EX-99.1 2 d64458dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

Summit Materials Announces Third Quarter 2015 Results

Denver, Colorado (November 3, 2015) — Summit Materials, Inc. (NYSE: SUM, “Summit” or the “Company”), a leading vertically integrated construction materials company, today announced results for the quarter ended September 26, 2015.

Third Quarter 2015 Highlights Compared to Third Quarter 2014:

 

    Volume and price increased across all lines of business, including aggregates organic pricing up 5.0%.

 

    Net revenue increased 22.4% to $426.3 million, led by West and Central Regions.

 

    Adjusted net income attributable to Summit Materials, Inc. of $27.4 million, or Adjusted EPS of $0.72; GAAP net income of $14.7 million, or EPS of $0.39.

 

    Further Adjusted EBITDA grew 55.2% to $120.4 million; approximately 60% of increase attributable to acquisitions

 

    Operating income improved 74.6% to $83.4 million.

 

    Gross profit increased 46.0% to $159.5 million.

 

    Completed previously announced acquisition of a 1.2 million short ton capacity cement plant in Davenport, Iowa along with seven cement distribution terminals (collectively, the “Davenport Assets”). Summit is now the third largest cement producer along the Mississippi River system with 2.4 million short tons of cement production capacity across its two cement plants with eight distribution terminals.

 

    Acquired LeGrand Johnson Construction Co. (“LeGrand”), a vertically integrated construction materials company based in Utah and servicing the northern and central Utah, western Wyoming and southern Idaho markets.

 

    Completed an offering of $350.0 million aggregate principal amount of 6.125% Senior Notes due 2023 and also entered into a new $650.0 million term loan facility due 2022, which replaced Summit’s prior $422.0 million term loan facility due 2019.

 

    Redeemed $183.0 million aggregate principal amount of outstanding 10 1/2% Senior Notes due 2020 for a total of $471.2 million aggregate principal amount redeemed year to date.

 

    Successfully completed follow-on offering of Class A common stock.

Tom Hill, CEO of Summit, stated, “The significant improvement in our results reflects our sustained efforts to capitalize on steadily rising demand trends across our markets, the contributions from our highly strategic acquisitions and continued progress on our internal initiatives. We were especially pleased to record a 55.2% increase in our Further Adjusted EBITDA representing another quarter of incremental margins in excess of 50%. This is a strong accomplishment and largely tied to the successful completion and ongoing integration of our Davenport Assets acquisition, which remains on track. Our expanded cement network was a meaningful contributor to the 600 basis point increase in our gross margin to 37.4%, reflecting a 970 basis point increase in the mix of our gross profit from materials, increased profitability across all of our lines of business and lower energy costs. On an organic basis, aggregate price increased 5% year over year, which is a third straight quarter of improved pricing, highlighting our disciplined focus on price optimization, especially on incremental project activity in our private and public construction markets. Looking more broadly, our organic prices increased across all of our lines of business reflecting the relative health and stability of our geographic footprint and our ability to enhance our profitability at each stage of our vertically integrated network of businesses.

Mr. Hill continued, “In Texas, our markets that were affected by severe weather during the first half of 2015 have experienced a rebound in activity during the second half of 2015. In Houston, we have seen continued strong demand in traditional residential and non-residential markets. Concerning the broader market, we are encouraged by the favorable long term outlook for construction activity, especially in our West and Central regions. Across the nation, state budgets are improving, as are the local political climates for public infrastructure. As a result, many states, including Texas, Iowa, Utah and Idaho, are allocating additional resources to invest in public construction. Additionally, we have experienced steady improvement in private nonresidential and residential activity which we anticipate will continue. As we enter the fourth quarter, we are excited by the strong momentum in our business and believe we are in an attractive position to continue accomplishing our growth objectives in 2015 and beyond.

 

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Brian Harris, CFO of Summit, stated, “We have a strong history of sourcing and completing strategic acquisitions and we expect to continue complementing our organic efforts with accretive transactions. We were pleased to complete the financing of the Davenport Assets acquisition in a timely manner and sourced on attractive terms to end the quarter with a prudently levered balance sheet. As we look forward, we are focused on strengthening our balance sheet metrics while also preserving our financial flexibility to execute our growth strategy and generate value for stockholders.

