of and for the years ended December 29, 2012 and December 31, 2011 are derived from audited consolidated financial statements not included in this prospectus.

        The selected historical consolidated financial data as of and for the six months ended July 2, 2016 and for the six months ended June 27, 2015 are derived from the unaudited consolidated financial statements included elsewhere in this prospectus. We have prepared our unaudited consolidated financial statements on the same basis as our audited consolidated financial statements and, in our opinion, have included all adjustments, which include normal recurring adjustments, necessary to present fairly in all material respects our results of operations and financial position. The results for any historical or interim period are not necessarily indicative of the results that may be expected for the full year or any future period.

        You should read the following information together with the more detailed information contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and the accompanying notes included elsewhere in this prospectus.

(in thousands)
  Six Months
Ended
July 2,
2016
  Six Months
Ended
June 27,
2015
  Year Ended
January 2,
2016
  Year Ended
December 27,
2014
  Year Ended
December 28,
2013
  Year Ended
December 29,
2012
  Year Ended
December 31,
2011
 

Statement of Operations Data:

                                           

Total revenue

  $ 673,653   $ 558,930   $ 1,432,297   $ 1,204,231   $ 916,201   $ 926,254   $ 789,076  

Total cost of revenue (excluding items shown separately below)

    462,088     407,439     990,645     887,160     677,052     713,346     597,654  

General and administrative expenses

    121,014     106,945     177,769     150,732     142,000     127,215     95,826  

Goodwill impairment

                    68,202          

Depreciation, depletion, amortization and accretion

    69,768     53,512     119,723     87,826     72,934     68,290     61,377  

Transaction costs

    3,606     7,740     9,519     8,554     3,990     1,988     9,120  

Operating income (loss)

    17,177     (16,706 )   134,641     69,959     (47,977 )   15,415     25,099  

Other expense (income), net

    217     493     (2,425 )   (3,447 )   (1,737 )   (1,182 )   (21,244 )

Loss on debt financings

        31,672     71,631         3,115     9,469      

Interest expense

    46,649     41,213     83,757     86,742     56,443     58,079     47,784  

Loss from continuing operations before taxes

    (30,251 )   (90,084 )   (18,322 )   (13,336 )   (105,798 )   (50,951 )   (1,441 )

Income tax (benefit) expense

    (9,205 )   (9,813 )   (18,263 )   (6,983 )   (2,647 )   (3,920 )   3,408  

Loss from continuing operations

  $ (20,484 ) $ (79,513 ) $ (59 ) $ (6,353 ) $ (103,151 ) $ (47,031 ) $ (4,849 )

Cash Flow Data:

                                           

Net cash (used for) provided by:

                                           

Operating activities

  $ (26,500 ) $ (80,224 ) $ 98,203   $ 79,238   $ 66,412   $ 62,279   $ 23,253  

Investing activities

    (377,391 )   (52,593 )   (584,347 )   (461,280 )   (111,515 )   (85,340 )   (192,331 )

Financing activities

    226,156     132,032     659,320     380,489     32,589     7,702     146,775  

Balance Sheet Data (as of period end):

                                           

Cash and cash equivalents

  $ 8,151         $ 185,388   $ 13,215   $ 14,917   $ 27,431   $ 42,790  

Total assets

    2,701,478           2,395,162     1,712,653     1,234,414     1,269,149     1,270,871  

Long-term debt, including current portion

    1,543,500           1,296,750     1,040,670     695,890     648,000     608,981  

Capital leases

    41,439           44,822     31,210     8,026     3,092     3,158  

Total member's interest

    786,419           778,292     286,983     283,551     382,428     436,372  

Other Financial Data (as of period end):

                                           

Total hard assets

  $ 1,613,933         $ 1,399,088   $ 1,062,154   $ 928,210   $ 906,584   $ 906,166  

Ratio of earnings to fixed charges(1)

    0.4x     N/A     0.8x     0.8x     N/A     0.1x     1.0x  

(1)
The ratio of earnings to fixed charges is determined by dividing earnings, as adjusted, by fixed charges. Fixed charges consist of interest on all indebtedness plus that portion of operating lease rentals representative of the interest factor (deemed to be 33% of operating lease rentals). For the six months ended July 2, 2016 and June 27, 2015 and the years ended January 2, 2016, December 27, 2014 and December 28, 2013, our earnings were insufficient to cover fixed charges by $29.2 million, $89.2 million, $20.0 million, $14.0 million and $107.5 million, respectively.

44


Table of Contents


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

        You should read the following discussion and analysis of our results of operations and financial condition with the "Selected Historical Consolidated Financial Data" section of this prospectus and our audited and unaudited consolidated financial statements and the related notes thereto included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section of this prospectus. Our actual results may differ materially from those contained in any forward-looking statements.

Overview

        We are one of the fastest growing construction materials companies in the United States, with a 82% increase in revenue between the year ended December 31, 2011 and the year ended January 2, 2016, as compared to an average increase of approximately 38% in revenue reported by our competitors over the same period. Our materials include aggregates, which we supply across the country, with a focus on Texas, Kansas, Utah, Missouri and Kentucky, and cement, which we supply primarily in Missouri, Iowa and along the Mississippi River. Within our markets, we offer customers a single-source provider for construction materials and related downstream products through our vertical integration. In addition to supplying aggregates to customers, we use our materials internally to produce ready-mix concrete and asphalt paving mix, which may be sold externally or used in our paving and related services businesses. Our vertical integration creates opportunities to increase aggregates volumes, optimize margin at each stage of production and provide customers with efficiency gains, convenience and reliability, which we believe gives us a competitive advantage.

        We have completed 46 acquisitions, which are organized into 12 operating companies that make up our three distinct operating segments—West, East and Cement—spanning 20 U.S. states and British Columbia, Canada and 40 metropolitan statistical areas. highly experienced management team, led by our President and Chief Executive Officer, Tom Hill, a 35-year industry veteran, has successfully enhanced the operations of acquired companies by focusing on scale advantages, cost efficiencies and pricing discipline to improve profitability and cash flow.

        As of July 2, 2016, we had 2.7 billion tons of proven and probable aggregates reserves serving our aggregates and cement businesses and operated over 300 sites and plants, to which we believe we have adequate road, barge and/or railroad access. From time to time, in connection with certain acquisitions, we engage a third party engineering firm to perform an aggregates reserves audit, but we do not perform annual reserve audits. By segment, our estimate of proven and probable reserves for which we have permits for extraction and that we consider to be recoverable aggregates of suitable quality for economic extraction, including the underground mine that was substantially completed in 2014 to support our Hannibal, Missouri cement plant, are shown in the table below along with average annual production.

 
   
  Tonnage of reserves for
each general type of
aggregate
   
   
   
   
 
 
   
   
  Average years
until
depletion at
current
production(2)
  Percent of
reserves owned
and percent leased
 
 
  Aggregate
producing
sites
  Hard
rock(1)
  Sand and
gravel(1)
  Annual
production(1)
 
Region
  Owned   Leased(3)  

West

    59     324,982     503,589     25,893     32     29 %   71 %

East

    105     1,242,596     112,426     13,029     104     59 %   41 %

Cement

    3     514,159         1,856     277     100 %    

Total

    167     2,081,737     616,015     40,778     66     58 %   42 %

(1)
Hard rock, sand and gravel and annual production tons are shown in thousands.

45


Table of Contents

(2)
Calculated based on total reserves divided by our average of 2014 and 2015 annual production.

(3)
Lease terms range from monthly to on-going with an average lease expiry of 2020.

