Summit Materials, Inc. Reports Third Quarter 2024 Results
Pricing Momentum Continues
Sets ELEVATE Summit Record for Quality of Earnings
Refining 2024 Guidance
DENVER, Oct. 30, 2024 /PRNewswire/ -- Summit Materials, Inc. (NYSE:SUM) ("Summit," "Summit Materials," "Summit Inc." or the "Company"), a market-leading producer of aggregates and cement company, today announced results for the third quarter ended September 28, 2024. All comparisons are versus the quarter ended September 30, 2023 unless noted otherwise.
Three months ended
($ in thousands, except per share amounts)
September 28, 2024
September 30, 2023
% Chg vs. PY
Net revenue
$ 1,111,846
$ 741,960
49.9 %
Operating income
194,651
127,983
52.1 %
Net income
105,178
232,725
(54.8) %
Basic EPS
$ 0.60
$ 1.93
(68.9) %
Adjusted Cash Gross Profit
382,827
251,638
52.1 %
Adjusted EBITDA
314,672
208,519
50.9 %
Adjusted Diluted EPS
$ 0.75
$ 0.81
(7.4) %
"Our materials-led portfolio delivered another resilient quarter of financial results, even amid significant rainfall and severe weather events that impacted many of our key markets," commented Anne Noonan, Summit Materials President and CEO. "I'm incredibly proud of our teams that responded safely and with agility to produce an Elevate-era record for EBITDA margins and take valuable steps towards achieving our strategic agenda. Today, due to volumes below prior expectations and including valuable self-help offsets, we are refining the mid-point of our full year guide to $985 million. Concurrently and thanks to strong execution, we are increasing our Adjusted EBITDA margin expectations to at least 24% in 2024. Without question, our Summit team has successfully navigated a dynamic environment to strengthen our business, improve our commercial and operational capabilities, and critically, build momentum as we focus on the fourth quarter and our path forward in 2025."
Scott Anderson, Executive Vice President and CFO of Summit Materials added, "Our capital allocation strategy is designed to unlock growth in a disciplined, returns-focused manner. With nearly $740 million in cash on hand and a capable balance sheet, Summit is well-equipped to invest in top growth prospects, both organic and inorganic, driving long-term sustainable returns for our shareholders."
2024 Guidance
For the full year 2024, Summit is refining its Adjusted EBITDA guidance to incorporate performance over the first nine months, including the impact of unfavorable weather conditions. The Company is now projecting Adjusted EBITDA of approximately $970 million to $1 billion. Summit also currently projects 2024 capital expenditures of approximately $390 million to $410 million.
Adjusted EBITDA is a non-GAAP measure. Refer to the "Non-GAAP Financial Measures" section for more information. Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.
Third Quarter 2024 | Total Company Results
Net revenue increased $369.9 million, or 49.9%, in the third quarter to $1,111.8 million. In the quarter, $403.4 million of net revenue was due to acquisitions, primarily the Argos USA transaction. Divestitures decreased net revenue by $43.6 million in the period. All lines of business experienced organic pricing growth.
Operating income increased in the third quarter by 52.1% to $194.7 million largely due to the Argos USA transaction. Summit's operating margin percentage for the three months ended September 28, 2024, increased to 17.5% from 17.2%.
Net income attributable to Summit Inc. decreased to $105.2 million, or $0.60 per basic share, compared to $230.0 million, or $1.93 per basic share in the prior year period. The decrease is due primarily to the tax receivable benefit recognized in the third quarter of 2023 of $153.1 million. Summit reported adjusted diluted net income of $131.2 million, or $0.75 per adjusted diluted share, compared to an adjusted diluted net income of $97.5 million, or $0.81 per adjusted diluted share, in the prior year period.
Adjusted EBITDA increased $106.2 million, or 50.9%, to $314.7 million reflecting the contribution from the Argos USA assets, continued pricing gains, and operational improvements across the enterprise, including integration synergies.
