UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 3, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                       

Commission file numbers:

001-36873 (Summit Materials, Inc.)

333-187556 (Summit Materials, LLC)

SUMMIT MATERIALS, INC.

SUMMIT MATERIALS, LLC

(Exact name of registrants as specified in their charters)

Delaware (Summit Materials, Inc.)	47-1984212
Delaware (Summit Materials, LLC)	26-4138486
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1550 Wynkoop Street, 3rd Floor	80202
Denver, Colorado	(Zip Code)
(Address of principal executive offices)

Registrants’ telephone number, including area code: (303) 893-0012

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A Common Stock (par value $.01 per share)	SUM	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Summit Materials, Inc.			Yes	☒	No	☐
Summit Materials, LLC			Yes	☒	No	☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Summit Materials, Inc.			Yes	☒	No	☐
Summit Materials, LLC			Yes	☒	No	☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Summit Materials, Inc.
Large accelerated filer	☒	Accelerated filer				☐
Non-accelerated filer	☐	Smaller reporting company				☐
		Emerging growth company				☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.						☐
Summit Materials, LLC
Large accelerated filer	☐	Accelerated filer				☐
Non-accelerated filer	☒	Smaller reporting company				☐
		Emerging growth company				☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.						☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Summit Materials, Inc.			Yes	☐	No	☒
Summit Materials, LLC			Yes	☐	No	☒

As of May 7, 2021, the number of shares of Summit Materials, Inc.’s outstanding Class A and Class B common stock, par value $0.01 per share for each class, was 117,362,411 and 99, respectively.

As of May 7, 2021, 100% of Summit Materials, LLC’s outstanding limited liability company interests were held by Summit Materials Intermediate Holdings, LLC, its sole member and an indirect subsidiary of Summit Materials, Inc.

EXPLANATORY NOTE

This quarterly report on Form 10-Q (this “report”) is a combined quarterly report being filed separately by two registrants: Summit Materials, Inc. and Summit Materials, LLC. Each registrant hereto is filing on its own behalf all of the information contained in this report that relates to such registrant. Each registrant hereto is not filing any information that does not relate to such registrant, and therefore makes no representation as to any such information. We believe that combining the quarterly reports on Form 10-Q of Summit Materials, Inc. and Summit Materials, LLC into this single report eliminates duplicative and potentially confusing disclosure and provides a more streamlined presentation since a substantial amount of the disclosure applies to both registrants.

Unless stated otherwise or the context requires otherwise, references to “Summit Inc.” mean Summit Materials, Inc., a Delaware corporation, and references to “Summit LLC” mean Summit Materials, LLC, a Delaware limited liability company. The references to Summit Inc. and Summit LLC are used in cases where it is important to distinguish between them. We use the terms “we,” “our,” “us” or “the Company” to refer to Summit Inc. and Summit LLC together with their respective subsidiaries, unless otherwise noted or the context otherwise requires.

Summit Inc. was formed on September 23, 2014 to be a holding company. As of April 3, 2021, its sole material asset was a 98.2% economic interest in Summit Materials Holdings L.P., a Delaware limited partnership (“Summit Holdings”). Summit Inc. has 100% of the voting rights of Summit Holdings, which is the indirect parent of Summit LLC. Summit LLC is a co-issuer of our outstanding 5 1/8% senior notes due 2025 (“2025 Notes”), our 6 1/2 % senior notes due 2027 (“2027 Notes”) and our 5 1/4% senior notes due 2029 (“2029 Notes” and collectively with the 2025 Notes and the 2027 Notes, the “Senior Notes”). Summit Inc.’s only revenue for the three months ended April 3, 2021 was that generated by Summit LLC and its consolidated subsidiaries. Summit Inc. controls all of the business and affairs of Summit Holdings and, in turn, Summit LLC.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report includes “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “trends,” “plans,” “estimates,” “projects” or “anticipates” or similar expressions that concern our strategy, plans, expectations or intentions. All statements made relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. These forward-looking statements are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, it is very difficult to predict the effect of known factors, and, of course, it is impossible to anticipate all factors that could affect our actual results. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be realized. Important factors could affect our results and could cause results to differ materially from those expressed in our forward-looking statements, including but not limited to the factors discussed in the section entitled “Risk Factors” in Summit Inc.’s Annual Report on Form 10-K for the fiscal year ended January 2, 2021 (the “Annual Report”), as filed with the Securities and Exchange Commission (the “SEC”), any factors discussed in the section entitled “Risk Factors” of this report and the following:

•our dependence on the construction industry and the strength of the local economies in which we operate;

•the cyclical nature of our business;