        We operate in 24 U.S. states and in British Columbia, Canada and currently have assets in 20 U.S. states and British Columbia, Canada. The map below illustrates our geographic footprint:

GRAPHIC

Business Trends and Conditions

        The U.S. construction materials industry is composed of four primary sectors: aggregates; cement; ready-mix concrete; and asphalt paving mix. Each of these materials is widely used in most forms of construction activity. Participants in these sectors typically range from small, privately-held companies focused on a single material, product or market to multinational corporations that offer a wide array of construction materials and services. Competition is constrained in part by the distance materials can be transported efficiently, resulting in predominantly local or regional operations. Due to the lack of product differentiation, competition for all of our products is predominantly based on price and, to a lesser extent, quality of products and service. As a result, the prices we charge our customers are not likely to be materially different from the prices charged by other producers in the same markets. Accordingly, our profitability is generally dependent on the level of demand for our products and our ability to control operating costs.

        Our revenue is derived from multiple end-use markets including private residential and nonresidential construction, as well as public infrastructure construction.

        Residential and nonresidential construction consists of new construction and repair and remodel markets. Any economic stagnation or decline, which could vary by local region and market, could affect our results of operations. Our sales and earnings are sensitive to national, regional and local economic

46


Table of Contents

conditions and particularly to cyclical changes in construction spending, especially in the private sector. From a macroeconomic view, we see positive indicators for the construction sector, including upward trends in housing starts, construction employment and highway obligations. All of these factors should result in increased construction activity in the private sector. However, we do not expect this recovery to be consistent across the United States. Certain of our markets are showing greater, more rapid signs of recovery. Increased construction activity in the private sector could lead to increased public infrastructure spending in the relatively near future. Public infrastructure includes spending by federal, state and local governments for roads, highways, bridges, airports and other infrastructure projects. Public infrastructure projects have historically been a relatively stable portion of state and federal budgets. Our acquisitions to date have been primarily focused in states with certain constitutional protections for transportation funding sources, which we believe limits our exposure to state and local budgetary uncertainties.

        Transportation infrastructure projects, driven by both federal and state funding programs, represent a significant share of the U.S. construction materials market. Federal funds are allocated to the states, which are required to match a portion of the federal funds they receive. Federal highway spending uses funds predominantly from the Federal Highway Trust Fund, which derives its revenue from taxes on diesel fuel, gasoline and other user fees. The dependability of federal funding allows the state departments of transportation to plan for their long term highway construction and maintenance needs. The FAST Act was signed into law on December 4, 2015 and authorizes $305 billion of funding between 2016 and 2020. Over its five year term, it provides funding for surface transportation infrastructure, including roads, bridges, transit systems, and the rail transportation network. With the nation's infrastructure aging, we expect U.S. infrastructure spending to grow over the long term, and we believe we are well positioned to capitalize on any such increase.

        In addition to federal funding, highway construction and maintenance funding is also available through state, county and local agencies. Each of our five largest states by revenue (Texas, Kansas, Utah, Missouri and Kentucky, which represented approximately 33%, 16%, 11%, 10% and 8%, respectively, of our total revenue in 2015) have funds whose revenue sources have certain constitutional protections that limit spending to transportation projects.

    Texas Department of Transportation's budget from 2014 to 2016 is $25.3 billion.

    On November 3, 2015, voters in Texas passed an additional proposition that dedicates up to $2.5 billion of the state's sales and use tax revenue to the state's highway fund beginning in 2018, and 35% of any excess revenue over $5 billion generated from the motor vehicles sales tax beginning in 2020.

    On November 4, 2014, voters in Texas passed a proposition that is estimated to provide up to $1.7 billion of incremental funding annually to the Texas Department of Transportation. The funds must be used for construction, maintenance, rehabilitation and acquiring right-of-way for public roads.

    Kansas has a 10-year $8.2 billion highway bill that was passed in May 2010.

    Utah's transportation investment fund has $3.0 billion committed through 2018.

    Missouri has an estimated $0.7 billion in annual construction funding committed to essential road and bridge programs through 2017.

    Kentucky's biennial highway construction plan has funding of $1.9 billion from July 2016 to June 2018.

47


Table of Contents

        The table below sets forth additional details regarding our five key states, including growth rates as compared to the U.S. as a whole:

 
   
  Revenue by End Market(1)   Projected Industry Growth by
End Market 2016 to 2018(2)
 
State
  Percentage of
Our Total
Revenue(1)
  Residential and
Nonresidential
Construction
  Public
Infrastructure
Construction
  Residential
Construction
  Nonresidential
Construction
  Public
Infrastructure
Construction
 

Texas

    33 %   58 %   42 %   8.2 %   7.2 %   5.2 %

Kansas

    16 %   48 %   52 %   10.3 %   6.4 %   6.2 %

Utah

    11 %   84 %   16 %   5.6 %   5.2 %   6.6 %

Missouri

    10 %   72 %   28 %   9.9 %   5.4 %   4.9 %

Kentucky

    8 %   7 %   93 %   10.3 %   4.9 %   6.9 %

Weighted average(3)

                      8.7 %   6.3 %   5.7 %

United States(2)

                      1.1 %   1.0 %   0.5 %

(1)
Percentages based on our revenue by state for the year ended January 2, 2016 and management's estimates as to end markets.

(2)
Source: FMI Management Consulting.

(3)
Calculated using weighted average based on each state's percentage contribution to our total revenue.

        Use and consumption of our products fluctuate due to seasonality. Nearly all of the products used by us, and by our customers, in the private construction and public infrastructure industries are used outdoors. Our highway operations and production and distribution facilities are also located outdoors. Therefore, seasonal changes and other weather-related conditions, in particular extended rainy and cold weather in the spring and fall and major weather events, such as hurricanes, tornadoes, tropical storms and heavy snows, can adversely affect our business and operations through a decline in both the use of our products and demand for our services. In addition, construction materials production and shipment levels follow activity in the construction industry, which typically occurs in the spring, summer and fall. Warmer and drier weather during the second and third quarters of our fiscal year typically result in higher activity and revenue levels during those quarters.

        Our acquisition strategy has historically required us to raise capital through equity issuances or debt financings. As of July 2, 2016 and January 2, 2016, our long-term borrowings, including the current portion without giving effect to original issue discount, totaled $1,543.5 million and $1,296.8 million, respectively, for which we incurred $73.6 million and $40.2 million of interest expense for the year ended January 2, 2016 and six months ended July 2, 2016, respectively, and $78.6 million and $36.8 million for the year ended December 27, 2014 and six months ended June 27, 2015, respectively. Although the amounts borrowed and related interest expense are material to us, we have been in compliance with our debt covenants and, when we have made additional issuances of senior notes to fund acquisitions, we have complied with the incurrence tests in the indentures governing our senior notes. In addition, our cash flows provided by operating activities was $98.2 million in the year ended January 2, 2016, which is net of interest payments, all of which have been paid when due, along with principal payments. Our senior secured revolving credit facility, which provides us with up to $209.4 million of borrowing capacity, net of $25.6 million of outstanding letters of credit, has been adequate to fund our seasonal working capital needs and certain acquisitions. We had $14.0 million of outstanding borrowings on the revolving credit facility as of July 2, 2016.

48


Table of Contents

Financial Highlights—Six Months Ended July 2, 2016

        The principal factors in evaluating our financial condition and operating results for the six months ended July 2, 2016 as compared to June 27, 2015 are:

    Net revenue increased $116.5 million in the six months ended July 2, 2016, as a result of pricing and volume increases across our product lines, which includes volume contributions from our acquisitions.