Third Quarter 2015 Operating Results

In the third quarter 2015, net revenue increased 22.4% to $426.3 million, compared to $348.1 million in the prior year quarter. The increase in net revenue was primarily attributable to an increase in volumes and price across all lines of business, led by the West and Central regions. Net revenue grew organically by $4.7 million, or 1.3%, compared to the prior year quarter.

Further Adjusted EBITDA increased 55.2% to $120.4 million, compared to $77.6 million in the prior year quarter, with growth in all regions. As a percentage of net revenue, Further Adjusted EBITDA improved to 28.2%, compared to 22.3% in the prior year quarter. Adjusted EBITDA by region in the third quarter 2015 compared to the prior year quarter was as follows:

 

    The West Region increased $20.5 million, or 52.3%, primarily driven by a higher mix of revenue from aggregates, organic volume and price growth across all lines of business and the impact of acquisitions, mainly in the Houston and Midland/Odessa, Texas and British Columbia, Canada markets.

 

    The Central Region grew $22.9 million, or 74.4%, largely attributable to the favorable impact of acquisition activity, including the addition of the Davenport Assets in cement, along with volume and price growth in aggregates and ready-mixed concrete.

 

    The East Region improved $1.5 million, or 12.8%, mainly as a result of higher price in aggregates, leading to a larger mix of net revenue derived from materials, and cost controls.

Gross profit increased 46.0% to $159.5 million, compared to $109.3 million in the prior year quarter. As a percentage of net revenue, gross margin improved to 37.4%, compared to 31.4% in the prior year quarter, primarily attributable to improved profitability in materials and products, in addition to a higher mix of revenue from materials and products as a result of organic improvements and acquisition activity.

 

    Materials Results – Net revenue from materials increased 60.9% to $129.5 million, compared to $80.5 million in the prior year quarter. Aggregates volumes grew 21.9% driven by 3.9% organic volume growth and the remainder attributable to acquisitions. Aggregates organic price increased 5.0% with the improvement due to higher prices across all regions. Cement volume and price increased 77.0% and 13.1%, respectively, mainly attributable to the acquisition of the Davenport Assets and an overall improved pricing in the market. Gross margin from materials increased to 57.7%, compared to 50.5% in the prior year quarter.

 

    Products Results – Net revenue from products increased 16.9% to $208.5 million, compared to $178.4 million in the prior year quarter. Ready-mixed concrete volumes increased 20.5% primarily attributable to acquisitions. Ready-mixed concrete price increased 5.0%, largely benefitting from the pass through of higher cement prices. Asphalt volume and price increased 10.7% and 1.4% respectively, mostly reflecting stronger market demand with additional benefits to volume from acquisitions. Gross margin from products increased to 26.7%, compared to 23.1% in the prior year quarter.

Adjusted net income attributable to Summit Materials, Inc. was $27.4 million, or $0.72 per share of Class A common stock for the third quarter 2015. On a GAAP basis, net income attributable to Summit Materials, Inc. was $14.7 million, or $0.39 per share of Class A common stock. The share of Class A common stock are issued by Summit Materials, Inc. (“Summit Inc.”), and as such the earnings and equity interests of noncontrolling interests, including LP Units, are not included in basic or diluted earnings per share.

Acquisitions

In July 2015, Summit completed the acquisition of the Davenport Assets for a purchase price of $450.0 million in cash and a cement distribution terminal in Bettendorf, Iowa. The Davenport Assets were integrated into the operations of Continental Cement Company, an existing wholly-owned subsidiary of Summit.

In August 2015, Summit completed the acquisition of LeGrand, a vertically integrated construction materials company based in Utah and serving the northern and central Utah, western Wyoming and southern Idaho markets. LeGrand operates five sand and gravel pit along with four ready mix concrete plants and five asphalt plants.