•risks related to weather and seasonality;

•risks associated with our capital-intensive business;

•competition within our local markets;

•our ability to execute on our acquisition strategy, successfully integrate acquisitions with our existing operations and retain key employees of acquired businesses;

•our ability to implement and successfully execute on our Elevate Summit strategy;

•our dependence on securing and permitting aggregate reserves in strategically located areas;

•the impact of the coronavirus (“COVID-19”) pandemic, or any similar crisis, on our business;

•declines in public infrastructure construction and delays or reductions in governmental funding, including the funding by transportation authorities and other state agencies;

•our reliance on private investment in infrastructure, which may be adversely affected by periods of economic stagnation and recession;

•environmental, health, safety and climate change laws or governmental requirements or policies concerning zoning and land use;

•costs associated with pending and future litigation;

•rising prices for commodities, labor and other production and delivery inputs as a result of inflation or otherwise;

•conditions in the credit markets;

•our ability to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us;

•material costs and losses as a result of claims that our products do not meet regulatory requirements or contractual specifications;

•cancellation of a significant number of contracts or our disqualification from bidding for new contracts;

•special hazards related to our operations that may cause personal injury or property damage not covered by insurance;

•unexpected factors affecting self-insurance claims and reserve estimates;

•our substantial current level of indebtedness, including our exposure to variable interest rate risk;

•our dependence on senior management team, and our ability to retain and attract other qualified personnel;

•supply constraints or significant price fluctuations in the electricity and petroleum-based resources that we use, including diesel and liquid asphalt;

•climate change and climate change legislation or regulations;

•unexpected operational difficulties;

•interruptions in our information technology systems and infrastructure, including cybersecurity and data leakage risks; and

•potential labor disputes, strikes, other forms of work stoppage or other union activities.

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

Any forward-looking statement that we make herein speaks only as of the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law.

 CERTAIN DEFINITIONS

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

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

•“Finance Corp.” refers to Summit Materials Finance Corp., an indirect wholly-owned subsidiary of Summit LLC and the co-issuer of the Senior Notes;

•“Issuers” refers to Summit LLC and Finance Corp. as co‑issuers of the Senior Notes;  

•“LP Units” refers to the Class A limited partnership units of Summit Holdings; and

•“TRA” refers to a tax receivable agreement between Summit Inc. and certain current and former holders of LP Units and their permitted assignees.

Corporate Structure

The following chart summarizes our organizational structure, equity ownership and our principal indebtedness as of April 3, 2021. This chart is provided for illustrative purposes only and does not show all of our legal entities or all obligations of such entities.

(1)SEC registrant.

(2)The shares of Class B Common Stock are currently held by pre-IPO investors, including certain members of management or their family trusts that directly hold LP Units.  A holder of Class B Common Stock is entitled, without regard to the number of shares of Class B Common Stock held by such holder, to a number of votes that is equal to the aggregate number of LP Units held by such holder.

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

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

Table of Contents

SUMMIT MATERIALS, INC.

SUMMIT MATERIALS, LLC 

FORM 10-Q 

TABLE OF CONTENTS  

		Page No.
PART I—Financial Information
Item 1.	Financial Statements for Summit Materials, Inc.	1
	Consolidated Balance Sheets as of April 3, 2021 (unaudited) and January 2, 2021	1
	Unaudited Consolidated Statements of Operations for the three months ended April 3, 2021 and March 28, 2020	2
	Unaudited Consolidated Statements of Comprehensive Income for the three months ended April 3, 2021 and March 28, 2020	3
	Unaudited Consolidated Statements of Cash Flows for the three months ended April 3, 2021 and March 28, 2020	4
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity for the three months ended April 3, 2021 and March 28, 2020	5
	Notes to Unaudited Consolidated Financial Statements	6
	Financial Statements for Summit Materials, LLC	20
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
PART II — Other Information
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	37
SIGNATURES		38

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets 

(In thousands, except share and per share amounts)