    Our operating income increased $33.9 million in the six months ended July 2, 2016. The 2016 results included a $24.8 million stock-based compensation charge in general and administrative costs. Prior to the IPO of Summit Inc., certain investors had equity in the company that vested only if a performance objective of 1.75 times return on Blackstone's initial investment was met. At the IPO Date, this equity converted to LP Units and stock options. Prior to the second quarter of 2016, we did not recognize any expense associated with these awards as achievement of the 1.75 times multiple was not deemed probable. The 1.75 times return threshold became probable following completion of the April 2016 secondary offering. As a result, in the second quarter of 2016, we recognized the $24.8 million cumulative catch up expense from the IPO date through June 2016. We will continue to recognize expense on the options over the remaining 4-year vesting period. The 2015 results included $28.3 million of costs associated with Summit Inc.'s IPO.

    In March 2016, we issued $250.0 million in aggregate principal amount of 8.500% Senior Notes due 2022. The proceeds were used to help finance the acquisition of Boxley, replenish cash used for the acquisition of AMC and the expenses incurred in connection with these acquisitions.

Financial Highlights—Year Ended January 2, 2016

        The principal factors in evaluating our financial condition and operating results for the year ended January 2, 2016, as compared to the year ended December 27, 2014, are:

    Net revenue increased $219.4 million in 2015, as a result of pricing and volume increases across our product lines, which includes volume contributions from our acquisitions.

    Our operating income increased $64.7 million in 2015. The improvement in operating income was driven by improved pricing, reduced fuel costs and an increased proportion of sales generated by materials and products, as compared to services.

    In March 2015, Summit Inc. completed an IPO of its Class A common stock, the proceeds of which were used: (i) to redeem $288.2 million in aggregate principal amount of our outstanding 2020 notes at a redemption price of 100% and an applicable premium thereon; (ii) to purchase a portion of the noncontrolling interests of Continental Cement; (iii) to pay a one-time fee of $13.8 million in connection with the termination of a transaction and management fee agreement; and (iv) for general corporate purposes.

    In August 2015, Summit Inc. completed a follow-on offering of its Class A common stock. The proceeds were used to purchase 3,750,000 newly-issued LP Units from Summit Holdings and 18,675,000 outstanding LP Units from certain pre-IPO owners, including affiliates of the Sponsors and certain of Summit Inc.'s directors and officers. The entire $80.0 million deferred purchase price for the Davenport Assets was funded with the proceeds.

    In 2015, Summit LLC and Finance Corp. issued $650.0 million in aggregate principal amount of 2023 notes and redeemed all of the 101/2% senior notes due 2020 ("2020 Notes").

49


Table of Contents

Acquisitions

        In addition to our organic growth, we continued to grow our business through acquisitions, completing the following transactions since 2013:

    On August 30, 2016, we acquired certain assets of Angelle Assets, including two cement distribution terminals in Louisiana.

    On August 26, 2016, we acquired RD Johnson, an asphalt and excavating business based in Lawrence, Kansas.

    On August 19, 2016, we acquired the issued and outstanding shares of Rustin, a vertically-integrated company in southeast Oklahoma with a sandpit and twelve ready-mix plants.

    On August 8, 2016, we acquired the assets of Weldon and the membership interests of Honey Creek Disposal Service, LLC. ("Honey Creek"). Honey Creek is a trash collection business, which we sold immediately after acquisition. We retained the building assets of Weldon, where our recycling business in Kansas is operated.

    On May 20, 2016, we acquired the Oldcastle Assets, seven aggregates quarries in central and northwest Missouri.

    On April 29, 2016, we acquired Sierra, a vertically integrated aggregates and ready-mix concrete business with one sand and gravel pit and two ready-mix concrete plants located in Las Vegas, Nevada

    On March 18, 2016, we acquired Boxley, a vertically integrated company based in Roanoke, Virginia with six quarries, four ready-mix concrete plants and four asphalt plants

    On February 5, 2016, we acquired AMC, an aggregates company with five sand and gravel pits servicing coastal North and South Carolina.

    On December 11, 2015, we acquired Pelican, an asphalt terminal business in Houston, Texas.

    On August 21, 2015, we acquired LeGrand, a vertically integrated company with five sand and gravel pits, four ready-mix concrete plants and three asphalt plants servicing the northern and central Utah, western Wyoming and southern Idaho markets.

    On July 17, 2015, we completed the acquisition of the Davenport Assets. Combined with the Company's cement plant in Hannibal, Missouri, the Company has over two million short tons of cement capacity across our two plants and eight cement distribution terminals along the Mississippi River from Minneapolis, Minnesota to New Orleans, Louisiana.

    On June 1, 2015, we acquired all of the issued and outstanding shares of Lewis & Lewis, a vertically integrated business in Wyoming.

    On October 3, 2014, we acquired Concrete Supply, which included two sand and gravel sites and 10 ready-mix concrete plants in Topeka and northeast Kansas, and a ready-mix concrete plant in western Missouri

    On September 30, 2014, we acquired all of the outstanding ownership interests in Colorado County S&G, M & M Gravel Sales, Inc., Marek Materials Co. Operating, Ltd. and Marek Materials Co., L.L.C., which collectively supply aggregates to the west Houston, Texas markets.

    On September 19, 2014, we acquired all of the membership interests of Southwest Ready Mix, which included two ready-mix concrete plants and serves the downtown and southwest Houston, Texas markets

50


Table of Contents

    On September 4, 2014, we acquired all of the issued and outstanding shares and certain shareholder notes of Rock Head Holdings Ltd. and B.I.M. Holdings Ltd., which collectively indirectly owned all the shares of Mainland Sand and Gravel Ltd., a supplier of construction aggregates to the Vancouver metropolitan area based in Surrey, British Columbia.

    On July 29, 2014, we acquired all of the assets of Canyon Redi-Mix, Inc. The acquired assets include two ready-mix concrete plants, which serve the Permian Basin region of West Texas.

    On June 9, 2014, we acquired all of the membership interests of Buckhorn Materials, an aggregates quarry in South Carolina, and Construction Materials Group LLC, a sand pit in South Carolina.

    On March 31, 2014, we acquired all of the stock of Troy Vines, an integrated aggregates and ready-mix concrete business headquartered in Midland, Texas, which serves the Permian Basin region of West Texas.

    On January 17, 2014, we acquired certain aggregates and ready-mix concrete assets of Alleyton in Houston, Texas, which expands our presence in the Texas market.

    On April 1, 2013, we acquired certain aggregates, ready-mix concrete and asphalt assets of Lafarge in and around Wichita, Kansas, which expanded our footprint in the Wichita market across our lines of business.

    On April 1, 2013, we acquired the membership interests of Westroc in Utah. The Westroc acquisition expanded our market coverage for aggregates and ready-mix concrete in Utah.

Components of Operating Results

Total Revenue

        We derive our revenue predominantly by selling construction materials and products and providing paving and related services. Construction materials consist of aggregates and cement. Products consist of related downstream products, including ready-mix concrete, asphalt paving mix and concrete products. Paving and related services that we provide are primarily asphalt paving services.

        Revenue derived from construction materials sales are recognized when risks associated with ownership have passed to unaffiliated customers. Typically this occurs when products are shipped. Product revenue generally includes sales of aggregates, cement and related downstream products and other materials to customers, net of discounts or allowances and taxes, if any.

        Revenue derived from paving and related services are recognized on the percentage-of-completion basis, measured by the cost incurred to date compared to estimated total cost of each project. This method is used because management considers cost incurred to be the best available measure of progress on these contracts. Due to the inherent uncertainties in estimating costs, it is at least reasonably possible that the estimates used will change over the life of the contract.

