DENVER--(BUSINESS WIRE)--Summit Materials, Inc. (NYSE:SUM, “Summit” or the “Company”), a leading vertically integrated construction materials company, announces results for the second quarter of 2016. The Company has posted supplementary materials to its investor relations website.
Highlights – Second Quarter 2016 Compared to Second Quarter 2015:
- Aggregates volume and price increased 10.9% and 9.5%, respectively; organic price up 6.7%
- Cement volume and price increased 114.7% and 10.7%, respectively
- Net income grew to $21.5 million
- Basic EPS of $0.22; Adjusted EPS improved to $0.46
- Adjusted EBITDA grew to $114.7 million and improved 400 basis points to 27.8% as a percent of net revenue
- Gross margin expanded 360 basis points to 38.8%, representing an incremental gross margin of 53.0%
- In April 2016, entered the Las Vegas, Nevada market through the acquisition of a vertically integrated aggregates and ready-mixed concrete business, providing Summit with premier, well-located assets in an expanding market
- In May 2016, acquired seven aggregates quarries in central and northwest Missouri adding over 100 million tons of permitted reserves, primarily serving infrastructure and nonresidential demand
- Full year 2016 Adjusted EBITDA outlook upwardly revised to a range of $360.0 million to $370.0 million
Tom Hill, CEO of Summit, stated, “We’ve made considerable progress over the past year integrating acquisitions, which contributed significantly to our net revenue and Adjusted EBITDA growth in the second quarter of 2016. Our materials-based growth strategy was evident with higher aggregates and cement exposure benefitting our overall gross margin performance. In cement, the successful integration of Davenport helped more than double Cement segment Adjusted EBITDA. The positive cement market fundamentals in the Mississippi river region resulted in both volume and price improvements. The Boxley, AMC and Sierra acquisitions completed during the year have all exceeded expectations and expanded our geographic footprint into several high growth markets. In our legacy businesses, we were pleased to achieve another quarter of organic price growth across all lines of business, including aggregates up 6.7%, helped by our effective price optimization focus. We experienced strong activity in North Texas highway demand and overall improvement in Utah, Kansas and Missouri. That said, organic volumes were softer overall due to wet weather, especially in Texas, lower aggregates volume in Vancouver with the completion of a large sand river project in 2015 and some competitive pressure in Austin, Texas. We expect all three of these factors to improve in the second half of the year as we make additional progress to grow our company. Moving forward in 2016, we are firmly situated to achieve our Adjusted EBITDA goals for the full year.”
Brian Harris, CFO of Summit, said, “We ended the second quarter with net leverage of 4.5x primarily reflecting the 46.8% increase in Adjusted EBITDA year-over-year. We were pleased to achieve this while funding two bolt-on transactions during the quarter and surpassing our targeted $30 million of annualized acquired Adjusted EBITDA. Our capital investments in our announced aggregates facility enhancement initiatives are also moving forward on schedule and on budget. With the continuation of strong results from our materials based-strategy along with ample liquidity on our balance sheet, we have the flexibility to pursue our strategy of acquiring attractively positioned reserves in attractive markets with selective downstream exposure, while maintaining our commitment to reduce our leverage ratios by year end.”
Second Quarter 2016 Operating Results
In the second quarter of 2016, net revenue increased 25.4% to $412.6 million, compared to $329.0 million in the prior year quarter. The improvement in net revenue was primarily attributable to an increase in volumes across all lines of business and higher prices in aggregates, cement and asphalt. Net revenue growth from acquisitions in the West and East segments was $56.5 million compared to the prior year quarter.
Adjusted EBITDA grew 46.8% to $114.7 million, compared to $78.1 million in the prior year quarter, with growth in all operating segments. As a percentage of net revenue, Adjusted EBITDA improved to 27.8%, up 400 basis points from the prior year quarter. Adjusted EBITDA by segment in the second quarter of 2016 compared to the prior year quarter was as follows:
- West: Increased $10.9 million to $50.6 million, primarily driven by organic price growth in all lines of business and the impact of acquisitions in the Utah-based market.
- East: Increased $6.1 million to $35.7 million, mainly as a result of a higher mix of revenue from aggregates, organic improvement in aggregates and ready mix, and the impact of acquisitions in the Mid-Atlantic market.