Liquidity and Capital Resources

In connection with the Davenport Assets acquisition, on July 8, 2015, the Company issued $350.0 million aggregate principal amount of 6.125% Senior Notes due 2023 at par. Additionally, on July 17, 2015, the Company refinanced its term loan under its

 

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senior secured credit facilities, and entered into a new $650.0 million term loan facility due 2022, replacing the prior $422.0 million term loan facility due 2019. The refinancing also reduced the applicable margins used to calculate interest rates for term loans under the Company’s senior secured credit facilities for Eurocurrency rate loans to 3.25% from 3.75%. The refinancing also reduced the level of the Eurocurrency rate loan floor applicable for term loans to 1.00% from 1.25%.

In August 2015, Summit completed a follow-on offering raising net proceeds of $555.8 million, net of underwriting discounts, through the issuance of 22,425,000 shares of Class A common stock. The proceeds were used to purchase 3,750,000 newly-issued LP Units from Summit Materials Holdings L.P. (“Summit Holdings”), a direct subsidiary of Summit Inc., and 18,675,000 outstanding LP Units from certain pre IPO owners, at a purchase price per LP Unit equal to the public offering price per share of Class A common stock, less underwriting discounts and commissions.

The Company used the combined net proceeds from the issuance of the senior notes due 2023, the refinancing of the term loan and the proceeds from the August equity offering to pay the $450.0 million cash purchase price for the Davenport Assets, to refinance its existing senior secured term loan facility, to redeem $183.0 million aggregate principal amount of its outstanding 10 1/2% Senior Notes due 2020 and to pay related fees and expenses.

As of September 26, 2015, Summit had 49,009,738 shares of Class A common stock or 99,342,035 assuming conversion of the outstanding LP Units, as compared to 26,584,738 shares of Class A common stock or 95,292,035 assuming conversion of the outstanding LP Units at June 27, 2015.

At September 26, 2015, the Company had cash of $19.0 million and total outstanding debt of $1,216.2 million. As of September 26, 2015, the Company’s borrowing capacity was $150.6 million under its $235.0 million revolving credit facility, excluding $24.4 million outstanding letters of credit.

Webcast and Conference Call Information

Summit will conduct a conference call at 11:00 a.m. Eastern Time (9:00 a.m. Mountain Time) on Tuesday, November 3, 2015 to review third quarter results, discuss recent events, and conduct a question-and-answer period. A webcast of the conference call and presentation slides to be referred to on the call will be available in the Investors section of Summit’s website at investors.summit-materials.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.

To participate in the telephone conference call:

 

   Domestic:    1-877-407-0784   
   International:    1-201-689-8560   
   Conference ID:    62442800   

To listen to a replay of the telephone conference call:

 

   Domestic:    1-877-870-5176   
   International:    1-858-384-5517   
   Conference ID:    13622464   
   The playback recording can be accessed through December 3, 2015

About Summit Materials

Summit Materials is a leading vertically integrated construction materials company that supplies aggregates, cement, ready-mixed concrete and asphalt in the United States and British Columbia, Canada. Summit is a geographically diverse, aggregates-based business of scale that offers customers a single-source provider of construction materials and related downstream products in the residential, nonresidential, and public infrastructure end markets. Summit has completed more than 35 acquisitions since its founding and continues to pursue growth opportunities in new and existing markets.

For more information about Summit Materials, please visit www.summit-materials.com.

Non-GAAP Financial Measures

The rules of the SEC regulate the use in filings with the SEC of “non-GAAP financial measures,” such as Adjusted EBITDA, Further Adjusted EBITDA, gross profit, adjusted net income, adjusted net income (loss) per share and free cash flow which are derived on the basis of methodologies other than in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). We have provided Adjusted EBITDA, Further Adjusted EBITDA, gross profit, adjusted net income, adjusted net income (loss) per share and free cash flow because, among

 

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other things, we believe that they provide investors with additional information to measure our performance, evaluate our ability to service our debt and evaluate certain flexibility under our restrictive covenants. Further Adjusted EBITDA is defined in our senior secured credit facilities and used to measure compliance with covenants, including interest coverage and debt incurrence, and is used to measure our debt incurrence and restricted payment capacity under the indenture governing our senior notes. Our use of the terms Adjusted EBITDA, Further Adjusted EBITDA, gross profit, adjusted net income, adjusted net income (loss) per share and free cash flow, may vary from the use of such terms by others and should not be considered as alternatives to net income (loss), operating income (loss), revenue or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or to cash flows as measures of liquidity.