Cost of Revenue (excluding items noted separately below)

        Cost of revenue consists of all production and delivery costs and primarily includes labor, repair and maintenance, utilities, raw materials, fuel, transportation, subcontractor costs, royalties and other direct costs incurred in the production and delivery of our products and services. Our cost of revenue is directly affected by fluctuations in commodity energy prices, primarily diesel fuel, liquid asphalt and other petroleum-based resources. As a result, our operating profit margins can be significantly affected by changes in the underlying cost of certain raw materials if they are not recovered through corresponding changes in revenue. We attempt to limit our exposure to changes in commodity energy prices by entering into forward purchase commitments when appropriate. In addition, we have sales

51


Table of Contents

price adjustment provisions that provide for adjustments based on fluctuations outside a limited range in certain energy-related production costs. These provisions are in place for most of our public infrastructure contracts, and we aggressively seek to include similar price adjustment provisions in our private contracts.

General and Administrative Expenses

        General and administrative expenses consist primarily of salaries and personnel costs for our sales and marketing, administration, finance and accounting, legal, information systems, human resources and certain managerial employees. Additional expenses include audit, consulting and professional fees, travel, insurance, rental costs, property taxes and other corporate and overhead expenses.

Goodwill Impairment

        Goodwill impairment charges consist of the amount by which the carrying value of a reporting unit exceeds its fair value. See "—Critical Accounting Policies—Goodwill and Goodwill Impairment."

Depreciation, Depletion, Amortization and Accretion

        Our business is capital intensive. We carry property, plant and equipment on our balance sheet at cost, net of applicable depreciation, depletion and amortization. Depreciation on property, plant and equipment is computed on a straight-line basis or based on the economic usage over the estimated useful life of the asset. The general range of depreciable lives by category, excluding mineral reserves, which are depleted based on the units of production method on a site-by-site basis, is as follows:

Buildings and improvements

  7 - 40 years

Plant, machinery and equipment

  20 - 40 years

Office equipment

  3 - 6 years

Truck and auto fleet

  5 - 10 years

Mobile equipment and barges

  15 - 20 years

Landfill airspace and improvements

  5 - 60 years

Other

  2 - 10 years

        Amortization expense is the periodic expense related to leasehold improvements and to intangible assets acquired with certain acquisitions. The intangible assets are generally amortized on a straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the life of the underlying asset or the remaining lease term.

        Accretion expense is the periodic expense recorded for the accrued mining reclamation liabilities and landfill closure and post-closure liabilities using the effective interest method.

Transaction Costs

        Transaction costs consist primarily of third party accounting, legal, valuation and financial advisory fees incurred in connection with acquisitions.

Results of Operations

        The following discussion of our results of operations is focused on the key financial measures we use to evaluate the performance of our business from both a consolidated and operating segment perspective. Operating income and margins are discussed in terms of changes in volume, pricing and mix of revenue source (i.e., type of product sales or service revenue). We focus on operating margin, which we define as operating income as a percentage of revenue, as a key metric when assessing the performance of the business, as we believe that analyzing changes in costs in relation to changes in

52


Table of Contents

revenue provides more meaningful insight into the results of operations than examining operating costs in isolation.

        Operating income (loss) reflects our profit (loss) from continuing operations after taking into consideration cost of revenue, general and administrative expenses, depreciation, depletion, amortization and accretion and transaction costs. Cost of revenue generally increases ratably with revenue, as labor, transportation costs and subcontractor costs are recorded in cost of revenue. General and administrative expenses as a percentage of revenue vary throughout the year due to the seasonality of our business. As a result of our revenue growth occurring primarily through acquisitions, general and administrative expenses and depreciation, depletion, amortization and accretion have historically grown ratably with revenue. However, as volumes increase, we expect these costs, as a percentage of revenue, to decrease. Our transaction costs fluctuate with the number and size of acquisitions completed each year.

        The table below includes revenue and operating income (loss) by segment for the periods indicated. Operating income (loss) by segment is computed as earnings before interest, taxes and other income and expense.

 
  Six months ended   Year ended  
 
  July 2, 2016   June 27, 2015   January 2, 2016   December 27, 2014   December 28, 2013  
(in thousands)
  Total
Revenue
  Operating
income
(loss)
  Total
Revenue
  Operating
income
(loss)
  Total
Revenue
  Operating
(loss)
income
  Total
Revenue
  Operating
(loss)
income
  Total
Revenue
  Operating
(loss)
income
 

West

  $ 349,994   $ 31,348   $ 335,742   $ 26,935   $ 804,503   $ 96,498   $ 665,716   $ 61,882   $ 426,195   $ (47,476 )

East

    210,054     14,832     175,003     6,319     432,310     49,445     432,942     26,663     398,302     4,210  

Cement

    113,605     24,000     48,185     3,850     195,484     64,567     105,573     19,705     91,704     20,829  

Corporate(1)

        (53,003 )       (53,810 )       (75,869 )       (38,291 )       (25,540 )

Total

  $ 673,653   $ 17,177   $ 558,930   $ (16,706 ) $ 1,432,297   $ 134,641   $ 1,204,231   $ 69,959   $ 916,201   $ (47,977 )

(1)
Corporate results primarily consist of compensation and office expenses for employees included in our headquarters. An approximate $24.8 million stock-based compensation charge associated with certain LP Units converted and options granted at the time of the IPO for which the performance metrics were deemed probable of occurring was recognized in the six months ended July 2, 2016. Approximately $28.3 million of costs associated with the IPO were included in the operating loss for the six months and year ended June 27, 2015 and January 2, 2016.

Non-GAAP Performance Measures

        We evaluate our operating performance using metrics that we refer to as "Adjusted EBITDA," "Further Adjusted EBITDA," "gross profit" and "gross margin" which are not defined by U.S. GAAP and should not be considered as an alternative to earnings measures defined by U.S. GAAP. We define Adjusted EBITDA as EBITDA, as adjusted to exclude accretion, loss on debt financings, IPO costs, loss from discontinued operations and certain non-cash and non-operating items. We define Further Adjusted EBITDA as Adjusted EBITDA plus the EBITDA contribution of certain recent acquisitions, to measure our compliance with debt covenants and to evaluate flexibility under certain restrictive covenants. See "—Liquidity and Capital Resources—Indebtedness" on pages 78 through 80 for more information. We do not use this metric as a measure to allocate resources. We define gross profit as operating income (loss) before general and administrative costs, depreciation, depletion, amortization and accretion and transaction costs and gross margin as gross profit as a percentage of revenue.

        We present Adjusted EBITDA, Further Adjusted EBITDA, gross profit and gross margin for the convenience of investment professionals who use such metrics in their analyses. The investment community often uses these metrics to assess the operating performance of a company's business and to provide a more consistent comparison of performance from period to period. We use these metrics, among other metrics, to assess the operating performance of our individual segments and the consolidated company.

53


Table of Contents

        Non-GAAP financial measures are not standardized; therefore, it may not be possible to compare such financial measures with other companies' non-GAAP financial measures having the same or similar names. We strongly encourage investors to review our consolidated interim and audited financial statements in their entirety and not rely on any single financial measure.