- Cement: Increased $21.8 million to $37.6 million, largely attributable to higher volume and price due to the favorable impact of the Davenport cement plant acquisition and stronger end market demand.
Gross profit increased 38.3% to $160.1 million, compared to $115.8 million in the prior year quarter. As a percentage of net revenue, gross margin improved to 38.8%, compared to 35.2% in the prior year quarter, primarily attributable to a higher percentage of revenue from materials and cost saving initiatives.
- Aggregates Results – Net revenue from aggregates increased 23.4% to $73.0 million. Aggregates organic price increased 6.7% with the improvement due to higher overall prices. Aggregates volumes grew 10.9% attributable to acquisitions. Gross margin from aggregates of 63.3% compared to 64.3% in the prior year quarter.
- Cement Results – Net revenue from cement grew 142.3% to $70.0 million. Cement volume and price increased 114.7% and 10.7%, respectively, mainly attributable to the acquisition of the Davenport cement plant and overall improved market pricing. Gross margin from cement expanded to 52.2% from 51.1% in the prior year quarter.
- Products Results – Net revenue from products increased 14.5% to $198.3 million. Ready-mixed concrete volumes were up 9.4% primarily resulting from acquisitions. Ready-mixed concrete organic price increased 1.2%, largely benefitting from the pass through of higher cement prices. Asphalt price rose 1.7%, mainly due to a shift in geographic mix. Gross margin from products expanded to 26.9%, compared to 25.9% in the prior year quarter.
In the second quarter of 2016, net income attributable to Summit Materials, Inc. was $13.4 million, and basic EPS was $0.22 per share of Class A common stock. The shares of Class A common stock are issued by Summit Materials, Inc., and as such the earnings and equity interests of noncontrolling interests, including LP units, are not included in basic earnings per share.
Adjusted net income was $46.2 million and Adjusted EPS was $0.46 per diluted share. Summit believes adjusted net income and Adjusted EPS are more representative of earnings performance, because these measures exclude the non-operating impact to earnings per share of any potential conversions of LP units to Class A common stock in any given quarter.
Acquisitions
In April 2016, Summit acquired Sierra Ready Mix, (“Sierra”), a vertically integrated aggregates and ready-mixed concrete business located in Las Vegas, Nevada. Sierra is a well-established aggregates and ready mix concrete supplier in the Las Vegas market with an excellent reputation for quality and service. Sierra operates a sand & gravel pit and two ready-mixed concrete facilities and has well-balanced exposure across all end-use segments. The acquisition provides Summit with premier, well-located assets in an expanding market.
In May 2016, Summit acquired seven aggregates quarries in central and northwest Missouri from Oldcastle Materials. These quarries added over 100 million tons of permitted reserves, primarily serving infrastructure and nonresidential demand, which enhances the scale and aggregate reserves position of Summit’s existing presence in Missouri.
Liquidity and Capital Resources
At July 2, 2016, the Company had cash of $9.2 million, total outstanding debt of $1,537.2 million and a borrowing capacity of $195.4 million. Our borrowing capacity is net of $25.6 million outstanding letters of credit and $14.0 million of outstanding borrowings under the revolving credit facility.
Full Year 2016 Outlook
For the full year 2016, based on current market conditions, Summit expects to generate Adjusted EBITDA in the range of $360.0 million to $370.0 million, compared to Adjusted EBITDA of $287.5 million in 2015. The Adjusted EBITDA outlook assumes organic improvement, along with the successor period for acquisitions completed through today’s date.
Summit continues to target approximately $30.0 million of annualized Adjusted EBITDA per year from acquisitions. The upwardly revised full year 2016 Adjusted EBITDA outlook range of $360.0 million to $370.0 million excludes the potential upside from any future acquisitions due to the unspecified closing dates of any future acquisitions, the timing of which will impact the magnitude of acquired Adjusted EBITDA realized in 2016.