	April 3, 2021		January 2, 2021
	(unaudited)		(audited)
Assets
Current assets:
Cash and cash equivalents	$	359,741	$	418,181
Accounts receivable, net	250,058		254,696
Costs and estimated earnings in excess of billings	17,124		8,666
Inventories	210,934		200,308
Other current assets	20,578		11,428
Total current assets	858,435		893,279
Property, plant and equipment, less accumulated depreciation, depletion and amortization (April 3, 2021 - $1,170,071 and January 2, 2021 - $1,132,925)	1,897,117		1,850,169
Goodwill	1,201,426		1,201,291
Intangible assets, less accumulated amortization (April 3, 2021 - $12,502 and January 2, 2021 - $11,864)	71,486		47,852
Deferred tax assets, less valuation allowance (April 3, 2021 - $1,675 and January 2, 2021 - $1,675)	240,565		231,877
Operating lease right-of-use assets	28,796		28,543
Other assets	53,432		55,000
Total assets	$	4,351,257	$	4,308,011
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of debt	$	6,354	$	6,354
Current portion of acquisition-related liabilities	13,372		10,265
Accounts payable	150,243		120,813
Accrued expenses	130,338		160,570
Current operating lease liabilities	7,480		8,188
Billings in excess of costs and estimated earnings	13,930		16,499
Total current liabilities	321,717		322,689
Long-term debt	1,891,522		1,892,347
Acquisition-related liabilities	31,015		12,246
Tax receivable agreement liability	325,832		321,680
Noncurrent operating lease liabilities	22,246		21,500
Other noncurrent liabilities	144,365		121,281
Total liabilities	2,736,697		2,691,743
Commitments and contingencies (see note 12)
Stockholders’ equity:
Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 116,644,332 and 114,390,595 shares issued and outstanding as of April 3, 2021 and January 2, 2021, respectively	1,167		1,145
Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 99 shares issued and outstanding as of April 3, 2021 and January 2, 2021	—		—
Additional paid-in capital	1,289,267		1,264,681
Accumulated earnings	304,255		326,772
Accumulated other comprehensive income	6,838		5,203
Stockholders’ equity	1,601,527		1,597,801
Noncontrolling interest in Summit Holdings	13,033		18,467
Total stockholders’ equity	1,614,560		1,616,268
Total liabilities and stockholders’ equity	$	4,351,257	$	4,308,011

See notes to unaudited consolidated financial statements.

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Table of Contents

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Operations

(In thousands, except share and per share amounts) 

	Three months ended
	April 3, 2021		March 28, 2020
Revenue:
Product	$	354,234	$	305,307
Service	44,247		37,099
Net revenue	398,481		342,406
Delivery and subcontract revenue	29,363		24,784
Total revenue	427,844		367,190
Cost of revenue (excluding items shown separately below):
Product	277,134		254,055
Service	40,197		38,524
Net cost of revenue	317,331		292,579
Delivery and subcontract cost	29,363		24,784
Total cost of revenue	346,694		317,363
General and administrative expenses	51,642		41,686
Depreciation, depletion, amortization and accretion	56,336		51,778
Gain on sale of property, plant and equipment	(1,769)		(1,917)
Operating loss	(25,059)		(41,720)
Interest expense	24,186		27,818
Gain on sale of business	(15,668)		—
Other (income) loss, net	(4,889)		89
Loss from operations before taxes	(28,688)		(69,627)
Income tax benefit	(5,443)		(22,901)
Net loss	(23,245)		(46,726)
Net loss attributable to Summit Holdings	(728)		(1,747)
Net loss attributable to Summit Inc.	$	(22,517)	$	(44,979)
Loss per share of Class A common stock:
Basic	$	(0.19)	$	(0.40)
Diluted	$	(0.20)	$	(0.40)
Weighted average shares of Class A common stock:
Basic	115,664,725		113,602,110
Diluted	115,411,204		113,602,110

See notes to unaudited consolidated financial statements.

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SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Comprehensive Income

(In thousands) 

	Three months ended
	April 3, 2021		March 28, 2020
Net loss	$	(23,245)	$	(46,726)
Other comprehensive income (loss):
Foreign currency translation adjustment	2,126		(8,359)
Less tax effect of other comprehensive (loss) income items	(446)		2,046
Other comprehensive income (loss)	1,680		(6,313)
Comprehensive loss	(21,565)		(53,039)
Less comprehensive loss attributable to Summit Holdings	(683)		(1,967)
Comprehensive loss attributable to Summit Inc.	$	(20,882)	$	(51,072)

See notes to unaudited consolidated financial statements.