        The tables below reconcile our net (loss) income to EBITDA and Adjusted EBITDA and present Adjusted EBITDA by segment for the periods indicated:

 
  Six months ended   Year ended  
(in thousands)
  July 2, 2016   June 27, 2015   January 2,
2016
  December 27,
2014
  December 28,
2013
 

Reconciliation of Net (Loss) Income to Adjusted EBITDA

                               

Net (loss) income

  $ (21,029 ) $ (79,804 ) $ 1,484   $ (6,282 ) $ (103,679 )

Interest expense

    47,194     41,504     84,629     86,742     56,443  

Depreciation, depletion and amortization

    68,938     52,749     118,321     86,955     72,217  

Income tax benefit

    (9,222 )   (9,813 )   (18,263 )   (6,983 )   (2,647 )

EBITDA

  $ 85,881   $ 4,636   $ 186,171   $ 160,432   $ 22,334  

Accretion

    830     763     1,402     871     717  

IPO/Legacy equity modification costs

    24,751     28,296     28,296          

Loss on debt financings

        31,672     71,631         3,115  

Goodwill impairment

                    68,202  

(Income) loss from discontinued operations

        (758 )   (2,415 )   (71 )   528  

Acquisition transaction expenses

    3,606     7,740     9,519     8,554     3,990  

Management fees and expenses

        1,046     1,046     4,933     2,620  

Non-cash compensation

    5,065     2,569     5,448     2,235     2,315  

(Gain) loss on disposal and impairment of assets

            (16,561 )   8,735     12,419  

Other

    3,008     829     2,991     3,344     13,807  

Adjusted EBITDA

  $ 123,141   $ 76,793   $ 287,528   $ 189,033   $ 130,047  

Adjusted EBITDA by Segment

                               

West

  $ 63,864   $ 51,690   $ 150,764   $ 102,272   $ 42,300  

East

    38,847     26,081     92,303     73,822     67,146  

Cement

    38,564     12,343     74,845     35,133     36,647  

Corporate

    (18,134 )   (13,321 )   (30,384 )   (22,194 )   (16,046 )

Adjusted EBITDA

  $ 123,141   $ 76,793   $ 287,528   $ 189,033   $ 130,047  

54


Table of Contents

 
  Six months ended   Year ended  
(in thousands)
  July 2,
2016
  June 27,
2015
  January 2,
2016
  December 27,
2014
  December 28,
2013
 

Reconciliation of Operating Income (Loss) to Gross Profit

                               

Operating income (loss)

  $ 17,177   $ (16,706 ) $ 134,641   $ 69,959   $ (47,977 )

General and administrative expenses

    121,014     106,945     177,769     150,732     142,000  

Goodwill impairment

                    68,202  

Depreciation, depletion, amortization and accretion

    69,768     53,512     119,723     87,826     72,934  

Transaction costs

    3,606     7,740     9,519     8,554     3,990  

Gross profit (exclusive of items shown separately)

  $ 211,565   $ 151,491   $ 441,652   $ 317,071   $ 239,149  

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

    34.1 %   30.0 %   34.2 %   29.6 %   29.0 %

(1)
Gross margin improved by approximately 500 basis points during the year ended January 2, 2016 primarily as a result of a shift in product mix. Our acquisitions in 2015 and 2014 were primarily materials and products businesses. As a result, and as shown in the table below, aggregates, cement and ready-mix concrete revenue represented 20.7%, 12.7% and 24.5%, respectively, of gross revenue during the year ended January 2, 2016 compared to 18.9%, 7.8% and 22.8%, respectively, during the year ended December 27, 2014. Gross revenue from paving and related services, which generally has lower operating margins than materials and products, was 35.2% of total gross revenue during the year ended January 2, 2016 compared to 44.0% during the year ended December 27, 2014. In addition, through effective use of our purchase commitments and a year on year decline in prices, our costs associated with liquid asphalt and energy decreased $13.8 million in the year ended January 2, 2016 as compared to the year ended December 27, 2014, taking into consideration organic and acquisition-related volume increases.

55


Table of Contents

Consolidated Results of Operations

        The table below sets forth our consolidated results of operations for the periods indicated:

 
  Six months ended   Year ended  
(in thousands)
  July 2,
2016
  June 27,
2015
  January 2,
2016
  December 27,
2014
  December 28,
2013
 

Total revenue

  $ 673,653   $ 558,930   $ 1,289,966   $ 1,204,231   $ 916,201  

Cost of revenue (excluding items shown separately below)

    462,088     407,439     990,645     887,160     677,052  

General and administrative expenses

    121,014     106,945     177,769     150,732     142,000  

Goodwill impairment

                    68,202  

Depreciation, depletion, amortization and accretion

    69,768     53,512     119,723     87,826     72,934  

Transaction costs

    3,606     7,740     9,519     8,554     3,990  

Operating income (loss)

    17,177     (16,706 )   134,641     69,959     (47,977 )

Other expense (income), net

    234     493     (2,425 )   (3,447 )   (1,737 )

Loss on debt financings

        31,672     71,631         3,115  

Interest expense

    47,194     41,504     84,629     86,742     56,443  

Loss from continuing operations before taxes          

    (30,251 )   (90,375 )   (19,194 )   (13,336 )   (105,798 )

Income tax benefit

    (9,222 )   (9,813 )   (18,263 )   (6,983 )   (2,647 )

Loss from continuing operations

    (21,029 )   (80,562 )   (931 )   (6,353 )   (103,151 )

(Income) loss from discontinued operations

        (758 )   (2,415 )   (71 )   528  

Net (loss) income

    (21,029 )   (79,804 )   1,484     (6,282 )   (103,679 )

Six Months Ended July 2, 2016 Compared to Six Months Ended June 27, 2015

 
  Six months ended  
($ in thousands)
  July 2, 2016   June 27, 2015   Variance  

Net Revenue

  $ 620,675   $ 504,148     23.1 %

Operating income (loss)

    17,177     (16,706 )   202.8 %

Operating margin

    2.8 %   (3.3 )%      

Adjusted EBITDA

  $ 123,141   $ 76,793     60.4 %

        Net revenue increased $116.5 million in the six months ended July 2, 2016, of which $83.3 million was from increased sales of materials, $27.9 million was from increased sales of products, and $5.3 million was from increased service revenue. We had volume growth in our aggregates, cement and ready-mix concrete lines of business, driven by the 2015 and 2016 acquisitions and organic growth. Excluding the cement segment, in the six months ended July 2, 2016, $65.0 million of the net revenue growth was from acquisitions, partially offset by a $13.9 million reduction in organic revenue. For the six months ended July 2, 2016, approximately $65.4 million of the revenue growth was attributable to our cement operations.

        As a vertically-integrated company, we include intercompany sales from materials to products and from products to services when assessing the operating results of our business. We refer to revenue

56


Table of Contents

inclusive of intercompany sales as gross revenue. These intercompany transactions are eliminated in the consolidated financial statements. Gross revenue by line of business was as follows:

 
  Six months ended  
($ in thousands)
  July 2, 2016   June 27, 2015   Variance  

Revenue by product:*

                   

Aggregates

  $ 162,063   $ 132,266   $ 29,797  

Cement

    101,222     41,996     59,226  

Ready-mix concrete

    177,608     159,397     18,211  

Asphalt

    96,477     106,243     (9,766 )

Paving and related services

    179,065     181,229     (2,164 )

Other

    (42,782 )   (62,201 )   19,419  

Total revenue

  $ 673,653   $ 558,930   $ 114,723  

*
Revenue by product includes intercompany and intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other. Revenue from the liquid asphalt terminals is included in asphalt revenue.

        Gross revenue for paving and related services decreased $2.2 million in the six months ended July 2, 2016, primarily in the Austin, Texas market. In Austin, Texas where the economy has been expanding, a new aggressive entrant has entered the market and has attracted a number of our employees, which have collectively resulted in a decrease in our paving and related services revenue. Detail of our volumes and average selling prices by product in the six months ended July 2, 2016 and June 27, 2015 were as follows:

 
  Six months ended
July 2, 2016
  Six months ended
June 27, 2015
  Percentage Change in  
 
  Volume(1)   Pricing(2)   Volume(1)   Pricing(2)   Volume(1)   Pricing(2)  

Aggregates

    16,645   $ 9.74     14,821   $ 8.92     12.3 %   9.2 %

Cement

    943     107.38     430     97.56     119.3 %   10.1 %

Ready-mixeconcrete

    1,715     103.56     1,564     101.91     9.7 %   1.6 %

Asphalt

    1,533     57.57     1,598     56.58     (4.1 )%   1.7 %

(1)
Volumes are shown in thousands and in tons for aggregates, cement and asphalt and in cubic yards for ready-mix concrete.