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 Wednesday, August 3, 2016 to review second quarter 2016 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: | 86972581 | ||||||
To listen to a replay of the telephone conference call:
| Domestic: | 1-877-870-5176 | ||||||
| International: | 1-858-384-5517 | ||||||
| Conference ID: | 13640805 | ||||||
The playback recording can be accessed through September 3, 2016
About Summit Materials
Summit Materials is a leading vertically integrated materials-based company that supplies aggregates, cement, ready-mixed concrete and asphalt in the United States and British Columbia, Canada. Summit is a geographically diverse, materials-based business of scale that offers customers a single-source provider of construction materials and related downstream products in the public infrastructure, residential and nonresidential, and end markets. Summit has a strong track record of successful 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 Securities and Exchange Commission (“SEC”) regulates the use of “non-GAAP financial measures,” such as adjusted net income, Adjusted EPS, Adjusted EBITDA, gross profit and free cash outflow, 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, Adjusted EPS, Adjusted EBITDA, gross profit and free cash outflow, 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 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 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 and other non-GAAP measures only supplementally.
Adjusted EBITDA, gross profit, adjusted net income, Adjusted EPS and free cash outflow 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. 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, to the extent available without unreasonable effort. 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.
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 expectations for our anticipated benefits from recent acquisitions, 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 Annual Report on Form 10-K for the fiscal year ended January 2, 2016. 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.
| SUMMIT MATERIALS, INC. AND SUBSIDIARIES | ||||||||||||||||
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Unaudited Consolidated Statements of Operations |
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|
($ in thousands, except share and per share amounts) |
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| Three months ended | Six months ended | |||||||||||||||
| July 2, | June 27, | July 2, | June 27, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenue: | ||||||||||||||||
| Product | $ | 341,341 | $ | 261,270 | $ | 521,443 | $ | 410,190 | ||||||||
| Service | 71,295 | 67,739 | 99,232 | 93,958 | ||||||||||||
| Net revenue | 412,636 | 329,009 | 620,675 | 504,148 | ||||||||||||
| Delivery and subcontract revenue | 32,638 | 35,934 | 52,978 | 54,782 | ||||||||||||
| Total revenue | 445,274 | 364,943 | 673,653 | 558,930 | ||||||||||||
| Cost of revenue (excluding items shown separately below): | ||||||||||||||||
| Product | 202,091 | 163,632 | 334,585 | 283,423 | ||||||||||||
| Service | 50,471 | 49,604 | 74,525 | 69,234 | ||||||||||||
| Net cost of revenue | 252,562 | 213,236 | 409,110 | 352,657 | ||||||||||||
| Delivery and subcontract cost | 32,638 | 35,934 | 52,978 | 54,782 | ||||||||||||
| Total cost of revenue | 285,200 | 249,170 | 462,088 | 407,439 | ||||||||||||
| General and administrative expenses | 75,644 | 39,711 | 121,014 | 106,945 | ||||||||||||
| Depreciation, depletion, amortization and accretion | 37,408 | 27,386 | 69,768 | 53,512 | ||||||||||||
| Transaction costs | 290 | 6,376 | 3,606 | 7,740 | ||||||||||||
| Operating income (loss) | 46,732 | 42,300 | 17,177 | (16,706 | ) | |||||||||||
| Other expense, net | 666 | 102 | 234 | 493 | ||||||||||||
| Loss on debt financings |
- |
30,873 |
- |
31,672 | ||||||||||||
| Interest expense | 25,617 | 17,395 | 47,194 | 41,504 | ||||||||||||