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

Adjusted EBITDA, Further Adjusted EBITDA, gross profit, adjusted net income, adjusted net income (loss) per share 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 U.S. GAAP financial measures included in the tables attached to this press release, may provide a more complete understanding of factors and trends affecting our business. However, non-GAAP financial measures should not be construed as being more important than other comparable U.S. GAAP financial measures and should be considered in conjunction with the U.S. 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 the non-GAAP measures used in this press release 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,” “trends,” “plans,” “estimates,” “projects” or “anticipates” or similar expressions that concern our strategy, plans, expectations or intentions. Any and all statements made relating to the macroeconomic outlook for our markets, potential acquisition activity, 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 filed with the SEC on August 11, 2015. Such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov.

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.

 

 

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SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

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

 

     Three months ended     Nine months ended  
     September 26,     September 27,     September 26,     September 27,  
     2015     2014     2015     2014  

Revenue:

        

Product

   $ 338,020      $ 258,860      $ 748,210      $ 580,351   

Service

     88,266        89,276        182,224        196,214   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net revenue

     426,286        348,136        930,434        776,565   

Delivery and subcontract revenue

     45,619        46,623        100,401        93,580   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     471,905        394,759        1,030,835        870,145   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue (excluding items shown separately below):

        

Product

     207,500        176,967        490,923        411,581   

Service

     59,280        61,907        128,514        140,773   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cost of revenue

     266,780        238,874        619,437        552,354   

Delivery and subcontract cost

     45,619        46,623        100,401        93,580   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     312,399        285,497        719,838        645,934   
  

 

 

   

 

 

   

 

 

   

 

 

 

General and administrative expenses

     42,539        35,517        149,484        105,872   

Depreciation, depletion, amortization and accretion

     33,306        23,255        86,818        63,950   

Transaction costs

     304        2,741        8,044        7,737   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     83,357        47,749        66,651        46,652   

Other income, net

     (1,171     (1,408     (678     (2,299

Loss on debt financings

     32,641        —          64,313        —     

Interest expense

     20,727        22,085        62,231        62,555   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before taxes

     31,160        27,072        (59,215     (13,604

Income tax benefit

     (2,655     (1,038     (12,468     (2,498
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

     33,815        28,110        (46,747     (11,106

Income from discontinued operations

     (57     (7     (815     (356
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     33,872        28,117        (45,932     (10,750

Net income (loss) attributable to noncontrolling interest in subsidiaries

     52        1,243        (1,917     674   
    

 

 

     

 

 

 

Net income (loss) attributable to Summit Holdings

     19,109      $ 26,874        (48,370   $ (11,424
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Summit Materials, Inc.

   $ 14,711        $ 4,355     
  

 

 

     

 

 

   

Net income per share of Class A common stock:

        

Basic

   $ 0.39        $ 0.14     

Diluted

   $ 0.39        $ 0.14     

Weighted average shares of Class A common stock:

        

Basic

     37,920,452          31,768,406     

Diluted

     37,963,930          31,811,315     

 

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SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Consolidated Balance Sheets

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

 

     September 26,     December 27,  
     2015     2014  
Assets     

Current assets:

    

Cash and cash equivalents

   $ 18,987     $ 13,215  

Accounts receivable, net

     205,939       141,302  

Costs and estimated earnings in excess of billings

     34,175       10,174  

Inventories

     138,036       111,553  

Other current assets

     21,762       17,172  
  

 

 

   

 

 

 

Total current assets

     418,899       293,416  

Property, plant and equipment, less accumulated depreciation, depletion and amortization (September 26, 2015 - $343,087 and December 27, 2014 - $279,375)

     1,276,227       950,601  

Goodwill

     567,836       419,270  

Intangible assets, less accumulated amortization (September 26, 2015 - $4,851 and December 27, 2014 - $3,073)

     15,481       17,647  

Other assets

     51,798       48,843  
  

 

 

   

 

 

 

Total assets

   $ 2,330,241     $ 1,729,777  
  

 

 

   

 

 

 

Liabilities, Redeemable Noncontrolling Interest and Stockholders’ Equity/Partners’ Interest