(2)
Pricing is shown on a per ton basis for aggregates, cement and asphalt and on a per cubic yard basis for ready-mix concrete.

        Aggregates volumes were positively affected by the 2015 and 2016 acquisitions as well as strength in the Kansas and Missouri markets. This growth was partially offset by declines in the British Columbia and Austin, Texas markets. The decline in aggregate volumes in British Columbia is a result of a large sand river project in 2015 that has been completed. In Austin, Texas, a new aggressive competitor contributed to the decrease in our paving and related services revenue, in addition to the upstream aggregate and asphalt products. Aggregates pricing improved across our markets and would have been greater, absent the effect from the U.S./Canadian exchange rate. The U.S. dollar was stronger as compared to the Canadian dollar in the six months ended July 2, 2016 compared to the six months ended June 27, 2015. Absent the effect of foreign currency fluctuations, aggregates pricing would have increased 9.8% in the six months ended July 2, 2016.

        Our cement volumes increased as a result of the July 2015 acquisition of the Davenport Assets and prices increased as a result of an improved market.

57


Table of Contents

        The increase in ready-mix concrete volumes was primarily as result of the 2015 and 2016 acquisitions and pricing generally increased by mid-single digit percentages in the organic operations, but was affected by the geographic mix as ready-mix concrete producers acquired in 2015 were in lower-priced markets.

        The decline in asphalt volumes in the six months ended July 2, 2016 from the six months ended June 27, 2015 occurred in the Austin, Texas and Wichita, Kansas markets, offset by increases in the north Texas and Utah markets, as well as from the 2015 and 2016 acquisitions. Absent the Austin, Texas market, asphalt volumes increased 5.6% in the same period primarily as a result of the 2015 and 2016 acquisitions. The decrease in Wichita, Kansas was primarily due to a shift in state work away from asphalt paving in that market. Asphalt pricing increased primarily due to product mix and a geographic shift to higher-priced markets, partially offset by lower input prices. Prior to eliminations, the net effect of these volume and pricing changes on gross revenue in the six months ended July 2, 2016 was approximately $81.4 million and $16.1 million, respectively.

        Operating income increased $33.9 million in the six months ended July 2, 2016 and Adjusted EBITDA improved $46.3 million. For the six months ended July 2, 2016 operating margin improved from (3.3)% to 2.8%, which was attributable to the following:

Operating margin—2015

    (3.3 )%

Other

    6.1 %

Operating margin—2016

    2.8 %

(1)
In conjunction with our March 2015 IPO, we recognized a $14.5 million charge on the modification of our share-based awards and a $13.8 million charge on the termination of a management fee agreement with Blackstone. The management fee agreement was terminated on March 17, 2015. In the six months ended July 2, 2016, we recognized a $24.8 million stock-based compensation charge in general and administrative costs associated with certain LP Units converted and options granted at the time of the IPO for which the performance metrics were deemed probable of occurring was recognized in the second quarter of 2016.

(2)
The remaining improvement in operating margin primarily resulted from improved pricing across our lines of business, volume growth, continued focus on cost management and a continued shift in total product mix toward materials and products.

Other Financial Information

Loss on Debt Financings

        In the six months ended June 27, 2015, we recognized a $31.7 million loss on debt financings related to the March 2015 amendment to the credit agreement and the April 2015 $288.2 redemption of 2020 Notes. On March 11, 2015, the Company entered into Amendment No. 3 to the Credit Agreement, which became effective on March 17, 2015 upon the consummation of the IPO. The amendment, among other things: (i) increased the size of the revolving credit facility from $150.0 million to $235.0 million; (ii) extended the maturity date of the revolving credit facility to March 11, 2020; (iii) amended certain covenants; and (iv) permits periodic tax distributions. In April 2015, using proceeds from the IPO, $288.2 million aggregate principal amount of the outstanding 2020 Notes were redeemed at a price equal to par plus an applicable premium. As a result of the redemption, a net charge of $31.3 million was recognized, which was composed of $38.2 million for the applicable prepayment premium and $4.7 million for the write-off of deferred financing fees, which was partially offset by an $11.6 million net benefit from the write-off the original issuance premium and discount.

58


Table of Contents

Segment results of operations

    West Segment

 
  Six months ended  
($ in thousands)
  July 2, 2016   June 27, 2015   Variance  

Net Revenue

  $ 322,821   $ 303,019     6.5 %

Operating income

    31,348     26,935     16.4 %

Operating margin

    9.7 %   8.9 %      

Adjusted EBITDA

  $ 63,864     51,690     23.6 %

        Net revenue in the West segment increased approximately 6.5% in the six months ended July 2, 2016 due primarily to growth from the 2015 and 2016 acquisitions and increased activity in the north Texas and Utah markets, partially offset by a $9.6 million and $18.7 million decrease, respectively, at our Austin, Texas operations. Gross revenue by product/service was as follows:

 
  Six months ended  
(in thousands)
  July 2, 2016   July 27, 2016   Variance  

Revenue by product:*

                   

Aggregates

  $ 75,177   $ 71,177   $ 4,000  

Ready-mix concrete

    135,951     124,031     11,920  

Asphalt

    73,974     71,294     2,680  

Paving and related services

    120,564     111,719     8,845  

Other

    (55,672 )   (42,479 )   (13,193 )

Total revenue

  $ 349,994   $ 335,742   $ 14,252  

*
Revenue by product includes intercompany and intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other. Revenue from the liquid asphalt terminals is included in asphalt revenue.

        Gross revenue for paving and related services increased by $8.8 million in the six months ended July 2, 2016 primarily due to increased acquisition revenue. The West segment's percent changes in sales volumes and pricing in the six months ended July 2, 2016 from the six months ended June 27, 2015 were as follows:

 
  Percentage
change in
 
 
  Volume   Pricing  

Aggregates

    (3.9 )%   9.9 %

Ready-mix concrete

    8.3 %   1.2 %

Asphalt

    8.1 %   1.3 %

        The decline in aggregates volumes was primarily in the British Columbia and Austin, Texas markets, partially offset by volume increases from the 2015 and 2016 acquisitions. Aggregates pricing improved across our markets and would have been greater, absent the effect from the U.S./Canadian exchange rate. The U.S. dollar was stronger as compared to the Canadian dollar in the six months ended July 2, 2016 compared to the six months ended June 27, 2015.

        Absent the effect of foreign currency fluctuations, aggregates pricing would have increased 11.3% in the six months ended July 2, 2016.

        The increase in ready-mix concrete volumes was primarily as result of the 2015 and 2016 acquisitions and pricing generally increased by mid-single digit percentages in the organic operations,

59


Table of Contents

but was affected by the geographic mix as ready-mix concrete producers acquired in 2015 were in lower-priced markets.

        The increase in asphalt volumes was due to improvements in the north Texas and Utah markets, as well as from the 2015 and 2016 acquisitions, partially offset by a decrease in asphalt volumes in Austin, Texas. Asphalt pricing was generally consistent with the prior year periods despite lower input costs, as they were offset by pricing improvements due to product mix and a geographic shift to higher-priced markets. Prior to eliminations of intercompany transactions, the net effect of volume and pricing changes on gross revenue in the six months ended July 2, 2016 was approximately $10.7 million and $7.9 million, respectively.