| Income (loss) from operations before taxes | 20,449 | (6,070 | ) | (30,251 | ) | (90,375 | ) | |||||||||
| Income tax benefit | (1,056 | ) | (5,345 | ) | (9,222 | ) | (9,813 | ) | ||||||||
| Income (loss) from continuing operations | 21,505 | (725 | ) | (21,029 | ) | (80,562 | ) | |||||||||
| Income from discontinued operations |
- |
(758 | ) |
- |
(758 | ) | ||||||||||
| Net income (loss) | 21,505 | 33 | (21,029 | ) | (79,804 | ) | ||||||||||
| Net income (loss) attributable to noncontrolling interest in subsidiaries | 44 | 13 | (35 | ) | (1,969 | ) | ||||||||||
| Net income (loss) attributable to Summit Holdings (1) | 8,090 | 225 | (13,247 | ) | (67,479 | ) | ||||||||||
| Net income (loss) attributable to Summit Inc. | $ | 13,371 | $ | (205 | ) | $ | (7,747 | ) | $ | (10,356 | ) | |||||
| Net income (loss) per share of Class A common stock: | ||||||||||||||||
| Basic | $ | 0.22 | $ | (0.01 | ) | $ | (0.14 | ) | $ | (0.38 | ) | |||||
| Diluted | $ | 0.21 | $ | (0.01 | ) | $ | (0.20 | ) | $ | (0.39 | ) | |||||
| Weighted average shares of Class A common stock: | ||||||||||||||||
| Basic | 61,607,457 | 27,319,846 | 55,677,214 | 27,319,846 | ||||||||||||
| Diluted | 62,758,217 | 27,319,846 | 99,818,541 | 29,145,998 | ||||||||||||
(1) Represents portion of business owned by private interests
| SUMMIT MATERIALS, INC. AND SUBSIDIARIES | ||||||||
|
Consolidated Balance Sheets |
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|
($ in thousands, except share and per share amounts) |
||||||||
| July 2, | January 2, | |||||||
| 2016 | 2016 | |||||||
| (unaudited) | (audited) | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 9,168 | $ | 186,405 | ||||
| Accounts receivable, net | 213,048 | 145,544 | ||||||
| Costs and estimated earnings in excess of billings | 29,026 | 5,690 | ||||||
| Inventories | 174,739 | 130,082 | ||||||
| Other current assets | 8,040 | 4,807 | ||||||
| Total current assets | 434,021 | 472,528 | ||||||
| Property, plant and equipment, less accumulated depreciation, depletion and amortization (July 2, 2016 - $422,017 and January 2, 2016 - $366,505) | 1,439,194 | 1,269,006 | ||||||
| Goodwill | 757,658 | 596,397 | ||||||
| Intangible assets, less accumulated amortization (July 2, 2016 - $6,577 and January 2, 2016 - $5,237) | 25,582 | 15,005 | ||||||
| Other assets | 46,040 | 43,243 | ||||||
| Total assets | $ | 2,702,495 | $ | 2,396,179 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Current portion of debt | $ | 20,500 | $ | 6,500 | ||||
| Current portion of acquisition-related liabilities | 17,731 | 20,584 | ||||||
| Accounts payable | 103,624 | 81,397 | ||||||
| Accrued expenses | 106,960 | 92,942 | ||||||
| Billings in excess of costs and estimated earnings | 9,695 | 13,081 | ||||||
| Total current liabilities | 258,510 | 214,504 | ||||||
| Long-term debt | 1,516,733 | 1,273,652 | ||||||
| Acquisition-related liabilities | 32,533 | 39,977 | ||||||
| Other noncurrent liabilities | 116,461 | 100,186 | ||||||
| Total liabilities | 1,924,237 | 1,628,319 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 62,930,986 and 49,745,944 shares issued and outstanding as of July 2, 2016 and January 2, 2016, respectively | 630 | 497 | ||||||
| Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 69,007,297 shares issued and outstanding as of July 2, 2016 and January 2, 2016 | 690 | 690 | ||||||
| Additional paid-in capital | 681,334 | 619,003 | ||||||
| Accumulated earnings | 1,439 | 10,870 | ||||||
| Accumulated other comprehensive loss | (1,981 | ) | (2,795 | ) | ||||
| Stockholders’ equity | 682,112 | 628,265 | ||||||
| Noncontrolling interest in consolidated subsidiaries | 1,327 | 1,362 | ||||||
| Noncontrolling interest in Summit Holdings | 94,819 | 138,233 | ||||||
| Total stockholders’ equity | 778,258 | 767,860 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,702,495 | $ | 2,396,179 | ||||
| SUMMIT MATERIALS, INC. AND SUBSIDIARIES | ||||||||