Third Quarter 2024 | Results by Line of Business
Aggregates Business: Aggregates net revenues increased by $12.5 million to $192.3 million in the third quarter. Aggregates adjusted cash gross profit margin decreased to 58.5% in the third quarter as compared to 59.0% in the prior year period. Aggregates sales volume decreased 1.8% in the third quarter as a result of divestitures. Organic aggregates sales volumes increased 0.7% primarily driven by Utah, British Columbia, and the Carolinas. Average selling prices for aggregates increased 7.4%, with organic pricing growth of 6.9%. Pricing growth was strong throughout the footprint and led by the East Segment, which increased 8.3% versus the prior year period.
Cement Business: Cement Segment net revenues increased to $323.2 million in the third quarter. Cement Segment adjusted cash gross profit margin increased to 47.2% in the third quarter, compared to 46.3% in the prior year period. Sales volume of cement increased 203.1% while organic sales volumes decreased 11.3% due to a combination of adverse weather conditions and moderating demand leading to, in part, lower imported volumes versus the prior year period. Organic average selling prices increased 3.9% in the third quarter, primarily reflecting increases implemented earlier in the year.
Products Business: Products net revenues were $516.4 million in the third quarter, up 48.9% versus the prior year period. Products adjusted cash gross profit margin decreased to 17.8% in the third quarter. Organic average sales price for ready-mix concrete increased 5.5%, with pricing growth in both segments. Organic sales volumes of ready-mix concrete decreased 10.0% due to unfavorable weather conditions and subdued private end-market activity. Organic average selling prices for asphalt increased 4.5%. Organic sales volume increased 0.4%, driven by growth in North Texas.
Third Quarter 2024 | Results By Reporting Segment
West Segment: The West Segment operating income increased $6.2 million to $95.8 million. Adjusted EBITDA increased $10.5 million, or 8.9%, to $128.4 million in the third quarter. Aggregates revenue increased 1.5%, driven by continued pricing growth. Pricing grew 6.2% over the prior period led by double-digit growth in certain Texas markets, as well as Arizona. Ready-mix concrete revenue increased 10.6% on 3.3% pricing growth and 7.1% volume growth. Organic ready-mix pricing increased 5.4%. Restrained private construction activity and weather headwinds drove organic ready-mix volumes down 10.4% in the period. Asphalt revenue increased 4.9% reflecting a volume increase of 0.4% and pricing growth of 4.5%.
East Segment: The East Segment operating income increased $16.5 million to $50.7 million and Adjusted EBITDA increased $20.2 million to $70.3 million. Aggregates revenue increased 9.5% versus the prior year period. Organic Aggregates volumes increased 1.1%, with the Carolinas and Missouri markets offsetting softness in Kansas. Aggregates pricing increased 8.3% with most markets realizing high single-digit or double-digit growth. Ready-mix concrete revenue increased $142.3 million to $165.4 million due to the acquisition of the Argos USA ready-mix concrete operations in Florida, Georgia, and the Carolinas. Asphalt revenue decreased $7.8 million versus the prior year period due to divestiture of asphalt assets.
Cement Segment: The Cement Segment operating income increased 142.5% to $92.8 million. Adjusted EBITDA increased $89.7 million, primarily from the Argos USA transaction. Adjusted EBITDA margin increased to 43.3% from 41.5%. As noted above, the Cement Segment reported an organic volume decrease of 11.3% and organic selling price growth of 3.9%.
Liquidity and Capital Resources
As of September 28, 2024, the Company had $737.5 million in cash and $2.8 billion in debt outstanding. The Company's $625 million revolving credit facility has $592.7 million available after outstanding letters of credit.
For the nine months ended September 28, 2024, cash flow provided by operations was $344.2 million and cash paid for capital expenditures was $275.1 million.
As of September 28, 2024, approximately $149.0 million remained available for share repurchases under the share repurchase program.
Webcast and Conference Call Information
Summit Materials will conduct a conference call on Thursday, October 31, 2024, at 11:00 a.m. eastern time (9:00 a.m. mountain time) to review the Company's third quarter 2024 financial results, discuss recent events and conduct a question-and-answer session.
A webcast of the conference call and accompanying presentation materials 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.