        The West segment's operating income increased $4.4 million in the six months ended July 2, 2016 and Adjusted EBITDA improved $12.2 million. The Adjusted EBITDA improvement was primarily driven by the 2015 and 2016 acquisitions of Sierra, Lewis & Lewis and LeGrand and improvement in our north Texas and Utah operations, partially offset by a decline in the Austin, Texas operations. Operating margin improved in the six months ended July 2, 2016 from 8.9% to 9.7%, which was attributable to the following:

Operating margin—2015

    8.9 %

Gross margin(1)

    3.0 %

Depreciation, depletion, amortization and accretion

    (1.8 )%

Other

    (0.4 )%

Operating margin—2016

    9.7 %

(1)
The gross margin improvement in the West segment was primarily a result of improved volume and pricing in our north Texas market primarily due to increased state highway spend and a shift in product mix, improved volumes in our Utah market due to acquisition and organic growth, partially offset by a decline in our Austin, Texas market.

    East Segment

 
  Six months ended  
(in thousands)
  July 2, 2016   June 27, 2015   Variance  

Net revenue

  $ 184,249   $ 152,944     20.5 %

Operating income

    14,832     6,319     134.7 %

Operating margin

    8.0 %   4.1 %      

Adjusted EBITDA

    38,847     26,081     48.9 %

        The East segment's net revenue increased 20.5% in the six months ended July 2, 2016, due primarily to acquisitions and organic growth. Incremental net revenue from acquisitions totaled

60


Table of Contents

$39.7 million in the six months ended July 2, 2016 and organic net revenue decreased $8.4 million. Gross revenue by product/service was as follows:

 
  Six months ended  
(in thousands)
  July 2, 2016   June 27, 2015   Variance  

Revenue by product:*

                   

Aggregates

  $ 86,886   $ 61,089   $ 25,797  

Ready-mix concrete

  $ 41,657   $ 35,366   $ 6,291  

Asphalt

    22,503     34,949     (12,446 )

Paving and related services

    58,501     69,510     (11,009 )

Other

    507     (25,911 )   26,418  

Total revenue

  $ 210,054   $ 175,003   $ 35,051  

*
Revenue by product includes intercompany and intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other. Revenue from the liquid asphalt terminals is included in asphalt revenue.

        The $11.0 million decrease in the six months ended July 2, 2016 in paving and related services was primarily a result of our exit of grading operations in Kentucky and a decrease in Wichita, Kansas, which was primarily due to a shift in state work away from asphalt paving in that market. The East segment's percent changes in sales volumes and pricing in the six months ended July 2, 2016 from the six months ended June 27, 2015 were as follows:

 
  Percentage
change in
 
 
  Volume   Pricing  

Aggregates

    34.6 %   5.7 %

Ready-mix concrete

    14.3 %   3.0 %

Asphalt

    (28.8 )%   (1.5 )%

        Aggregate volumes in the six months ended July 2, 2016 increased 34.6%, primarily as a result of the AMC, Boxley, and Oldcastle Assets acquisitions on February 5, 2016, March 18, 2016, and May 20, 2016, respectively. Aggregates pricing increased as a result of an improved market and shift in product mix. Ready-mix concrete volumes improved in Kansas and Missouri and pricing generally increased across the East region's markets.

        The decrease in asphalt volumes was driven by the shift in the Wichita, Kansas market and pricing decreased due to lower input costs. Prior to eliminations of intercompany transactions, the net effect of volume and pricing changes on gross revenue in the six months ended July 2, 2016 was approximately $16.0 million and $3.6 million, respectively.

61


Table of Contents

        The East segment's operating income increased $8.5 million in the six months ended July 2, 2016 and Adjusted EBITDA increased $12.8 million. Operating margin for the six months ended July 2, 2016 improved from 4.1% to 8.0%, which was attributable to the following:

Operating margin—2015

    4.1 %

Gross margin(1)

    3.1 %

General and administrative

    0.7 %

Other

    0.1 %

Operating margin—2016

    8.0 %

(1)
The operating margin improvement in the East segment was partially due to a shift in product mix, increased organic volumes and price improvements across the segment's markets. As shown in the table above, gross revenue from aggregates was 41.4% of the East segment's total gross revenue in the six months ended July 2, 2016, compared to 34.9% in the six months ended June 27, 2015. Gross revenue from paving and related services, which generally has lower operating margins than materials and products, was 27.9% of total gross revenue in the six months ended July 2, 2016, compared to 39.7% in the six months ended June 27, 2015. Our business includes a significant amount of fixed costs and, as a result, volume growth across the East segment's lines of business resulted in an improvement in gross margin.

    Cement Segment

 
  Six months ended  
(in thousands)
  July 2, 2016   June 27, 2015   Variance  

Net revenue

  $ 113,605   $ 48,185     135.8 %

Operating income

    24,000     3,850     523.4 %

Operating margin

    21.1 %   8.0 %      

Adjusted EBITDA

    38,564     12,343     212.4 %

        Net revenue in the Cement segment increased $65.4 million in the six months ended July 2, 2016, primarily as a result of the acquisition of the Davenport Assets in July 2015. However, a significant portion of the 135.8% increase in Cement revenue in the six months ended July 2, 2016 is estimated to be a result of the acquisition of the Davenport Assets in July 2015. Gross revenue by product was as follows:

 
  Six months ended  
(in thousands)
  July 2,
2016
  June 27,
2015
  Variance  

Revenue by product:*

                   

Cement

    101,222     41,996     59,226  

Other

    12,383     6,189     6,194  

Total revenue

  $ 113,605   $ 48,185   $ 65,420  

*
Revenue by product includes intercompany and intracompany sales transferred at market value. Revenue from waste processing and the elimination of intracompany transactions is included in Other.

62


Table of Contents

        The Cement segment's percent changes in sales volumes and pricing in the six months ended July 2, 2016 from the six months ended June 27, 2015 were as follows:

 
  Percentage
change in
 
 
  Volume   Pricing  

Cement

    119.3 %   10.1  

        For the six months ended July 2, 2016, cement volumes and pricing increased primarily as a result of the acquisition of the Davenport Assets. With the acquisition of the Davenport Assets, we expanded our markets from Minnesota to Louisiana, which included higher-priced markets than St. Louis and Hannibal, Missouri. The net effect of volume and pricing changes on gross revenue in the six months ended July 2, 2016 was approximately $54.6 million and $4.6 million, respectively.

        The Cement segment's operating income increased $20.2 million in the six months ended July 2, 2016 and Adjusted EBITDA improved $26.2 million. Operating margin for the six months ended July 2, 2016 increased from 8.0% to 21.1%, primarily attributable to pricing improvements and operational efficiencies. The operational efficiencies have been driven by a reduction in unscheduled downtime and improved cost management and production processes.

Fiscal Year 2015 Compared to 2014

($ in thousands)
  2015   2014   Variance  

Net Revenue

  $ 1,289,966   $ 1,070,605   $ 219,361     20.5 %

Operating income

    134,641     69,959     64,682     92.5 %

Operating margin

    10.4 %   6.5 %            

Adjusted EBITDA

  $ 287,528   $ 189,033   $ 98,495     52.1 %

        Net revenue increased $219.4 million during the year ended January 2, 2016 driven by a $57.5 million increase in aggregate net revenue, $85.8 million in cement and $94.2 million from products, which was partially offset by an $18.1 million decrease in service revenue. Volumes in our aggregates, cement and ready-mix concrete lines of business all improved from both acquisitions and organic growth. Organic growth is defined as incremental revenue that was not derived from acquisitions.