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SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

(In thousands) 

	Three months ended
	April 3, 2021		March 28, 2020
Cash flow from operating activities:
Net loss	$	(23,245)	$	(46,726)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, depletion, amortization and accretion	59,107		55,278
Share-based compensation expense	5,363		4,905
Net gain on asset and business disposals	(15,964)		(1,933)
Change in deferred tax asset, net	(10,145)		(24,194)
Other	483		1,611
Decrease (increase) in operating assets, net of acquisitions and dispositions:
Accounts receivable, net	4,946		19,939
Inventories	(15,412)		(26,979)
Costs and estimated earnings in excess of billings	(8,442)		1,710
Other current assets	(9,209)		(2,519)
Other assets	2,504		5,543
(Decrease) increase in operating liabilities, net of acquisitions and dispositions:
Accounts payable	14,518		(2,712)
Accrued expenses	(24,130)		(20,776)
Billings in excess of costs and estimated earnings	(2,578)		245
Tax receivable agreement liability	4,152		993
Other liabilities	(3,266)		(3,316)
Net cash used in operating activities	(21,318)		(38,931)
Cash flow from investing activities:
Purchases of property, plant and equipment	(69,757)		(61,829)
Proceeds from the sale of property, plant and equipment	2,663		3,160
Proceeds from sale of business	33,077		—
Other	(483)		1,801
Net cash used in investing activities	(34,500)		(56,868)
Cash flow from financing activities:
Payments on debt	(10,170)		(5,493)
Payments on acquisition-related liabilities	(8,096)		(9,515)
Proceeds from stock option exercises	15,920		310
Other	(416)		(908)
Net cash used in financing activities	(2,762)		(15,606)
Impact of foreign currency on cash	140		(800)
Net decrease in cash	(58,440)		(112,205)
Cash and cash equivalents—beginning of period	418,181		311,319
Cash and cash equivalents—end of period	$	359,741	$	199,114

See notes to unaudited consolidated financial statements.

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SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Consolidated Statements of Changes in Stockholders’ Equity

(In thousands, except share amounts) 

	Summit Materials, Inc.
			Accumulated
			Other		Class A			Class B			Additional		Noncontrolling		Total
	Accumulated		Comprehensive		Common Stock			Common Stock			Paid-in		Interest in		Stockholders’
	Earnings		income (loss)		Shares	Dollars		Shares	Dollars		Capital		Summit Holdings		Equity
Balance - January 2, 2021	$	326,772	$	5,203	114,390,595	$	1,145	99	$	—	$	1,264,681	$	18,467	$	1,616,268
Net loss	(22,517)		—		—	—		—	—		—		(728)		(23,245)
LP Unit exchanges	—		—		711,794	7		—	—		4,744		(4,751)		—
Other comprehensive income, net of tax	—		1,635		—	—		—	—		—		45		1,680
Stock option exercises	—		—		863,338	9		—	—		15,911		—		15,920
Share-based compensation	—		—		—	—		—	—		5,363		—		5,363
Shares redeemed to settle taxes and other	—		—		678,605	6		—	—		(1,432)		—		(1,426)
Balance - April 3, 2021	$	304,255	$	6,838	116,644,332	$	1,167	99	$	—	$	1,289,267	$	13,033	$	1,614,560
Balance — December 28, 2019	$	188,805	$	3,448	113,309,385	$	1,134	99	$	—	$	1,234,020	$	17,366	$	1,444,773
Net loss	(44,979)		—		—	—		—	—		—		(1,747)		(46,726)
LP Unit exchanges	—		—		196,542	2		—	—		1,132		(1,134)		—
Other comprehensive loss, net of tax	—		(6,093)		—	—		—	—		—		(220)		(6,313)
Stock option exercises	—		—		13,335	—		—	—		310		—		310
Share-based compensation	—		—		—	—		—	—		4,905		—		4,905
Shares redeemed to settle taxes and other	—		—		591,335	6		—	—		(1,096)		—		(1,090)
Balance — March 28, 2020	$	143,826	$	(2,645)	114,110,597	$	1,142	99	$	—	$	1,239,271	$	14,265	$	1,395,859

See notes to unaudited consolidated financial statements.

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SUMMIT MATERIALS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in tables in thousands, except per share amounts or otherwise noted)

1.SUMMARY OF ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Summit Materials, Inc. (“Summit Inc.” and, together with its subsidiaries, “Summit,” “we,” “us,” “our” or the “Company”) is a vertically-integrated construction materials company. The Company is engaged in the production and sale of aggregates, cement, ready-mix concrete, asphalt paving mix and concrete products and owns and operates quarries, sand and gravel pits, two cement plants, cement distribution terminals, ready-mix concrete plants, asphalt plants and landfill sites. It is also engaged in paving and related services. The Company’s three operating and reporting segments are the West, East and Cement segments.

Substantially all of the Company’s construction materials, products and services are produced, consumed and performed outdoors, primarily in the spring, summer and fall. Seasonal changes and other weather-related conditions can affect the production and sales volumes of its products and delivery of services. Therefore, the financial results for any interim period are typically not indicative of the results expected for the full year. Furthermore, the Company’s sales and earnings are sensitive to national, regional and local economic conditions, weather conditions and to cyclical changes in construction spending, among other factors.

