EX-99.1 2 d622250dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

Summit Materials

November 5, 2013

Summit Materials, LLC Reports Third Quarter 2013 Results

 

    Operating income increases 14.0% to $37.9 million

 

    Operating margin improves 160 bps to 12.0%

 

    $6.0 million increase in Adjusted EBITDA to $57.6 million

DENVER, CO - Summit Materials, LLC today reported financial results for the quarter ended September 28, 2013. Notable items for the quarter include (all comparisons, unless noted, are with the prior year’s third quarter):

 

    Revenue of $316.3 million, slight decline of 0.9%.

 

    Operating earnings up 14.0% driven by improved pricing and completion of low margin projects.

 

    Year-to-date pricing increased for aggregates, asphalt and ready-mixed concrete products, 3.6%, 4.9% and 4.1%, respectively, compared to the nine months ended September 29, 2012.

 

    Year-to-date aggregate and cement volumes increased 1.67% and 5.1%, respectively, while volumes declined among asphalt products 15.2%, compared to the nine months ended September 29, 2012.

Tom Hill, the CEO of Summit Materials, stated, “This quarter our aggregate, ready-mixed concrete and cement product pricing gained momentum in many of our key markets in Texas, Missouri and Kansas. Weather conditions were more favorable as compared to the first half of this year and we saw signs of improvement in several of our major residential and private non-residential markets.”

Third Quarter 2013 Financial Results Compared to Third Quarter 2012

Hill continued, “Although we experienced some wet weather at the start of the third quarter, conditions improved and we were able to achieve a modest improvement in product revenue of $3.6 million, or 1.7%, compared to last year. Operating earnings improved by $4.6 million and Adjusted EBITDA increased by $6.0 million due to a focus on higher margin projects. Heading into the end of the year, our backlog remains healthy. Our aggregate backlog is 38% higher than at this point last year and our ready-mixed concrete and paving and construction backlogs have all increased.”

Central Region Results

The Central Region’s revenue increased 18.4% due to higher volumes across its products and pricing improvements in aggregates and ready-mixed concrete. Adjusted EBITDA improved by $8.2 million due to increased volumes and reduced stripping costs.

West Region Results

The West Region’s revenue declined 17.7% due to a reduction in grading and structural projects. Despite the reduction in sales, Adjusted EBITDA in the West Region increased $1.9 million. This was primarily driven by improved margins on aggregates, asphalt and ready-mixed concrete and improved performance in the Texas construction services business.


East Region Results

The East Region’s revenue increased 20.6%, while Adjusted EBITDA decreased $1.0 million this quarter. This region saw growth in aggregate and asphalt volumes, which led to the increased revenue. The $1.0 million decrease in Adjusted EBITDA is a result of lower asphalt pricing during the quarter due to product mix.

Liquidity and Capital Resources

Our primary sources of liquidity include cash on-hand, cash provided by our operations and amounts available for borrowing under our credit facilities. As of September 28, 2013, we had $19.2 million in cash and working capital of $140.8 million as compared to cash and working capital of $27.4 million and $114.4 million, respectively, at December 29, 2012. We calculate working capital as current assets less current liabilities, excluding the current portion of long term debt and outstanding borrowings on our revolving credit facility. Our remaining borrowing capacity on our revolving credit facility, net of $18.3 million of outstanding letters of credit, as of September 28, 2013 was $47.7 million.

Given the seasonality of our business, we typically experience significant fluctuations in working capital needs and balances throughout the year; these amounts are converted to cash as our operating cycle is completed each fiscal year. Our working capital requirements generally increase during the first half of the year as we buildup inventory and focus on repair and maintenance and other set up costs for the upcoming season. Working capital levels then decrease as we wind down the construction season and enter the winter months, which is when we see significant inflows of cash from the collection of receivables during the peak months of the season.