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Unaudited Consolidated Statements of Cash Flows |
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|
($ in thousands) |
||||||||
| Six months ended | ||||||||
| July 2, | June 27, | |||||||
| 2016 | 2015 | |||||||
| Cash flow from operating activities: | ||||||||
| Net loss | $ | (21,029 | ) | $ | (79,804 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation, depletion, amortization and accretion | 76,252 | 57,131 | ||||||
| Share-based compensation expense | 29,817 | 17,020 | ||||||
| Deferred income tax (benefit) expense | (10,040 | ) | 23 | |||||
| Net gain on asset disposals | (3,717 | ) | (3,487 | ) | ||||
| Net gain on debt financings | - | (6,926 | ) | |||||
| Other | 129 | 1,185 | ||||||
| (Increase) decrease in operating assets, net of acquisitions: | ||||||||
| Accounts receivable, net | (55,489 | ) | (21,535 | ) | ||||
| Inventories | (27,948 | ) | (16,555 | ) | ||||
| Costs and estimated earnings in excess of billings | (24,542 | ) | (14,505 | ) | ||||
| Other current assets | (2,646 | ) | (2,779 | ) | ||||
| Other assets | (367 | ) | 53 | |||||
| Increase (decrease) in operating liabilities, net of acquisitions: | ||||||||
| Accounts payable | 9,682 | 3,105 | ||||||
| Accrued expenses | 10,343 | (11,161 | ) | |||||
| Billings in excess of costs and estimated earnings | (3,523 | ) | (875 | ) | ||||
| Other liabilities | (3,422 | ) | (1,114 | ) | ||||
| Net cash used in operating activities | (26,500 | ) | (80,224 | ) | ||||
| Cash flow from investing activities: | ||||||||
| Acquisitions, net of cash acquired | (296,664 | ) | (15,863 | ) | ||||
| Purchases of property, plant and equipment | (91,669 | ) | (43,379 | ) | ||||
| Proceeds from the sale of property, plant and equipment | 9,442 | 6,039 | ||||||
| Other | 1,500 | 610 | ||||||
| Net cash used for investing activities | (377,391 | ) | (52,593 | ) | ||||
| Cash flow from financing activities: | ||||||||
| Proceeds from equity offerings | - | 460,000 | ||||||
| Capital issuance costs | (136 | ) | (36,398 | ) | ||||
| Proceeds from stock option exercises | 113 | - | ||||||
| Proceeds from debt issuances | 321,000 | 242,000 | ||||||
| Debt issuance costs | (5,110 | ) | (5,130 | ) | ||||
| Payments on debt | (63,676 | ) | (469,628 | ) | ||||
| Purchase of noncontrolling interests | - | (35,000 | ) | |||||
| Payments on acquisition-related liabilities | (25,662 | ) | (11,970 | ) | ||||
| Distributions from partnership | (373 | ) | (11,842 | ) | ||||
| Net cash provided by financing activities | 226,156 | 132,032 | ||||||
| Impact of foreign currency on cash | 498 | 140 | ||||||
| Net decrease in cash | (177,237 | ) | (645 | ) | ||||
| Cash and cash equivalents—beginning of period | 186,405 | 13,215 | ||||||
| Cash and cash equivalents—end of period | $ | 9,168 | $ | 12,570 | ||||
| SUMMIT MATERIALS, INC. AND SUBSIDIARIES | ||||||||||||
|
Unaudited Revenue Data by Segment and Line of Business |
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|
($ in thousands) |
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| Three months ended | Six months ended | |||||||||||
| July 2, | June 27, | July 2, | June 27, | |||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||
| Net Revenue by Segment | ||||||||||||
| West | $ | 208,974 | $ | 186,013 | $ | 322,821 | $ | 303,019 | ||||
| East | 124,045 | 108,588 | 184,249 | 152,944 | ||||||||
| Cement | 79,617 | 34,408 | 113,605 | 48,185 | ||||||||
| Net Revenue | $ | 412,636 | $ | 329,009 | $ | 620,675 | $ | 504,148 | ||||
| Net Revenue by Line of Business | ||||||||||||
| Materials | ||||||||||||
| Aggregates | $ | 73,035 | $ | 59,188 | $ | 122,943 | $ | 99,474 | ||||
| Cement (1) | 69,968 | 28,871 | 98,504 | 38,673 | ||||||||
| Products | 198,338 | 173,211 | 299,996 | 272,043 | ||||||||
| Total Materials and Products | 341,341 | 261,270 | 521,443 | 410,190 | ||||||||
| Services | 71,295 | 67,739 | 99,232 | 93,958 | ||||||||