        In the West segment, revenue from organic growth was $25.1 million from acquisitions. The Davenport Assets acquired in July 2015 were immediately integrated with our existing cement operations such that it is impracticable to bifurcate the $89.9 million increase in cement revenue between organic and acquisition growth. However, a significant portion of the 85.2% increase in Cement revenue is estimated to be a result of the acquisition of the Davenport Assets in July 2015.

        As a vertically-integrated company, we include intercompany sales from materials to products and from products to services when assessing the operating results of our business. We refer to revenue

63


Table of Contents

inclusive of intercompany sales as gross revenue. These intercompany transactions are eliminated in the consolidated financial statements. Gross revenue by line of business was as follows:

(in thousands)
  2015   2014   Variance  

Revenue by product:*

                   

Aggregates

  $ 296,960   $ 227,885   $ 69,075  

Cement

    181,901     94,402     87,499  

Ready-mix concrete

    350,554     274,970     75,584  

Asphalt

    292,193     278,867     13,326  

Paving and related services

    504,459     530,297     (25,838 )

Other

    (193,770 )   (202,190 )   8,420  

Total revenue

  $ 1,432,297   $ 1,204,231   $ 228,066  

*
Revenue by product includes intercompany and intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other. Revenue from the liquid asphalt terminals is included in asphalt revenue.

        Gross revenue for paving and related services decreased $25.8 million for the year ended January 2, 2016, primarily as a result of decreased activity in Kansas, our exit of grading operations in Kentucky, weather delays on jobs in Texas, partially offset by increased activity in Utah. Detail of our volumes and average selling prices by product for the years ended January 2, 2016 and December 27, 2014 were as follows:

 
  2015   2014   Percentage Change to  
 
  Volume(1)   Pricing(2)   Volume(1)   Pricing(2)   Volume(1)   Pricing(2)  

Aggregates

    32,297   $ 9.19     25,413   $ 8.97     27.1 %   2.5 %

Cement

    1,733     104.94     1,049     90.01     65.2 %   16.6 %

Ready-mix concrete

    3,406     102.92     2,814     97.72     21.0 %   5.3 %

Asphalt

    4,359     57.67     4,271     55.62     2.1 %   3.7 %

(1)
Volumes are shown in tons for aggregates, cement and asphalt and in cubic yards for ready-mix concrete

(2)
Pricing is shown on a per ton basis for aggregates, cement and asphalt and on a per cubic yard basis for ready-mix concrete.

        Aggregate volumes increased in each of our five key states, Texas, Kansas, Utah, Missouri and Kansas as well as at our operations in British Columbia, Canada, which was acquired in September 2014. All of the 2014 and 2015 acquisitions in the West and East segments contributed to the growth in aggregate volumes. Aggregates pricing improved 2.5% despite the effects from the U.S./Canadian exchange rate. Absent the effect of foreign currency fluctuations, aggregates pricing would have increased 3.9% for the year ended January 2, 2016.

        Our cement volumes increased as a result of the July 2015 acquisition of the Davenport Assets and prices increased as a result of an improved market and a higher proportion of sales to low-volume customers. Ready-mix concrete volumes were positively affected by the 2014 acquisitions in Texas and, to a lesser extent, in Kansas, and prices increased as a result of the improved cement pricing. Asphalt volumes and prices increased from the comparable periods. In 2014, asphalt volumes included a higher percentage of base materials, which is thicker than intermediate or surface mix and has a lower selling price per ton. The increased pricing was largely due to a shift in product mix. Prior to eliminations of intercompany transactions, the net effect of volume and pricing changes on gross revenue in 2015 was approximately $196.1 million and $49.4 million, respectively.

64


Table of Contents

        Operating margin for the year ended January 2, 2016 increased from 6.5% to 10.4%, which was attributable to the following:

Operating margin—2014

    6.5 %

IPO Costs(1)

    (2.2 )%

Gross margin(2)

    4.6 %

Gain (loss) on asset disposals(3)

    2.4 %

Other

    (0.9 )%

Operating margin—2015

    10.4 %

(1)
In conjunction with our March 2015 IPO, we recognized a $14.5 million charge on the modification of our share-based awards and a $13.8 million charge on the termination of a management fee agreement with our Sponsors. The management fee agreement was terminated on March 17, 2015

(2)
As noted above, gross margin improved primarily due to a shift in product mix. Our acquisitions in 2015 and 2014 were primarily materials and products businesses. As a result, and as shown in the table below, aggregates, cement and ready-mix concrete revenue represented 20.7%, 12.7% and 24.5%, respectively, of gross revenue during the year ended January 2, 2016 compared to 18.9%, 7.8% and 22.8%, respectively, during the year ended December 27, 2014. Gross revenue from paving and related services which generally has lower operating margins than materials and products, was 35.2% of total gross revenue during the year ended January 2, 2016 compared to 44.0% during the year ended December 27, 2014. In addition, through effective use of our purchase commitments and a year on year decline in prices, our costs associated with liquid asphalt and energy decreased $13.8 million in the year ended January 2, 2016 as compared to the year ended December 27, 2014, taking into consideration organic and acquisition-related volume increases.

(3)
In the year ended January 2, 2016, we recognized a net $23.1 million gain on asset disposals compared to a net $6.5 million loss in the year ended December 27, 2014. Included in the 2015 amount was a $16.6 million gain on the cement terminal and related assets in Bettendorf, Iowa, which were part of the purchase consideration paid to acquire the Davenport Assets.

Other Financial Information

Loss on Debt Financings

        In the year ended January 2, 2016, we recognized $71.6 million of losses associated with the: (1) March 2015 amendment to the credit agreement; (2) April 2015 $288.2 million redemption of 2020 Notes; (3) August 2015 term loan refinancing, $350.0 million issuance of 2023 notes and $183.0 million redemption of 2020 Notes; and (4) November 2015 $153.8 million redemption of 2020 Notes. The write-off of deferred financings fees and original issuance discounts and premiums and the incurrence of prepayment premiums, all associated with the redemption of the 2020 Notes, are included in the loss on debt financings.

    Income Tax Benefit

        The income tax benefit increased $18.3 million for the year ended January 2, 2016, reflective of the tax benefit associated with the loss on debt financings that was recognized in our C corporations.

65


Table of Contents

Segment Results of Operations

    West Segment

($ in thousands)
  2015   2014   Variance  

Net Revenue

  $ 719,485   $ 608,671   $ 110,814     18.2 %

Operating income

    96,498     61,882     34,616     55.9 %

Operating margin

    13.4 %   10.2 %            

Adjusted EBITDA

  $ 150,764   $ 102,272   $ 48,492     47.4 %

        Net revenue in the West segment increased approximately 18.2% in 2015 due to both acquisitions and organic growth. Incremental net revenue from acquisitions totaled $85.7 million in 2015 and organic net revenue increased $25.1 million. Gross revenue by product/service was as follows:

(in thousands)
  2015   2014   Variance  

Revenue by product:*

                   

Aggregates

  $ 156,873   $ 105,178   $ 51,695  

Ready-mix concrete

    266,210     213,587     52,623  

Asphalt

    194,155     168,227     25,928  

Paving and related services

    315,573     296,186     19,387  

Other

    (128,308 )   (117,462 )   (10,846 )

Total revenue

  $ 804,503   $ 665,716   $ 138,787  

*
Revenue by product includes intercompany and intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other. Revenue from the liquid asphalt terminals is included in asphalt revenue.

        Gross revenue for paving and related services increased $19.4 million in 2015, which was primarily a result of increased activity in Utah, partially offset by weather delays in Texas. The West segment's percent changes in sales volumes and pricing in 2015 from 2014 were as follows:

 
  Percentage
change in
 
 
  Volume   Pricing  

Aggregates

    43.0 %   4.2 %

Ready-mix concrete

    17.2 %   6.3 %