Free cash flow utilization, a non-GAAP measure defined as operating cash outflow less net capital expenditures, was $44.9 million and $44.4 million in the nine month periods ended September 28, 2013 and September 29, 2012, respectively. Free cash flow in 2013, as compared to 2012, was affected by improved working capital management, which was used to pay an additional $9.8 million of interest payments related to the timing and terms of our January 2012 refinancing and increased investment of $12.4 million in capital projects. In 2013, we have continued to develop an underground mine and storage dome at our cement plant in Hannibal, Missouri and are bringing a new hot mix asphalt plant on-line in Austin, Texas.

Our growth strategy contemplates future acquisitions for which we believe we have access to sufficient capital through committed funds from our sponsors, Blackstone Capital Partners V L.P. and Silverhawk Summit, L.P., and our borrowing capacity.

About Summit Materials, LLC

We are a leading, vertically-integrated, geographically-diverse heavy-side building materials company. We supply aggregates, cement and related downstream products such as ready-mixed concrete, asphalt paving mix, concrete products and paving and related construction services to a variety of end-uses in the U.S. construction industry, including public infrastructure projects, as well as private residential and non-residential construction. Summit has executed 27 transactions since 2009. Our nine operating companies make up our three distinct geographic regions that span 20 states and 23 metropolitan statistical areas.

For more information about Summit Materials, LLC refer to the Company’s website at http://www.summit-materials.com. The information contained on our website is not incorporated herein by reference.

Conference Call Information

The Company will conduct a conference call at 11:00 a.m. Eastern Time (9:00 a.m. Mountain Time) on Wednesday, November 6, 2013. Interested parties may access this event by webcast (listen only) https://viavid.webcasts.com/starthere.jsp?ei=1025135.


For those investors without online web access, the conference call may be accessed at:

 

Conference ID:    4648502   
Domestic:    1-877-941-1429   
International:    1-480-629-9857   

Non-GAAP Financial Measures

Our chief operating decision maker evaluates the performance of our segments and allocates resources to them based on several factors including a measure we call segment profit, or Adjusted EBITDA by segment. We define Adjusted EBITDA as net income (loss) before loss from discontinued operations, income tax expense (benefit), interest expense and depreciation, depletion, amortization and accretion. Accretion expense is recognized on our asset retirement obligations and reflects the time value of money. Given that accretion is similar in nature to interest expense, it is treated consistently with interest expense in determining Adjusted EBITDA. Adjusted EBITDA is determined before considering the loss from discontinued operations as results from discontinued operations is not viewed by management as part of our core business when management assesses the performance of our segments or allocation of resources. Therefore, it is not included in Adjusted EBITDA.

Our chief operating decision maker also considers our free cash flow as a measure of operating performance. We define free cash flow as net cash provided by (used for) operating activities less purchases of property, plant and equipment.

Adjusted EBITDA and free cash flow reflect additional ways of viewing aspects of our business that, when viewed with our GAAP results and the accompanying reconciliations to GAAP financial measures included in the tables attached to this press release, may provide a more complete understanding of factors and trends affecting our business. However, it should not be construed as being more important than other comparable GAAP measures and must be considered in conjunction with the GAAP measures. In addition, 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 financial statements in their entirety and not rely on any single financial measure.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “plans,” “estimates,” “projects” or “anticipates” or similar expressions that concern our strategy, plans or intentions. Any and all statements made relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, sales volumes and financial results are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect our actual results.

In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. Important factors could affect our results and could cause results to differ materially from those expressed in our forward-looking statements, including but not limited to the factors discussed in the section entitled “Risk Factors” in our prospectus dated June 10, 2013 (the “Prospectus”), filed with the Securities and Exchange Commission (the “SEC”) in accordance with Rule 424(b) of the Securities Act of 1933, as amended, on June 10, 2013 and other filings with the SEC.

All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements.