A webcast of the conference call and accompanying presentation materials will be available in the Investors section of Summit's website at investors.summit-materials.com or at the following link: https://events.q4inc.com/attendee/353405932
To participate in the live teleconference for third quarter 2024 financial results:
North America Toll-Free:
1-888-330-3416
International Toll:
1-646-960-0820
Conference ID:
1542153
Password:
Summit
To listen to a replay of the teleconference, which will be available through November 7, 2024:
US & Canada Toll-Free:
1-800-770-2030
Conference ID:
1542153
About Summit Materials
Summit Materials is a market-leading producer of aggregates and cement with vertically integrated operations that supply ready-mix concrete and asphalt in select markets. Summit is a geographically diverse, materials-led business of scale that offers customers in the United States and British Columbia, Canada high quality products and services for the public infrastructure, residential and non-residential end markets. Summit has a strong track record of successful acquisitions since its founding and continues to pursue high-return growth opportunities in new and existing markets. For more information about Summit Materials, please visit www.summit-materials.com.
Non-GAAP Financial Measures
The Securities and Exchange Commission ("SEC") regulates the use of "non-GAAP financial measures," such as Adjusted Net Income (Loss), Adjusted Diluted Net Income (Loss), Adjusted Diluted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, 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 these measures because, among 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. Our Adjusted Net Income (Loss), Adjusted Diluted Net Income (Loss), Adjusted Diluted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, and Free Cash Flow may vary from the use of such terms by others and should not be considered as alternatives to or more important than 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, Adjusted EBITDA Margin, 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, Adjusted EBITDA Margin and other non-GAAP measures 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; and (iv) income tax payments we are required to make. Because of these limitations, we rely primarily on our U.S. GAAP results and use Adjusted EBITDA, Adjusted EBITDA Margin and other non-GAAP measures on a supplemental basis.
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Adjusted Net Income (Loss), Adjusted Diluted Net Income (Loss), Adjusted Diluted EPS, and Free Cash Flow reflect additional ways of viewing aspects of our business that, when viewed with our GAAP results and the accompanying reconciliations to 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. 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 attached tables.
Cautionary Statement Regarding Forward-Looking Statements
This press release 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," "outlook," "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 December 30, 2023, and Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2024, each as filed with the SEC, and any factors discussed in the section entitled "Risk Factors" in any of our subsequently filed SEC filings; and the following:
our dependence on the construction industry and the strength of the local economies in which we operate, including residential;
the cyclical nature of our business;
risks related to weather and seasonality;
risks associated with our capital-intensive business;
competition within our local markets;
risks related to the integration of Argos USA and realization of intended benefits within the intended timeframe;
our ability to execute on our acquisition strategy and portfolio optimization strategy and, successfully integrate acquisitions with our existing operations;
our dependence on securing and permitting aggregate reserves in strategically located areas;
the impact of rising interest rates;
declines in public infrastructure construction and delays or reductions in governmental funding, including the funding by transportation authorities, the federal government and other state agencies particularly;
our reliance on private investment in infrastructure, which may be adversely affected by periods of economic stagnation and recession;
environmental, health and safety laws or governmental requirements or policies concerning zoning and land use;
rising prices for, or more limited availability of, commodities, labor and other production and delivery inputs as a result of inflation, supply chain challenges or otherwise;
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 current level of indebtedness, including our exposure to variable interest rate risk;
potential incurrence of substantially more debt;
restrictive covenants in the instruments governing our debt obligations;
our dependence on senior management and other key personnel, and our ability to retain 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 other regulations;
evolving corporate governance and corporate disclosure regulations and expectations, including with respect to environmental, social and governance matters;
unexpected operational failures or difficulties;
costs associated with pending and future litigation;
interruptions in our information technology systems and infrastructure; including cybersecurity and data leakage risks;
potential labor disputes, strikes, other forms of work stoppage or other union activities; and
material or adverse effects related to the Argos USA combination.
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 press release. 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.