Summit Inc. is a holding corporation operating and controlling all of the business and affairs of Summit Materials Holdings L.P. (“Summit Holdings”) and its subsidiaries and, through Summit Holdings, conducts its business. Summit Inc. owns the majority of the partnership interests of Summit Holdings (see Note 9, Stockholders’ Equity). Summit Materials, LLC (“Summit LLC”) an indirect wholly owned subsidiary of Summit Holdings, conducts the majority of our operations. Summit Materials Finance Corp. (“Summit Finance”), an indirect wholly owned subsidiary of Summit LLC, has jointly issued our Senior Notes as described below.

Basis of Presentation—These unaudited consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures typically included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto as of and for the year ended January 2, 2021. The Company continues to follow the accounting policies set forth in those audited consolidated financial statements.

Management believes that these consolidated interim financial statements include all adjustments, normal and recurring in nature, that are necessary to present fairly the financial position of the Company as of April 3, 2021, the results of operations for the three months ended April 3, 2021 and March 28, 2020 and cash flows for the three months ended April 3, 2021 and March 28, 2020.

Principles of Consolidation—The consolidated financial statements include the accounts of Summit Inc. and its majority owned subsidiaries. All intercompany balances and transactions have been eliminated.

For a summary of the changes in Summit Inc.’s ownership of Summit Holdings, see Note 9, Stockholders’ Equity.

Use of Estimates—Preparation of these consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and reported amounts of revenue and expenses. Such estimates include the valuation of accounts receivable, inventories, valuation of deferred tax assets, goodwill, intangibles and other long-lived assets, tax receivable agreement ("TRA") liability, pension and other postretirement obligations and asset retirement obligations. Estimates also include revenue earned on contracts and costs to complete contracts. Most of the Company’s paving and related services are performed under fixed unit-price contracts with state and local governmental entities. Management regularly evaluates its estimates and assumptions based on historical experience and other factors, including the current economic environment. As future events and their effects cannot be determined with precision, actual results can differ significantly from estimates made. Changes in estimates, including those resulting from continuing changes in the economic environment, are reflected in the Company’s consolidated financial statements when the change in estimate occurs.

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Business and Credit Concentrations—The Company’s operations are conducted primarily across 21 U.S. states and in British Columbia, Canada, with the most significant revenue generated in Texas, Utah, Kansas and Missouri. The Company’s accounts receivable consist primarily of amounts due from customers within these areas. Therefore, collection of these accounts is dependent on the economic conditions in the aforementioned states, as well as specific situations affecting individual customers. Credit granted within the Company’s trade areas has been granted to many customers, and management does not believe that a significant concentration of credit exists with respect to any individual customer or group of customers. No single customer accounted for more than 10% of the Company’s total revenue in the three months ended April 3, 2021 or March 28, 2020.

Revenue Recognition—We earn revenue from the sale of products, which primarily include aggregates, cement, ready-mix concrete and asphalt, but also include concrete products, and from the provision of services, which are primarily paving and related services.

Products: Revenue for product sales is recognized when evidence of an arrangement exists and when control passes, which generally is when the product is shipped. 

Services: We earn revenue from the provision of services, which are primarily paving and related services, which are typically calculated using monthly progress based on the percentage of completion or a customer’s engineer review of progress.

The majority of our construction service contracts are completed within one year, but may occasionally extend beyond this time frame. The majority of our construction service contracts are for work that occurs mostly during the spring, summer and fall. We generally measure progress toward completion on long-term paving and related services contracts based on the proportion of costs incurred to date relative to total estimated costs at completion.

The percentage of completion method of accounting involves the use of various estimating techniques to project costs at completion, and in some cases includes estimates of recoveries asserted against the customer for changes in specifications or other disputes.

Earnings per Share—The Company computes basic earnings per share attributable to stockholders by dividing income attributable to Summit Inc. by the weighted-average shares of Class A common stock outstanding. Diluted earnings per share reflects the potential dilution beyond shares for basic earnings per share that could occur if securities or other contracts to issue common stock were exercised, converted into common stock, or resulted in the issuance of common stock that would have shared in the Company’s earnings. Since the Class B common stock has no economic value, those shares are not included in the weighted-average common share amount for basic or diluted earnings per share. In addition, as the shares of Class A common stock are issued by Summit Inc., the earnings and equity interests of noncontrolling interests are not included in basic earnings per share.