    

Current liabilities:

    

Current portion of debt

   $ 68,125     $ 5,275  

Current portion of acquisition-related liabilities

     20,191       18,402  

Accounts payable

     113,226       78,854  

Accrued expenses

     90,880       101,496  

Billings in excess of costs and estimated earnings

     11,005       8,958  
  

 

 

   

 

 

 

Total current liabilities

     303,427       212,985  

Long-term debt

     1,148,068       1,059,642  

Acquisition-related liabilities

     41,978       42,736  

Other noncurrent liabilities

     114,575       93,691  
  

 

 

   

 

 

 

Total liabilities

     1,608,048       1,409,054  
  

 

 

   

 

 

 

Redeemable noncontrolling interest

     —          33,740  

Stockholders’ equity/partners’ interest:

    

Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 49,009,738 shares issued and outstanding as of September 26, 2015

     490       —     

Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 69,007,297 shares issued and outstanding as of September 26, 2015

     690       —     

Partners’ interest

     —          285,685  

Additional paid-in capital

     600,204       —     

Accumulated earnings

     4,355       —     

Accumulated other comprehensive loss

     (2,607 )     —     
  

 

 

   

 

 

 

Stockholders’ equity/partners’ interest:

     603,132       285,685  

Noncontrolling interest in consolidated subsidiaries

     1,271       1,298  

Noncontrolling interest in Summit Materials, Inc.

     117,790       —     
  

 

 

   

 

 

 

Total stockholders’ equity/partners’ interest

     722,193       286,983  
  

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interest and stockholders’ equity/partners’ interest

   $ 2,330,241     $ 1,729,777  
  

 

 

   

 

 

 

 

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SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

($ in thousands)

 

     Nine months ended  
     September 26,     September 27,  
     2015     2014  

Cash flow from operating activities:

    

Net loss

   $ (45,932   $ (10,750

Adjustments to reconcile net loss to net cash used in operating activities:

    

Depreciation, depletion, amortization and accretion

     90,789        68,467   

Share-based compensation expense

     18,589        1,746   

Deferred income tax benefit

     —          (525

Net gain on asset disposals

     (4,990     (219

Net gain on debt financings

     (4,570 )       —     

Other

     136        (463

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

    

Accounts receivable, net

     (56,287     (54,463

Inventories

     (3,830     (3,843

Costs and estimated earnings in excess of billings

     (23,402     (15,009

Other current assets

     (4,401     (3,910

Other assets

     (524     (675

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

    

Accounts payable

     29,383        9,433   

Accrued expenses

     (12,272     2,578   

Billings in excess of costs and estimated earnings

     (763     270   

Other liabilities

     (853     (3,473
  

 

 

   

 

 

 

Net cash used in operating activities

     (18,927     (10,836
  

 

 

   

 

 

 

Cash flow from investing activities:

    

Acquisitions, net of cash acquired

     (505,466     (351,941

Purchases of property, plant and equipment

     (69,672     (64,244

Proceeds from the sale of property, plant and equipment

     8,883        9,575   

Other

     610        757   
  

 

 

   

 

 

 

Net cash used for investing activities

     (565,645     (405,853
  

 

 

   

 

 

 

Cash flow from financing activities:

    

Proceeds from equity offerings

     1,037,444        —     

Capital issuance costs

     (61,218     —     

Capital contributions by partners

     —          24,350   

Proceeds from debt issuances

     1,415,750        657,217   

Debt issuance costs

     (10,911     (8,834

Payments on debt

     (1,251,407     (258,337

Purchase of noncontrolling interests

     (497,848     —     

Payments on acquisition-related liabilities

     (15,018     (5,807

Distributions from partnership

     (26,448     —     

Other

     —          (88
  

 

 

   

 

 

 

Net cash provided by financing activities

     590,344        408,501   
  

 

 

   

 

 

 

Net increase (decrease) in cash

     5,772        (8,188

Cash – beginning of period

     13,215        18,184   
  

 

 

   

 

 

 

Cash – end of period

   $ 18,987      $ 9,996   
  

 

 

   

 

 

 

 

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SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Revenue Data by Region and Line of Business

