EX-99.1 2 d689488dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Announces 2013 Fourth Quarter and Full Year Results

DENVER, Colorado (March 7, 2014) - Summit Materials, LLC today announced results for the quarter and year ended December 28, 2013.

Notable items for the quarter include (all comparisons are with the fourth quarter of 2012):

 

    Revenue increased 2.9% to $238.3 million.

 

    Aggregate and ready-mixed concrete volumes increased 14% and 28%, respectively. Cement and asphalt volumes decreased 28% and 9%, respectively.

 

    $68.2 million of goodwill impairment charges recognized. Excluding the goodwill impairment charge, operating earnings decreased $2.9 million.

Notable items for the year (all comparisons are with 2012):

 

    Product revenue increased $4.8 million; total revenue was slightly down by 1.1%.

 

    Aggregate and ready-mixed concrete volumes increased 5% and 9%, respectively, while cement and asphalt volumes declined 4% and 14%, respectively.

 

    Pricing increased for each of our product lines.

 

    $68.2 million of goodwill impairment charges recognized. Excluding the goodwill impairment charge, operating earnings improved $4.8 million.

2013 Financial Results Compared to 2012

Tom Hill, the CEO of Summit Materials, stated, “This year we were pleased with our performance. A safety-first culture helped us improve in each of our key safety metrics. We were able to achieve a slight improvement in product revenue of $4.8 million, or 0.8%, compared to last year. Excluding the fourth quarter goodwill impairment charges of $68.2 million, our operating earnings improved by $4.8 million. Adjusted EBITDA increased by $16.4 million from 2012. Our product pricing increased in many of our markets in Texas, Missouri, Kentucky and Kansas. As a result of our focus on lower-volume, higher-margin contracts, disciplined integration of strategic acquisitions in Kansas and Utah and a continued focus on costs, we enjoyed improved margins from 2012. Weather conditions in the first half of 2013 were not favorable; however, we have a strong backlog going into 2014, with our aggregates backlog 33% higher than at this point last year. In addition, we increased our footprint in Texas with our January acquisition of Alleyton Resources, an aggregates and ready-mixed concrete business in Houston that we believe is well-positioned to serve that growing market.”

Central Region Results

The Central Region’s revenue increased 9.1% due to higher aggregate, asphalt and ready-mixed concrete volumes and pricing improvements in aggregates, ready-mixed concrete and cement. Adjusted EBITDA improved by $7.2 million due to the revenue growth and reduced stripping costs.

West Region Results

The West Region’s revenue declined 12.1% due to a shift to lower-volume, higher-margin projects and a reduction in grading and structural projects. Despite the reduction in sales, Adjusted EBITDA in the West Region increased $14.2 million. This was primarily driven by improved margins on aggregates, asphalt and ready-mixed concrete and improved performance in the Texas construction services business.

 

1


East Region Results

The East Region’s revenue increased $21.2 million, while Adjusted EBITDA increased $4.4 million. This region saw growth in aggregate and asphalt volumes. The increase in Adjusted EBITDA was driven by increased aggregate pricing and various cost savings initiatives.

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 December 28, 2013, we had $14.9 million in cash and working capital of $85.4 million as compared to cash and working capital of $27.4 million and $114.4 million at December 29, 2012, respectively. We calculate working capital as current assets less current liabilities, excluding the current portion of long term debt and outstanding borrowings on our revolver facility. As of December 28, 2013, our remaining borrowing capacity on our senior secured revolving credit facility was $105.7 million, net of $18.3 million of outstanding letters of credit.

Given the seasonality of our business, we typically experience significant fluctuations in working capital needs and balances throughout the year. Our working capital requirements generally increase during the first half of the year as we build up 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.

Free cash outflow utilization, a non-GAAP measure defined as operating cash outflow less net capital expenditures, was $16.5 million and $25.6 million in the years ended December 28, 2013 and December 29, 2012, respectively. Free cash outflow in 2013, as compared to 2012, was affected by increased investment of $13.3 million in capital projects. In 2013, we continued development of an underground mine and built a storage dome for our cement business based in Hannibal, Missouri and installed a new hot mix asphalt plant on-line in Austin, Texas.

Our growth strategy considers 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.

On January 17, 2014, we issued $260.0 million of 10.5% senior notes due 2020. Proceeds from the notes were used to acquire Alleyton Resources, pay down outstanding borrowings on our senior secured revolving credit facility and for general corporate purposes.

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 28 transactions since 2009. Our eight operating companies make up our three distinct geographic regions that span 16 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 Friday, March 7, 2014. Interested parties may access this event at https://viavid.webcasts.com/starthere.jsp?ei=1029782.