Prior Period Reclassifications — Beginning in the first quarter of 2021, we have reclassified $31.2 million of fixed overhead expenses related to production activities from general and administrative expenses to cost of revenue for the three months ended March 28, 2020 to conform to the current year presentation. In addition, we reclassified $1.9 million of gain on sale of property, plant and equipment from general and administrative expenses to a separate line item included within operating loss, also to conform to the current year presentation. Lastly, we reclassified $0.8 million of transaction costs from its own line item within operating loss into general and administrative expenses for the three months ended March 28, 2020 to conform to the current year presentation. We believe these reclassifications enhance the comparability of our financial statements to others in the industry and had no impact on previously reported operating income or Adjusted EBITDA, a non-GAAP measure described in note 14 below.

New Accounting Standards — In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which reduces the accounting complexity of implementing a cloud computing service arrangement. The ASU aligns the capitalization of implementation costs among hosting arrangements and costs incurred to develop internal-use software. We adopted this ASU in the first quarter of 2020 and the adoption of this ASU did not have a material impact on the consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework Changes to The Disclosure Requirements for Defined Benefits Plans, which modifies the disclosure requirements of employer-sponsored defined benefit and other postretirement benefits plans. The

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ASU is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. We adopted this ASU in the fourth quarter of 2020 and the adoption of this ASU did not have a material impact on the consolidated financial statements.

2.ACQUISITIONS, DISPOSITIONS, GOODWILL AND INTANGIBLES

The Company has completed numerous acquisitions since its formation, which have been financed through a combination of debt and equity funding and available cash. The operations of each acquisition have been included in the Company’s consolidated results of operations since the respective closing dates of the acquisitions. The Company measures all assets acquired and liabilities assumed at their acquisition-date fair value. Goodwill acquired during a business combination has an indefinite life and is not amortized.

Changes in the carrying amount of goodwill, by reportable segment, from January 2, 2021 to April 3, 2021 are summarized as follows:

	West		East		Cement		Total
Balance—January 2, 2021	$	586,209	$	410,426	$	204,656	$	1,201,291
Acquisitions (dispositions) (1)	—		(670)		—		(670)
Foreign currency translation adjustments	805		—		—		805
Balance—April 3, 2021	$	587,014	$	409,756	$	204,656	$	1,201,426

_______________________________________________________________________

(1) Reflects goodwill from acquisitions and dispositions completed during the three months ended April 3, 2021 and working capital adjustments from prior year acquisitions.

The Company’s intangible assets subject to amortization are primarily composed of operating permits, mineral lease agreements and reserve rights. Operating permits relate to permitting and zoning rights acquired outside of a business combination. The assets related to mineral lease agreements reflect the submarket royalty rates paid under agreements, primarily for extracting aggregates. The values were determined as of the respective acquisition dates by a comparison of market-royalty rates. The reserve rights relate to aggregate reserves to which the Company has the rights of ownership, but does not own the reserves. The intangible assets are amortized on a straight-line basis over the lives of the leases or permits. The following table shows intangible assets by type and in total:

	April 3, 2021						January 2, 2021
	Gross  Carrying  Amount		Accumulated  Amortization		Net  Carrying  Amount		Gross  Carrying  Amount		Accumulated  Amortization		Net  Carrying  Amount
Operating permits	$	33,671	$	(1,553)	$	32,118	$	33,671	$	(1,207)	$	32,464
Mineral leases	19,225		(7,857)		11,368		19,225		(7,571)		11,654
Reserve rights	25,586		(2,710)		22,876		6,234		(2,504)		3,730
Other	5,506		(382)		5,124		586		(582)		4
Total intangible assets	$	83,988	$	(12,502)	$	71,486	$	59,716	$	(11,864)	$	47,852

Amortization expense totaled $1.0 million and $0.7 million for the three months ended April 3, 2021 and March 28, 2020, respectively. The estimated amortization expense for the intangible assets for each of the five years subsequent to April 3, 2021 is as follows:

2021 (nine months)	$	3,023
2022	4,091
2023	3,904
2024	3,809
2025	3,765
2026	3,620
Thereafter	49,274
Total	$	71,486

In the first quarter of 2021, as part of the Company's strategy to rationalize assets, the Company sold a business in the East segment, resulting in cash proceeds of $33.1 million and a total gain on disposition of $15.7 million.

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3.REVENUE RECOGNITION

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

Revenue by product for the three months ended April 3, 2021 and March 28, 2020 is as follows:

	Three months ended
	April 3, 2021		March 28, 2020
Revenue by product*:
Aggregates	$	117,388	$	96,161
Cement	38,139		32,863
Ready-mix concrete	158,233		141,704
Asphalt	28,375		23,206
Paving and related services	43,215		33,426
Other	42,494		39,830
Total revenue	$	427,844	$	367,190

*Revenue from liquid asphalt terminals is included in asphalt revenue.