| Net Revenue | $ | 412,636 | $ | 329,009 | $ | 620,675 | $ | 504,148 | ||||
| Gross Profit | ||||||||||||
| Materials | ||||||||||||
| Aggregates | $ | 46,248 | $ | 38,051 | $ | 67,665 | $ | 51,216 | ||||
| Cement (1) | 41,531 | 17,591 | 45,786 | 16,014 | ||||||||
| Products | 53,387 | 44,946 | 76,862 | 63,938 | ||||||||
| Services | 18,908 | 15,185 | 21,252 | 20,323 | ||||||||
| Gross Profit | $ | 160,074 | $ | 115,773 | $ | 211,565 | $ | 151,491 | ||||
| (1) | Net revenue for the cement line of business excludes revenue associated with the processing of hazardous and non-hazardous waste, which is processed into fuel and used in the cement plants and is included in services net revenue. Additionally, net revenue from cement swaps and other cement-related products are included in products net revenue. The cement segment gross profit includes the earnings from the waste processing operations, cement swaps and other products. |
| SUMMIT MATERIALS, INC. AND SUBSIDIARIES | |||||||||||||
|
Unaudited Volume and Price Statistics |
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|
(Units in thousands) |
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| Three months ended | Six months ended | ||||||||||||
| Total Volume | July 2, 2016 | June 27, 2015 | July 2, 2016 | June 27, 2015 | |||||||||
| Aggregates (tons) | 9,683 | 8,733 | 16,645 | 14,821 | |||||||||
| Cement (tons) | 659 | 307 | 943 | 430 | |||||||||
| Ready-mixed concrete (cubic yards) | 953 | 871 | 1,715 | 1,564 | |||||||||
| Asphalt (tons) | 1,316 | 1,302 | 1,533 | 1,598 | |||||||||
| Three months ended | Six months ended | ||||||||||||
| Pricing | July 2, 2016 | June 27, 2015 | July 2, 2016 | June 27, 2015 | |||||||||
| Aggregates (per ton) | $ | 10.02 | $ | 9.15 | $ | 9.74 | $ | 8.92 | |||||
| Cement (per ton) | 108.89 | 98.38 | 107.38 | 97.56 | |||||||||
| Ready-mixed concrete (per cubic yards) | 102.15 | 102.48 | 103.56 | 101.91 | |||||||||
| Asphalt (per ton) | 57.45 | 56.49 | 57.57 | 56.58 | |||||||||
| Year over Year Comparison | Volume | Pricing | Volume | Pricing | |||||||||
| Aggregates (per ton) | 10.9 | % | 9.5 | % | 12.3 | % | 9.2 | % | |||||
| Cement (per ton) | 114.7 | % | 10.7 | % | 119.3 | % | 10.1 | % | |||||
| Ready-mixed concrete (per cubic yards) | 9.4 | % | (0.3) | % | 9.7 | % | 1.6 | % | |||||
| Asphalt (per ton) | 1.1 | % | 1.7 | % | (4.1) | % | 1.7 | % | |||||
| Year over Year Comparison (Excluding acquisitions) | Volume | Pricing | Volume | Pricing | |||||||||
| Aggregates (per ton) | (9.7) | % | 6.7 | % | (3.2) | % | 7.7 | % | |||||
| Cement (per ton) | * | * | * | * | |||||||||
| Ready-mixed concrete (per cubic yards) | (5.4) | % | 1.2 | % | (0.2) | % | 2.5 | % | |||||
| Asphalt (per ton) | (19.2) | % | 5.1 | % | (21.0) | % | 4.7 | % | |||||
| * | The Davenport Assets were immediately integrated with our existing cement operations such that it is impracticable to bifurcate the growth attributable to the Davenport Assets from organic growth. |
| SUMMIT MATERIALS, INC. AND SUBSIDIARIES | ||||||||||||||
|
Unaudited Reconciliations of Gross Revenue to Net Revenue by Line of Business |
||||||||||||||
|
($ and Units in thousands) |
||||||||||||||
| Three months ended July 2, 2016 | ||||||||||||||
| Gross Revenue | Intercompany | Net | ||||||||||||
| Volumes | Pricing | by Product | Elimination/Delivery | Revenue | ||||||||||
| Aggregates | 9,683 | $ | 10.02 | $ | 97,006 | $ | (23,971) | $ | 73,035 | |||||
| Cement | 659 | 108.89 | 71,711 | (1,743) | 69,968 | |||||||||
| Materials | $ | 168,717 | $ | (25,714) | $ | 143,003 | ||||||||
| Ready-mixed concrete | 953 | 102.15 | 97,371 | (70) | 97,301 | |||||||||
| Asphalt | 1,316 | 57.45 | 75,616 | (129) | 75,487 | |||||||||
| Other Products | 92,592 | (67,042) | 25,550 | |||||||||||
| Products | $ | 265,579 | $ | (67,241) | $ | 198,338 | ||||||||
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 six months ended July 2, 2016 and June 27, 2015.