 

2


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

 

  Conference ID:     4668808
  Domestic:   1-877-941-4774
  International:   1-480-629-9760

Non-GAAP Financial Measures

We have included certain non-GAAP financial measures in this release including Adjusted EBITDA and Pro Forma Adjusted EBITDA, because we believe that they provide investors with additional information to measure our performance, evaluate our ability to service our debt and evaluate certain flexibility under our restrictive covenants. Our senior secured credit facilities use Pro Forma Adjusted EBITDA to measure compliance with covenants such as interest coverage and debt incurrence and the indenture governing our senior notes uses Adjusted EBITDA in connection with our debt incurrence and restricted payment capacity. 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. Our use of the terms Adjusted EBITDA, Pro Forma Adjusted EBITDA and free cash flow may vary from the use of such terms by others in our industry and should not be considered as alternatives to net loss, operating (loss) income, revenue or any other performance measures derived in accordance with GAAP as measures of operating performance or to cash flows as measures of liquidity.

Adjusted EBITDA, Pro Forma Adjusted EBITDA and free cash flow and other non-GAAP measures have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of the limitations of Adjusted EBITDA, Pro Forma Adjusted EBITDA and free cash flow are that these measures do not reflect: (i) changes in, or cash requirements for, our working capital needs; (ii) the significant interest expense or cash requirements necessary to service interest and principal payments on our debt; and (iii) any cash requirements for the replacement cost of assets being depreciated or amortized. Because of these limitations, we rely primarily on our GAAP results and use Adjusted EBITDA, Pro Forma Adjusted EBITDA and free cash flow only supplementally.

Adjusted EBITDA, Pro Forma Adjusted EBITDA and free cash flow reflect an additional way 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, non-GAAP financial measures should not be construed as being more important than other comparable GAAP financial 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 financial statements in their entirety and not rely on any single financial measure.

Reconciliations of Adjusted EBITDA and Pro Forma Adjusted EBITDA to net income (loss) and from free cash flow to cash flows from operations are included in the tables attached to this press release.

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

 

3


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 annual report on Form 10-K for the fiscal year ended December 28, 2013, filed with the Securities and Exchange Commission (the “SEC”) as such factors may be updated from time to time in our periodic 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.

 

4


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands)

 

     December 28,     December 29,  
     2013     2012  
Assets     

Current assets:

    

Cash

   $ 14,917     $ 27,431  

Accounts receivable, net

     99,337       100,298  

Costs and estimated earnings in excess of billings

     10,767       11,575  

Inventories

     96,432       92,977  

Other current assets

     13,181       10,068  
  

 

 

   

 

 

 

Total current assets

     234,634       242,349  

Property, plant and equipment, net

     831,778       813,607  

Goodwill

     127,038       179,120  

Intangible assets, net

     15,147       8,606  

Other assets

     39,197       37,531  
  

 

 

   

 

 

 

Total assets

   $ 1,247,794     $ 1,281,213  
  

 

 

   

 

 

 
Liabilities, Redeemable Noncontrolling Interest and Member’s Interest     

Current liabilities:

    

Current portion of debt

   $ 30,220     $ 4,000  

Current portion of acquisition-related liabilities

     10,635       9,525  

Accounts payable

     72,104       61,634  

Accrued expenses

     57,251       49,822  

Billings in excess of costs and estimated earnings

     9,263       6,926  
  

 

 

   

 

 

 

Total current liabilities

     179,473       131,907  

Long-term debt

     658,767       635,843  

Acquisition-related liabilities

     23,756       23,919  

Other noncurrent liabilities

     77,480       84,266  
  

 

 

   

 

 

 

Total liabilities

     939,476       875,935  
  

 

 

   

 

 

 

Redeemable noncontrolling interest

     24,767        22,850  

Member’s interest:

    

Member’s equity

     486,896        484,584  

Accumulated deficit

     (198,511     (94,085 )

Accumulated other comprehensive loss

     (6,045     (9,130 )
  

 

 

   

 

 

 

Member’s interest

     282,340        381,369  

Noncontrolling interest

     1,211        1,059  
  

 

 

   

 

 

 

Total member’s interest

     283,551        382,428  
  

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interest and member’s interest

   $ 1,247,794     $ 1,281,213  
  

 

 

   

 

 

 

 

5


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Statements of Operations

(In thousands)

 

     Three Months Ended     Twelve Months Ended  
     December 28,     December 29,              
     2013
(unaudited)
    2012
(unaudited)
    December 28,
2013
    December 29,
2012
 

Revenue:

        

Product

   $ 146,227      $ 148,208      $ 593,570      $ 588,762   

Service

     92,040        83,426        322,631        337,492   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     238,267        231,634        916,201        926,254   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue (excluding items shown separately below):