Accounts receivable, net consisted of the following as of April 3, 2021 and January 2, 2021: 

	April 3, 2021		January 2, 2021
Trade accounts receivable	$	212,825	$	191,871
Construction contract receivables	24,795		47,179
Retention receivables	15,080		18,824
Receivables from related parties	1,569		1,339
Accounts receivable	254,269		259,213
Less: Allowance for doubtful accounts	(4,211)		(4,517)
Accounts receivable, net	$	250,058	$	254,696

Retention receivables are amounts earned by the Company but held by customers until paving and related service contracts and projects are near completion or fully completed. Amounts are generally billed and collected within one year.

4.INVENTORIES

Inventories consisted of the following as of April 3, 2021 and January 2, 2021: 

	April 3, 2021		January 2, 2021
Aggregate stockpiles	$	137,595	$	137,938
Finished goods	39,331		32,993
Work in process	7,186		9,281
Raw materials	26,822		20,096
Total	$	210,934	$	200,308

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5.ACCRUED EXPENSES

Accrued expenses consisted of the following as of April 3, 2021 and January 2, 2021:

	April 3, 2021		January 2, 2021
Interest	$	14,292	$	21,860
Payroll and benefits	25,459		46,026
Finance lease obligations	21,271		24,601
Insurance	20,083		18,355
Non-income taxes	18,566		15,669
Deferred asset purchase payments	3,788		9,749
Professional fees	1,006		828
Other (1)	25,873		23,482
Total	$	130,338	$	160,570

(1)Consists primarily of current portion of asset retirement obligations and miscellaneous accruals.

6.DEBT

Debt consisted of the following as of April 3, 2021 and January 2, 2021: 

	April 3, 2021		January 2, 2021
Term Loan, due 2024:
$614.7 million and $616.3 million, net of $0.8 million and $0.9 million discount at April 3, 2021 and January 2, 2021, respectively	$	613,894	$	615,425
51⁄8% Senior Notes, due 2025	300,000		300,000
61⁄2% Senior Notes, due 2027	300,000		300,000
51⁄4% Senior Notes, due 2029	700,000		700,000
Total	1,913,894		1,915,425
Current portion of long-term debt	6,354		6,354
Long-term debt	$	1,907,540	$	1,909,071

The contractual payments of long-term debt, including current maturities, for the five years subsequent to April 3, 2021, are as follows:

2021 (nine months)	$	4,765
2022	6,353
2023	6,354
2024	597,253
2025	300,000
2026	—
Thereafter	1,000,000
Total	1,914,725
Less: Original issue net discount	(831)
Less: Capitalized loan costs	(16,018)
Total debt	$	1,897,876

Senior Notes—On August 11, 2020, Summit LLC and Summit Finance (together, the “Issuers”) issued $700.0 million in aggregate principal amount of 5.250% senior notes due January 15, 2029 (the “2029 Notes”). The 2029 Notes were issued at 100.0% of their par value with proceeds of $690.4 million, net of related fees and expenses. The 2029 Notes were issued under an indenture dated August 11, 2020 (the "2020 Indenture"). The 2020 Indenture contains covenants limiting, among other things, Summit LLC and its restricted subsidiaries’ ability to incur additional indebtedness or issue certain preferred shares, pay dividends, redeem stock or make other distributions, make certain investments, sell or transfer certain assets, create liens, consolidate, merge, sell or otherwise dispose of all or substantially all of its assets, enter into certain

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transactions with affiliates, and designate subsidiaries as unrestricted subsidiaries. The 2020 Indenture also contains customary events of default. Interest on the 2029 Notes is payable semi-annually on January 15 and July 15 of each year commencing on January 15, 2021.

On March 15, 2019, the Issuers issued $300.0 million in aggregate principal amount of 6.500% senior notes due March 15, 2027 (the “2027 Notes”). The 2027 Notes were issued at 100.0% of their par value with proceeds of $296.3 million, net of related fees and expenses. The 2027 Notes were issued under an indenture dated March 25, 2019, the terms of which are generally consistent with the 2020 Indenture. Interest on the 2027 Notes is payable semi-annually on March 15 and September 15 of each year commencing on September 15, 2019.

In 2017, the Issuers issued $300.0 million of 5.125% senior notes due June 1, 2025 (the “2025 Notes”). The 2025 Notes were issued at 100.0% of their par value with proceeds of $295.4 million, net of related fees and expenses. The 2025 Notes were issued under an indenture dated June 1, 2017, the terms of which are generally consistent with the 2020 Indenture. Interest on the 2025 Notes is payable semi-annually on June 1 and December 1 of each year commencing on December 1, 2017.