We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands)

 

     September 28,     December 29,  
     2013     2012  
     (unaudited)     (audited)  
Assets     

Current assets:

    

Cash

   $ 19,207     $ 27,431  

Accounts receivable, net

     127,036       100,298  

Costs and estimated earnings in excess of billings

     32,504       11,575  

Inventories

     96,231       92,977  

Other current assets

     16,168       10,068  
  

 

 

   

 

 

 

Total current assets

     291,146       242,349  

Property, plant and equipment, less accumulated depreciation, depletion and amortization (September 28, 2013 - $199,061 and December 29, 2012 - $156,313)

     844,175       813,607  

Goodwill

     195,240       179,120  

Intangible assets, less accumulated amortization (September 28, 2013 - $1,393 and December 29, 2012 - $1,354)

     15,238       8,606  

Other assets

     37,575       37,531  
  

 

 

   

 

 

 

Total assets

   $ 1,383,374     $ 1,281,213  
  

 

 

   

 

 

 
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest     

Current liabilities:

    

Current portion of debt

   $ 88,220     $ 4,000  

Current portion of acquisition-related liabilities

     10,533       9,525  

Accounts payable

     77,725       61,634  

Accrued expenses

     57,418       49,822  

Billings in excess of costs and estimated earnings

     4,655       6,926  
  

 

 

   

 

 

 

Total current liabilities

     238,551       131,907  

Long-term debt

     659,498       635,843  

Acquisition-related liabilities

     27,990       23,919  

Other noncurrent liabilities

     83,531       84,266  
  

 

 

   

 

 

 

Total liabilities

     1,009,570       875,935  
  

 

 

   

 

 

 

Redeemable noncontrolling interest

     23,300        22,850  

Member’s interest:

    

Member’s equity

     486,327        484,584  

Accumulated deficit

     (127,898     (94,085 )

Accumulated other comprehensive loss

     (9,130     (9,130 )
  

 

 

   

 

 

 

Member’s interest

     349,299        381,369  

Noncontrolling interest

     1,205        1,059  
  

 

 

   

 

 

 

Total member’s interest

     350,504        382,428  
  

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

   $ 1,383,374     $ 1,281,213  
  

 

 

   

 

 

 


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

(In thousands)

 

     Three Months Ended     Nine Months Ended  
     September 28,     September 29,     September 28,     September 29,  
     2013     2012     2013     2012  

Revenue:

        

Product

   $ 210,162      $ 206,558        447,343      $ 440,554   

Service

     106,101        112,623        230,591        254,066   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     316,263        319,181        677,934        694,620   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue (excluding items shown separately below):

        

Product

     145,605        150,807        327,536        337,774   

Service

     79,678        88,372        175,662        206,948   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     225,283        239,179        503,198        544,722   
  

 

 

   

 

 

   

 

 

   

 

 

 

General and administrative expenses

     33,822        29,269        107,219        95,186   

Depreciation, depletion, amortization and accretion

     18,552        17,251        54,577        50,854   

Transaction costs

     711        233        3,175        1,765   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     37,895        33,249        9,765        2,093   

Other income, net

     (1,151     (1,232     (988     (291

Loss on debt financings

     —          85        3,115        8,245   

Interest expense

     14,531        14,591        42,380        43,417   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before taxes

     24,515        19,805        (34,742     (49,278

Income tax expense (benefit)

     1,565        149        (1,782     (1,814
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     22,950        19,656        (32,960     (47,464

Loss from discontinued operations

     (160     (1,287     (257     (3,011
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     22,790        18,369        (33,217     (50,475

Net income attributable to noncontrolling interest

     2,623        1,099        1,105        580   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to member of Summit Materials, LLC

   $ 20,167      $ 17,270        (34,322   $ (51,055
  

 

 

   

 

 

   

 

 

   

 

 

 


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

(In thousands)

 

     Nine months ended  
     September 28,     September 29,  
     2013     2012  

Cash flow from operating activities:

    

Net loss

   $ (33,217   $ (50,475

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

    

Depreciation, depletion, amortization and accretion

     59,275        56,129   

Share-based compensation expense

     1,743        2,149   

Deferred income tax benefit

     (2,685     (854

Net loss on property, plant and equipment disposals

     7,709        977   

Loss on debt financings

     2,989        8,245   

Other

     (79     472   

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

    

Account receivable

     (18,797     (39,326

Inventories

     700        (4,347

Costs and estimated earnings in excess of billings

     (21,836     (17,565

Other current assets

     (1,046     (4,260

Other assets

     (800     2,596   

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

    