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 28,
September 30,
September 28,
September 30,
2024
2023
2024
2023
Revenue:
Product
$ 1,013,646
$ 641,778
$ 2,736,081
$ 1,609,664
Service
98,200
100,182
224,465
219,939
Net revenue
1,111,846
741,960
2,960,546
1,829,603
Delivery and subcontract revenue
59,291
52,837
133,868
129,732
Total revenue
1,171,137
794,797
3,094,414
1,959,335
Cost of revenue (excluding items shown separately below):
Product
658,901
412,784
1,865,009
1,086,299
Service
70,118
77,538
163,453
173,568
Net cost of revenue
729,019
490,322
2,028,462
1,259,867
Delivery and subcontract cost
59,291
52,837
133,868
129,732
Total cost of revenue
788,310
543,159
2,162,330
1,389,599
General and administrative expenses
78,916
50,895
231,317
150,731
Depreciation, depletion, amortization and accretion
99,159
57,452
299,527
163,133
Transaction and integration costs
13,656
17,442
86,129
19,518
Gain on sale of property, plant and equipment
(3,555)
(2,134)
(7,583)
(5,787)
Operating income
194,651
127,983
322,694
242,141
Interest expense
50,916
28,013
155,657
83,335
Loss on debt financings
7,157
—
12,610
493
Tax receivable agreement benefit
—
(153,080)
—
(153,080)
Loss (gain) on sale of businesses
7,083
—
(11,660)
—
Other income, net
(9,224)
(3,583)
(26,188)
(14,771)
Income from operations before taxes
138,719
256,633
192,275
326,164
Income tax expense
33,541
23,908
48,292
39,923
Net income
105,178
232,725
143,983
286,241
Net income attributable to Summit Holdings (1)
—
2,680
(404)
3,363
Net income attributable to Summit Inc.
$ 105,178
$ 230,045
$ 144,387
$ 282,878
Earnings per share of Class A common stock:
Basic
$ 0.60
$ 1.93
$ 0.84
$ 2.38
Diluted
$ 0.60
$ 1.92
$ 0.83
$ 2.37
Weighted average shares of Class A common stock:
Basic
175,635,388
119,013,331
172,899,150
118,874,967
Diluted
176,287,257
119,725,693
173,649,453
119,558,974
________________________________________________________
(1) Represents portion of business owned by pre-IPO investors rather than by Summit.
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
($ in thousands, except share and per share amounts)
September 28,
December 30,
2024
2023
(unaudited)
(audited)
Assets
Current assets:
Cash and cash equivalents
$ 737,541
$ 374,162
Restricted cash
—
800,000
Accounts receivable, net
570,917
287,252
Costs and estimated earnings in excess of billings
35,263
10,289
Inventories
345,215
241,350
Other current assets
24,964
17,937
Current assets held for sale
1,495
1,134
Total current assets
1,715,395
1,732,124
Property, plant and equipment, less accumulated depreciation, depletion and amortization (September 28, 2024 - $1,568,591 and December 30, 2023 - $1,399,468)
4,293,472
1,976,820
Goodwill
2,069,495
1,224,861
Intangible assets, less accumulated amortization (September 28, 2024 - $50,670 and December 30, 2023 - $18,972)
157,269
68,081
Deferred tax assets, less valuation allowance (September 28, 2024 - $1,113 and December 30, 2023 - $1,113)
—
52,009
Operating lease right-of-use assets
83,012
36,553
Other assets
108,543
59,134
Total assets
$ 8,427,186
$ 5,149,582
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of debt
$ 10,100
$ 3,822
Current portion of acquisition-related liabilities
8,996
7,007
Accounts payable
274,957
123,621
Accrued expenses
226,310
171,691
Current operating lease liabilities
17,134
8,596
Billings in excess of costs and estimated earnings
15,334
8,228
Total current liabilities
552,831
322,965
Long-term debt
2,776,918
2,283,639
Acquisition-related liabilities
21,230
28,021
Tax receivable agreement liability
47,667
41,276
Deferred tax liabilities
206,168
15,854
Noncurrent operating lease liabilities
75,287
33,230
Other noncurrent liabilities
300,459
108,017
Total liabilities
3,980,560
2,833,002
Stockholders' equity:
Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 175,596,314 and 119,529,380 shares issued and outstanding as of September 28, 2024 and December 30, 2023, respectively
1,757
1,196
Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 0 and 99 shares issued and outstanding as of September 28, 2024 and December 30, 2023, respectively
—
—
Preferred Stock, par value ...