As of April 3, 2021 and January 2, 2021, the Company was in compliance with all financial covenants under the applicable indentures.

Senior Secured Credit Facilities— Summit LLC has credit facilities that provide for term loans in an aggregate amount of $650.0 million and revolving credit commitments in an aggregate amount of $345.0 million (the “Senior Secured Credit Facilities”). Under the Senior Secured Credit Facilities, required principal repayments of 0.25% of the refinanced aggregate amount of term debt are due on the last business day of each March, June, September and December commencing with the March 2018 payment. The unpaid principal balance is due in full on the maturity date, which is November 21, 2024.

The revolving credit facility bears interest per annum equal to, at Summit LLC’s option, either (i) a base rate determined by reference to the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate of Bank of America, N.A. and (c) LIBOR plus 1.00%, plus an applicable margin of 2.00% for base rate loans or (ii) a LIBOR rate determined by reference to Reuters prior to the interest period relevant to such borrowing adjusted for certain additional costs plus an applicable margin of 3.00% for LIBOR rate loans. The maturity date with respect to revolving credit commitments under the revolving credit facility is February 25, 2024.

There were no outstanding borrowings under the revolving credit facility as of April 3, 2021 and January 2, 2021, with borrowing capacity of $329.1 million remaining as of April 3, 2021, which is net of $15.9 million of outstanding letters of credit. The outstanding letters of credit are renewed annually and support required bonding on construction projects, large leases, workers compensation claims and the Company’s insurance liabilities.

Summit LLC’s Consolidated First Lien Net Leverage Ratio, as such term is defined in the Credit Agreement, should be no greater than 4.75:1.0 as of each quarter-end. As of April 3, 2021 and January 2, 2021, Summit LLC was in compliance with all financial covenants.

Summit LLC’s wholly-owned domestic subsidiary companies, subject to certain exclusions and exceptions, are named as subsidiary guarantors of the Senior Notes and the Senior Secured Credit Facilities. In addition, Summit LLC has pledged substantially all of its assets as collateral, subject to certain exclusions and exceptions, for the Senior Secured Credit Facilities.

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The following table presents the activity for the deferred financing fees for the three months ended April 3, 2021 and March 28, 2020:

	Deferred financing fees
Balance—January 2, 2021	$	18,367
Amortization	(836)
Balance—April 3, 2021	$	17,531
Balance—December 28, 2019	$	15,436
Amortization	(833)
Balance—March 28, 2020	$	14,603

Other—On January 15, 2015, the Company’s wholly-owned subsidiary in British Columbia, Canada entered into an agreement with HSBC Bank Canada for a (i) $6.0 million Canadian dollar (“CAD”) revolving credit commitment to be used for operating activities that bears interest per annum equal to the bank’s prime rate plus 0.20%, (ii) $0.5 million CAD revolving credit commitment to be used for capital equipment that bears interest per annum at the bank’s prime rate plus 0.90% and (iii) $0.3 million CAD revolving credit commitment to provide guarantees on behalf of that subsidiary. There were no amounts outstanding under this agreement as of April 3, 2021 or January 2, 2021.

7.INCOME TAXES

Summit Inc.’s tax provision includes its proportional share of Summit Holdings’ tax attributes. Summit Holdings’ subsidiaries are primarily limited liability companies but do include certain entities organized as C corporations and a Canadian subsidiary. The tax attributes related to the limited liability companies are passed on to Summit Holdings and then to its partners, including Summit Inc. The tax attributes associated with the C corporation and Canadian subsidiaries are fully reflected in the Company’s accounts.

Our income tax benefit was $5.4 million and $22.9 million in the three months ended April 3, 2021 and March 28, 2020, respectively. The effective tax rate for Summit Inc. differs from the federal statutory tax rate primarily due to (1) unrecognized tax benefits in 2020, (2) state taxes, (3) tax depletion expense in excess of the expense recorded under U.S. GAAP, (4) the minority interest in the Summit Holdings partnership that is allocated outside of the Company and (5) various other items such as limitations on meals and entertainment, certain stock compensation and other costs. In the first quarter of 2020, we recorded the impact of the Coronavirus Aid, Relief and Economic Stability Act ("CARES Act") enacted into law in late March 2020, which reduced our unrecognized tax benefits by approximately $9.5 million.

As of April 3, 2021 and January 2, 2021, Summit Inc. had a valuation allowance of $1.7 million, which relates to certain deferred tax assets in taxable entities where realization is not more likely than not.