        

Product

     102,636        106,795        430,172        444,569   

Service

     71,218        61,830        246,880        268,777   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     173,854        168,625        677,052        713,346   
  

 

 

   

 

 

   

 

 

   

 

 

 

General and administrative expenses

     34,781        32,029        142,000        127,215   

Goodwill impairment

     68,202        —          68,202        —     

Depreciation, depletion, amortization and accretion

     18,357        17,435        72,934        68,290   

Transaction costs

     815        223        3,990        1,988   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income

     (57,742     13,322        (47,977     15,415   

Other income, net

     (749     (891     (1,737     (1,182

Loss on debt financings

     —          1,224        3,115        9,469   

Interest expense

     14,063        14,662        56,443        58,079   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from continuing operations before taxes

     (71,056     (1,673     (105,798     (50,951

Income tax (benefit) expense

     (865     (2,106     (2,647     (3,920
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from continuing operations

     (70,191     433        (103,151     (47,031

Loss from discontinued operations

     271        535        528        3,546   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (70,462     (102     (103,679     (50,577

Net income attributable to noncontrolling interest

     2,007        1,339        3,112        1,919   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to member of Summit Materials, LLC

   $ (72,469   $ (1,441   $ (106,791   $ (52,496
  

 

 

   

 

 

   

 

 

   

 

 

 

 

6


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

 

     Twelve Months Ended  
     December 28,     December 29,  
     2013     2012  

Cash flow from operating activities:

    

Net loss

   $ (103,679   $ (50,577

Adjustments to reconcile net loss to net cash provided by operating activities:

    

Depreciation, depletion, amortization and accretion

     75,927        72,179   

Financing fee amortization

     3,256        3,266   

Share-based compensation expense

     2,315        2,533   

Deferred income tax benefit

     (4,408     (3,468

Net loss on asset disposals

     12,419        2,564   

Goodwill impairment

     68,202        —     

Other

     1,891        8,595   

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

    

Account receivable

     9,884        5,201   

Inventories

     499        (1,726

Costs and estimated earnings in excess of billings

     196        6,931   

Other current assets

     (453     3,494   

Other assets

     (1,708     1,189   

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

    

Accounts payable

     4,067        (6,076

Accrued expenses

     (742     17,175   

Billings in excess of costs and estimated earnings

     1,998        2,589   

Other liabilities

     (3,252     (1,590
  

 

 

   

 

 

 

Net cash provided by operating activities

     66,412        62,279   
  

 

 

   

 

 

 

Cash flow from investing activities:

    

Acquisitions, net of cash acquired

     (61,601     (48,757

Purchases of property, plant and equipment

     (65,999     (45,488

Proceeds from the sale of property, plant and equipment

     16,085        8,836   

Other

     —          69   
  

 

 

   

 

 

 

Net cash used for investing activities

     (111,515     (85,340
  

 

 

   

 

 

 

Cash flow from financing activities:

    

Net proceeds from debt issuance

     230,817        713,361   

Payments on long-term debt

     (188,424     (697,438

Payments on acquisition-related liabilities

     (9,801     (7,519

Other

     (3     (702
  

 

 

   

 

 

 

Net cash provided by financing activities

     32,589        7,702   
  

 

 

   

 

 

 

Net decrease in cash

     (12,514     (15,359

Cash – beginning of period

     27,431        42,790   
  

 

 

   

 

 

 

Cash – end of period

   $ 14,917      $ 27,431   
  

 

 

   

 

 

 

 

7


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Financial Highlights

(In thousands)

 

     Twelve Months Ended  
     December 28,     December 29,  
     2013     2012  

Revenue by product:*

    

Aggregates

   $ 159,019      $ 146,991   

Cement

     76,211        77,676   

Ready-mixed concrete

     112,878        100,941   

Asphalt

     219,811        242,458   

Construction and paving

     478,280        505,189   

Other

     (129,998     (147,001
  

 

 

   

 

 

 

Total revenue

   $ 916,201      $ 926,254   
  

 

 

   

 

 

 

 

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

 

     Twelve Months Ended  
     December 28,      December 29,  
     2013      2012  

Revenue:

     

Central region

   $ 329,621       $ 302,113   

West region

     426,195         484,922   

East region

     160,385         139,219   
  

 

 

    

 

 

 

Total revenue

   $ 916,201       $ 926,254   
  

 

 

    

 

 

 

 

           Average Selling  
           Prices in 2013  
     Volume in 2013     Compared to  
     Compared to 2012     2012  

Aggregate

     5     7

Cement

     (4 %)      3

Ready-mixed concrete

     9     4

Asphalt

     (14 %)      5

 