Accounts payable

     10,919        18,865   

Accrued expenses

     (1,020     13,844   

Billings in excess of costs and estimated earnings

     (2,421     1,201   

Other liabilities

     (1,311     494   
  

 

 

   

 

 

 

Net cash provided by (used for) operating activities

     123        (11,855
  

 

 

   

 

 

 

Cash flow from investing activities:

    

Acquisitions, net of cash acquired

     (60,913     (42,933

Purchases of property, plant and equipment

     (53,659     (36,812

Proceeds from the sale of property, plant and equipment

     8,642        4,244   

Other

     —          69   
  

 

 

   

 

 

 

Net cash used for investing activities

     (105,930     (75,432
  

 

 

   

 

 

 

Cash flow from financing activities:

    

Net proceeds from debt issuance

     214,390        248,300   

Payments on long-term debt

     (111,884     (177,892

Payments on acquisition-related liabilities

     (4,923     (4,067

Other

     —          (701
  

 

 

   

 

 

 

Net cash provided by financing activities

     97,583        65,640   
  

 

 

   

 

 

 

Net decrease in cash

     (8,224     (21,647

Cash – beginning of period

     27,431        42,790   
  

 

 

   

 

 

 

Cash – end of period

   $ 19,207      $ 21,143   
  

 

 

   

 

 

 


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Financial Highlights

(In thousands)

 

     Three months ended     Nine months ended  
     September 28,     September 29,     September 28,     September 29,  
     2013     2012     2013     2012  

Revenue by product:*

        

Aggregates

   $ 51,454      $ 44,446      $ 119,757      $ 111,127   

Asphalt

     87,277        99,981        162,485        182,147   

Ready-mixed concrete

     36,035        31,035        82,447        77,572   

Cement

     28,245        25,799        59,160        57,176   

Construction and paving

     171,399        189,417        343,346        373,504   

Other

     (58,147     (71,497     (89,261     (106,906
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

   $ 316,263      $ 319,181      $ 677,934      $ 694,620   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* Revenue by product includes intracompany sales transferred at market value. The elimination of intracompany transactions is included in Other.

 

     Three months ended      Nine months ended  
     September 28,      September 29,      September 28,      September 29,  
     2013      2012      2013      2012  

Revenue:

           

Central region

   $ 115,527       $ 97,580       $ 244,207       $ 226,077   

West region

     142,921         173,642         322,640         369,767   

East region

     57,815         47,959         111,087         98,776   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenue

   $ 316,263       $ 319,181       $ 677,934       $ 694,620   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Nine Months Ended
September 28, 2013
     Nine Months Ended
September 29, 2012
     Percentage Change in  
     Volume (1)
(in thousands)
     Average Selling
Price (2)
     Volume (1)
(in thousands)
     Average Selling
Price (2)
     Volume     Average Selling
Price
 

Aggregates

     13,092       $ 8.89         12,884       $ 8.58         1.6     3.6

Asphalt

     2,919         55.42         3,442         52.85         (15.2 %)      4.9

Ready-mixed concrete

     883         93.15         850         89.48         3.9     4.1

 

(1) Volumes are shown in tons for aggregatess and asphalt and in cubic yards for ready-mixed concrete.
(2) Average selling prices are shown on a per ton basis for aggregatess and asphalt and on a per cubic yard basis for ready-mixed concrete.


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Reconciliations of Non-GAAP Financial Measures

(In thousands)

The tables below reconcile our net income (loss) to Adjusted EBITDA and presents Adjusted EBITDA by segment for the three and nine month periods ended September 28, 2013 and September 29, 2012.