($ in thousands)

 

     Three months ended      Nine months ended  
     September 26,      September 27,      September 26,      September 27,  
     2015      2014      2015      2014  

Net Revenue:

           

West region

   $ 233,703       $ 191,565       $ 536,722       $ 440,713   

Central region

     151,722         110,962         309,478         247,793   

East region

     40,861         45,609         84,234         88,059   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total net revenue

   $ 426,286       $ 348,136       $ 930,434       $ 776,565   
  

 

 

    

 

 

    

 

 

    

 

 

 
     Three months ended      Nine months ended  
     September 26,      September 27,      September 26,      September 27,  
     2015      2014      2015      2014  

Net Revenue by Line of Business

           

Materials

   $ 129,543       $ 80,493       $ 267,690       $ 178,224   

Products

     208,477         178,367         480,520         402,127   

Services

     88,266         89,276         182,224         196,214   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Revenue

   $ 426,286       $ 348,136       $ 930,434       $ 776,565   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross Profit

           

Materials

   $ 74,804       $ 40,651       $ 137,633       $ 84,066   

Products

     55,716         41,240         119,654         84,703   

Services

     28,986         27,371         53,710         55,442   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross Profit

   $ 159,506       $ 109,262       $ 310,997       $ 224,211   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

8


SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Volume and Price Statistics

(Units in thousands)

 

     Three months ended     Nine months ended  
Total Volume (in 000s)    September 26, 2015     September 27, 2014     September 26, 2015     September 27, 2014  

Aggregates (tons)

     9,127        7,488        23,949        17,684   

Cement (tons)

     669        378        1,100        773   

Ready-mixed concrete (cubic yards)

     929        771        2,493        1,968   

Asphalt (tons)

     1,690        1,527        3,288        3,173   
     Three months ended     Nine months ended  
Pricing    September 26, 2015     September 27, 2014     September 26, 2015     September 27, 2014  

Aggregates (per ton)

   $ 9.43      $ 9.17      $ 9.12      $ 9.05   

Cement (per ton)

     102.30        90.43        100.44        89.86   

Ready-mixed concrete (per cubic yards)

     102.74        97.83        102.22        96.13   

Asphalt (per ton)

     58.40        57.60        57.52        54.95   
Year over Year Comparison    Volume     Pricing     Volume     Pricing  

Aggregates (per ton)

     21.9     2.8     35.4     0.8

Cement (per ton)

     77.0     13.1     42.3     11.8

Ready-mixed concrete (per cubic yards)

     20.5     5.0     26.7     6.3

Asphalt (per ton)

     10.7     1.4     3.6     4.7
Year over Year Comparison (Excluding acquisitions)    Volume     Pricing     Volume     Pricing  

Aggregates (per ton)

     3.9     5.0     5.6     5.4

Cement (per ton)

     *        *        *        *   

Ready-mixed concrete (per cubic yards)

     1.6     4.6     3.8     5.3

Asphalt (per ton)

     5.7     1.2     0.9     4.5

 

* Davenport Assets were immediately integrated with our existing cement operations such that it is impracticable to bifurcate the results.

 

9


SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Reconciliations of Gross Revenue to Net Revenue by Line of Business

($ and Units in thousands)

 

     Three months ended September 26, 2015  
     Volumes      Pricing      Gross Revenue
by Product
     Intercompany
Elimination/Delivery
    Net
Revenue
 

Aggregates

     9,127       $ 9.43       $ 86,070       $ (23,648   $ 62,422   

Cement

     669         102.30         68,481         (1,360     67,121   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Materials

         $ 154,551       $ (25,008   $ 129,543   

Readymix

     929         102.74         95,481         (437     95,044   

Asphalt

     1,690         58.40         98,687         (50     98,637   

Other Products

           97,436         (82,640     14,796   
        

 

 

    

 

 

   

 

 

 

Products

         $ 291,604       $ (83,127   $ 208,477   
     Nine months ended September 26, 2015  
                   Gross Revenue      Intercompany     Net  
     Volumes      Pricing      by Product      Elimination/Delivery     Revenue  