8


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Reconciliations of Non-GAAP Financial Measures

(In thousands)

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

 

     Three Months Ended     Twelve Months Ended  
     December 28,     December 29,     December 28,     December 29,  

Reconciliation of Net Loss to Adjusted EBITDA

   2013     2012     2013     2012  

Net loss

   $ (70,462   $ (102   $ (103,679   $ (50,577

Income tax (benefit) expense

     (865     (2,106     (2,647     (3,920

Interest expense

     14,063        14,662        56,443        58,079   

Depreciation, depletion and amortization

     18,177        17,201        72,217        67,665   

Accretion

     180        235        717        625   

Goodwill impairment

     68,202        —          68,202        —     

Loss from discontinued operations

     271        535        528        3,546   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 29,566      $ 30,425      $ 91,781      $ 75,418   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA by Segment

        

Central

   $ 23,026      $ 20,590      $ 72,918      $ 65,767   

West

     9,347        6,831        28,607        14,429   

East

     4,344        5,226        15,134        10,782   

Corporate

     (7,151     (2,222     (24,878     (15,560
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 29,566      $ 30,425      $ 91,781      $ 75,418   
  

 

 

   

 

 

   

 

 

   

 

 

 

The following table sets forth a reconciliation of free cash flow for the years ended December 28, 2013 and December 29, 2012.

 

     2013     2012  

Net loss

   $ (103,679   $ (50,577

Non- cash items

     159,602        85,669   
  

 

 

   

 

 

 

Net income adjusted for non-cash items

     55,923        35,092   

Change in working capital accounts

     10,489        27,187   
  

 

 

   

 

 

 

Net cash provided by operating activities

     66,412        62,279   

Capital expenditures, net of asset sales

     (49,914     (36,652
  

 

 

   

 

 

 

Free cash flow

   $ 16,498      $ 25,627   
  

 

 

   

 

 

 

 

9


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Reconciliations of Non-GAAP Financial Measures

(In thousands)

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

 

     Twelve Months ended
December 28, 2013
 

Net loss

   $ (103,679

Interest expense

     56,443   

Income tax expense

     (2,647

Depreciation, depletion, amortization and accretion expense

     72,934   
  

 

 

 

EBITDA

   $ 23,051   
  

 

 

 

EBITDA for certain acquisitions

     (1,596

Discontinued operations

     678   

Transaction expenses

     3,990   

Monitoring fees and expenses

     2,620   

Strategic fees and initiatives

     3,887   

Goodwill impairment

     68,202   

Non-cash compensation

     2,315   

Deferred financing fees written off at re-financing

     3,115   

Loss on disposal and impairment of fixed assets

     12,419   

Severance and relocation costs

     2,755   

Other

     7,015   
  

 

 

 

Pro Forma Adjusted EBITDA

   $ 128,451   
  

 

 

 

 

10


SUMMIT MATERIALS, LLC AND SUBSIDIARIES

Unaudited Credit Statistics

($ in millions)

 

     Pro forma (1)
December 28, 2013
    December 28, 2013     December 29, 2012  

Cash & Cash Equivalents

   $ 129.5      $ 14.9      $ 27.4   
  

 

 

   

 

 

   

 

 

 

Debt

      

Revolving Credit Facility ($150M Capacity)

   $ —        $ 26.0      $ —     

Senior Secured Term Loan

     419.9        419.9        398.0   

Capital Leases

     8.0        8.0        3.1   

Other Debt

     1.6        1.6        0.6   
  

 

 

   

 

 

   

 

 

 

Total Senior Secured Debt

   $ 429.5      $ 455.5      $ 401.7   

10.5% Senior Notes

     510.0        250.0        250.0   
  

 

 

   

 

 

   

 

 

 

Total Debt

   $ 939.5      $ 705.5      $ 651.7   

Leverage Ratio Calculations

      

Senior Secured Net Debt

   $ 300.0      $ 440.6      $ 374.3   

Total Net Debt

   $ 810.0      $ 690.6      $ 624.3   

Pro Forma LTM Adjusted EBITDA

   $ 161.1      $ 128.5      $ 118.9   

Senior Secured Net Leverage

     1.86     3.43     3.15

Covenant Senior Secured Net Leverage Limit

     4.75     4.75     4.75

Total Net Leverage

     5.03     5.38     5.25

 

(1) Includes January 17, 2014 acquisition of Alleyton (estimated $32.6 million of Adjusted EBITDA) and reflects issuance of an additional $260.0 million aggregate principal amount of 10.5% Senior Notes.

 

Contact:         info@summit-materials.com
             303-893-0012

 

11