 

     Three Months Ended     Nine Months Ended  
     September 28,     September 29,     September 28,     September 29,  
     2013     2012     2013     2012  

Reconciliation of Net Income (Loss) to Adjusted EBITDA

        

(in thousands)

        

Net income (loss)

   $ 22,790      $ 18,369      $ (33,217   $ (50,475

Income tax expense (benefit)

     1,565        149        (1,782     (1,814

Interest expense

     14,531        14,591        42,380        43,417   

Depreciation, depletion and amortization

     18,367        17,110        54,040        50,464   

Accretion

     185        141        537        390   

Loss from discontinued operations

     160        1,287        257        3,011   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 57,598      $ 51,647      $ 62,215      $ 44,993   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA by Segment

        

(in thousands)

        

Central

   $ 30,710      $ 22,560      $ 49,892      $ 45,177   

West

     19,175        17,248        19,260        7,598   

East

     13,167        14,129        10,790        5,556   

Corporate

     (5,454     (2,290     (17,727     (13,338
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 57,598      $ 51,647      $ 62,215      $ 44,993   
  

 

 

   

 

 

   

 

 

   

 

 

 

The following table sets forth a reconciliation of free cash flow for the nine month periods ended September 28, 2013 and September 29, 2012.

 

     Nine Months Ended  
     September 28,     September 29,  
     2013     2012  

(in thousands)

    

Net loss

   $ (33,217   $ (50,475

Non- cash items

     68,952        67,118   
  

 

 

   

 

 

 

Net loss adjusted for non-cash items

     35,735        16,643   

Change in working capital accounts

     (35,612     (28,498
  

 

 

   

 

 

 

Net cash provided by (used for) operating activities

     123        (11,855

Capital expenditures, net of asset sales

     (45,017     (32,568
  

 

 

   

 

 

 

Free cash flow

   $ (44,894   $ (44,423
  

 

 

   

 

 

 


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Reconciliations of Non-GAAP Financial Measures

(In thousands)

The following table presents a reconciliation of net income to Pro Forma Adjusted EBITDA for the twelve months ended September 28, 2013.

 

(in thousands)    Twelve Months ended
September 28, 2013
 

Net loss

   $ (33,319

Interest expense

     57,042   

Income tax expense

     (3,888

Depreciation, depletion, amortization and accretion expense

     72,013   
  

 

 

 

EBITDA

   $ 91,848   
  

 

 

 

EBITDA for certain acquisitions

     (291

Discontinued operations

     147   

Gain on revaluation of contingent consideration

     (409

Transaction expenses

     3,458   

Monitoring fees and expenses

     2,474   

Strategic fees and initiatives

     3,190   

Anticipated cost savings

     4,864   

Non-cash compensation

     2,127   

Deferred financing fees written off at re-financing

     4,340   

Loss on disposal and impairment of fixed assets

     8,157   

Severance and relocation costs

     3,630   

Other

     9,942   
  

 

 

 

Pro Forma Adjusted EBITDA

   $ 133,477   
  

 

 

 


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Financial Highlights

(In millions)

The following is a summary of our credit statistics:

 

($ in millions)    September 28, 2013     December 29, 2012  

Cash 

   $ 19.2      $ 27.4   
  

 

 

   

 

 

 

Debt

    

Revolving Credit Facility ($150M Capacity)

   $ 84.0      $ —     

Senior Secured Term Loan

     420.9        398.0   

Capital Leases

     7.8        3.1   

Other Debt

     2.5        0.6   
  

 

 

   

 

 

 

Total Senior Secured Debt

   $ 515.2      $ 401.7   

10.5 % Senior Notes

     250.0        250.0   
  

 

 

   

 

 

 

Total Debt

   $ 765.2      $ 651.7   

Leverage Ratio Calculations

    

Senior Secured Net Debt (1)

   $ 496.0      $ 374.3   

Total Net Debt(1)

   $ 746.0      $ 624.3   

Pro Forma LTM Adjusted EBITDA

   $ 133.5      $ 118.9   

Senior Secured Net Leverage(2)

     3.72     3.15

Covenant Senior Secured Net Leverage Limit

     4.75     4.75

Total Net Leverage(3)

     5.59     5.25

 

(1) Net of cash
(2) Calculated as the ratio of Senior Secured Net Debt to Pro Forma Adjusted EBITDA.
(3) Calculated as the ratio of Total Net Debt to Pro Forma Adjusted EBITDA.

Contact:     info@summit-materials.com

                  303-893-0012