Aggregates

     23,949       $ 9.12       $ 218,336       $ (56,439   $ 161,897   

Cement

     1,100         100.44         110,477         (4,684     105,793   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Materials

         $ 328,813       $ (61,123   $ 267,690   

Readymix

     2,493         102.22         254,878         (560     254,318   

Asphalt

     3,288         57.52         189,107         (150     188,957   

Other Products

           229,211         (191,966     37,245   
        

 

 

    

 

 

   

 

 

 

Products

         $ 673,196       $ (192,676   $ 480,520   

 

10


SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Reconciliations of Non-GAAP Financial Measures

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

The tables below reconcile our net income (loss) to Adjusted EBITDA and present Adjusted EBITDA by segment for the three and nine months ended September 26, 2015 and September 27, 2014.

 

     Three months ended      Nine months ended  
     September 26,      September 27,      September 26,      September 27,  
Reconciliation of Net Income (Loss) to Adjusted EBITDA    2015      2014      2015      2014  

Net income (loss) (1)

   $ 33,872       $ 28,117       $ (45,932    $ (10,750

Interest expense (1)

     20,727         22,085         62,231         62,555   

Depreciation, depletion and amortization

     32,940         23,032         85,689         63,302   

Accretion

     366         223         1,129         648   

Income tax benefit

     (2,655      (1,038      (12,468      (2,498

Initial public offering costs

     —           —           28,296         —     

Loss on debt financings

     32,641         —           64,313         —     

Income from discontinued operations

     (57      (7      (815      (356
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA (1)

   $ 117,834       $ 72,412       $ 182,443       $ 112,901   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA by Segment

           

(in thousands)

           

West

   $ 59,574       $ 39,105       $ 110,940       $ 71,646   

Central

     53,756         30,820         89,984         59,220   

East

     13,383         11,868         15,096         10,462   

Corporate

     (8,879      (9,381      (33,577      (28,427
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

   $ 117,834       $ 72,412       $ 182,443       $ 112,901   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) The reconciliation of net income (loss) to Adjusted EBITDA is based on the financial results of Summit Materials, Inc. Summit Materials, Inc.’s net loss in the three and nine months ended September 26, 2015 was $291 thousand and $582 thousand, respectively, greater than Summit Materials, LLC’s due to interest expense associated with a deferred consideration obligation that is an obligation of Summit Holdings and is thus excluded from Summit Materials, LLC’s interest expense.

The table below reconciles our net income per share to adjusted earnings per share for the three and nine months ended September 26, 2015.

 

Reconciliation of Net Income to Adjusted Net Income and Adjusted Net Income
Per Share
   September 26, 2015  
     Three months ended      Nine months ended  
     Net Income      Per Share      Net Income      Per Share  

Net income attributable to Summit Materials, Inc.

   $ 14,711       $ 0.39       $ 4,355       $ 0.14   

Initial public offering costs

     —           —           7,866         0.25   

Loss on debt financings

     12,697         0.33         21,502         0.68   
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted net income

   $ 27,408       $ 0.72       $ 33,724       $ 1.06   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted net income

   $ 27,408       $ 0.72       $ 33,724       $ 1.06   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares of Class A common stock:

           

Basic

     37,920,452            31,768,406      

Diluted

     37,963,930            31,811,315      

 

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The table below reconciles the Summit Materials, Inc. net income per share to net income (loss) per share attributable to member of Summit Materials, LLC, post-IPO for the three and nine months ended September 26, 2015:

 

     September 26, 2015  
     Three months      Nine months  
     ended      ended  

Net income (loss) attributable to member of Summit Materials, LLC, post-IPO:

     

Net income attributable to Summit Materials, Inc.

   $ 14,711       $ 4,355   

Net income (loss) attributable to Summit Holdings, post-IPO

     19,401       $ (6,740
  

 

 

    

 

 

 

Total net income (loss) attributable to member of Summit Materials, LLC, post-IPO

   $ 34,112       $ (2,385
  

 

 

    

 

 

 

Weighted-average common shares:

     

Weighted average shares of Class A common stock outstanding in Summit Materials, Inc.

     37,920,452         31,768,406   

Weighted average LP Units outstanding in Summit Holdings

     59,567,187         64,690,463   
  

 

 

    

 

 

 

Total

     97,487,639         96,458,869   
  

 

 

    

 

 

 

Net income per share attributable to Summit Materials, Inc.

   $ 0.39       $ 0.14   
  

 

 

    

 

 

 

Net income (loss) per share attributable to member of Summit Materials, LLC, post-IPO

   $ 0.35       $ (0.02
  

 

 

    

 

 

 

The following table reconciles operating income to gross profit for the three and nine months ended September 26, 2015 and September 27, 2014.

 

     Three months ended     Nine months ended  
     September 26,     September 27,     September 26,     September 27,  
Reconciliation of Operating Income to Gross Profit    2015     2014     2015     2014  

Operating income

   $ 83,357      $ 47,749      $ 66,651      $ 46,652   

General and administrative expenses

     42,539        35,517        149,484        105,872   

Depreciation, depletion, amortization and accretion

     33,306        23,255        86,818        63,950   

Transaction costs

     304        2,741        8,044        7,737   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

   $ 159,506      $ 109,262      $ 310,997      $ 224,211   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Margin (1)

     37.4     31.4     33.4     28.9

 

(1) Gross margin is defined as gross profit as a percentage of net revenue.

The following table reconciles net cash used for operating activities to free cash flow for the three and nine months ended September 26, 2015 and September 27, 2014.

 

     Three months ended     Nine months ended  
     September 26,     September 27,     September 26,     September 27,  
     2015     2014     2015     2014  

Net income (loss)

   $ 33,872      $ 28,117      $ (45,932   $ (10,750

Non- cash items

     35,008        24,144        99,954        69,006   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income adjusted for non-cash items

     68,880        52,261        54,022        58,256   

Change in working capital accounts

     (7,723     (17,217     (72,949     (69,092
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used for) operating activities

     61,157        35,044        (18,927     (10,836

Capital expenditures, net of asset sales

     (23,449     (11,394     (60,789     (54,669
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 37,708      $ 23,650      $ (79,716   $ (65,505
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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The following table presents a reconciliation of net income (loss) to Further Adjusted EBITDA for the three and nine months ended September 26, 2015 and September 27, 2014.

 

     Three months ended     Nine months ended  
($ in thousands)    September 26,
2015
    September 27,
2014
    September 26,
2015
    September 27,
2014
 

Net income (loss) (1)

   $ 33,872      $ 28,117      $ (45,932   $ (10,750

Interest expense (1)

     20,727        22,085        62,231        62,555   

Depreciation, depletion and amortization

     32,940        23,032        85,689        63,302   

Accretion

     366        223        1,129        648   

Income tax benefit

     (2,655     (1,038     (12,468     (2,498

Initial public offering costs

     —          —          28,296        —     

Loss on debt financings

     32,641        —          64,313        —     

Discontinued operations

     (57     (7     (815     (356
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 117,834      $ 72,412      $ 182,443      $ 112,901   
  

 

 

   

 

 

   

 

 

   

 

 

 

Acquisition transaction expenses

     304        2,741        8,044        7,737   

Non-cash compensation

     1,569        608        4,138        1,746   

Management fees and expenses

     —          995        1,046        3,255   

Other

     699        806        1,528        1,075   

EBITDA for certain completed acquisitions (2)

        
  

 

 

   

 

 

   

 

 

   

 

 

 

Further Adjusted EBITDA

   $ 120,406      $ 77,562      $ 197,199      $ 126,714   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Further Adjusted EBITDA is defined in our credit agreement and used for various covenant ratios. Summit Materials, Inc.’s net loss in the three and nine months ended September 26, 2015 was $291 thousand and $582 thousand, respectively, greater than Summit Materials, LLC’s net loss due to additional interest expense associated with a certain deferred consideration obligation. However, Adjusted EBITDA and Further Adjusted EBITDA for Summit Materials, LLC is the same as Summit Materials, Inc.’s.
(2) For purposes of this presentation, EBITDA prior to our ownership for certain completed acquisitions has been omitted.

Contact:

Investor Relations:

303-515-5159

Investorrelations@summit-materials.com

Media Contact:

303-515-5158

mediarelations@summit-materials.com

 

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