| Three months ended | Six months ended | |||||||||||||||
| July 2, | June 27, | July 2, | June 27, | |||||||||||||
| Reconciliation of Net Income (Loss) to Adjusted EBITDA | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Net income (loss) | $ | 21,505 | $ | 33 | $ | (21,029 | ) | $ | (79,804 | ) | ||||||
| Interest expense | 25,617 | 17,395 | 47,194 | 41,504 | ||||||||||||
| Income tax benefit | (1,056 | ) | (5,345 | ) | (9,222 | ) | (9,813 | ) | ||||||||
| Depreciation, depletion and amortization | 37,038 | 27,027 | 68,938 | 52,749 | ||||||||||||
| EBITDA | $ | 83,104 | $ | 39,110 | $ | 85,881 | $ | 4,636 | ||||||||
| Accretion | 370 | 359 | 830 | 763 | ||||||||||||
| IPO/ Legacy equity modification costs | 24,751 |
- |
24,751 | 28,296 | ||||||||||||
| Loss on debt financings |
- |
30,873 |
- |
31,672 | ||||||||||||
| Income from discontinued operations |
- |
(758 | ) |
- |
(758 | ) | ||||||||||
| Transaction costs | 290 | 6,376 | 3,606 | 7,740 | ||||||||||||
| Management fees and expenses | - | 53 |
- |
1,046 | ||||||||||||
| Non-cash compensation | 3,029 | 1,803 | 5,065 | 2,569 | ||||||||||||
| Other | 3,188 | 331 | 3,008 | 829 | ||||||||||||
| Adjusted EBITDA | $ | 114,732 | $ | 78,147 | $ | 123,141 | $ | 76,793 | ||||||||
| Adjusted EBITDA by Segment | ||||||||||||||||
| West | 50,585 | 39,658 | 63,864 | 51,690 | ||||||||||||
| East | 35,674 | 29,585 | 38,847 | 26,081 | ||||||||||||
| Cement | 37,593 | 15,756 | 38,564 | 12,343 | ||||||||||||
| Corporate | (9,120 | ) | (6,852 | ) | (18,134 | ) | (13,321 | ) | ||||||||
| Adjusted EBITDA | $ | 114,732 | $ | 78,147 | $ | 123,141 | $ | 76,793 | ||||||||
The table below reconciles our net income (loss) per share attributable to Summit Materials, Inc. to adjusted income (loss) per share for the three and six months ended July 2, 2016 and June 27, 2015. The per share amount of the net income (loss) attributable to Summit Materials, Inc. presented in the table is calculated using the total equity interests for the purpose of reconciling to adjusted net income (loss) per share.
| Three months ended | Six months ended | ||||||||||||||||||||||||||||
| July 2, 2016 | June 27, 2015 | July 2, 2016 | June 27, 2015 | ||||||||||||||||||||||||||
| Reconciliation of Net Income (Loss) Per Share to Adjusted EPS | Net Income | Per Share | Net Income | Per Share | Net Income | Per Share | Net Income | Per Share | |||||||||||||||||||||
| Net income (loss) attributable to Summit Materials, Inc. | $ | 13,371 | $ | 0.13 | $ | (205 | ) | $ |
- |
$ | (7,747 | ) | $ | (0.08 | ) | $ | (10,356 | ) | $ | (0.11 | ) | ||||||||
| Adjustments: | |||||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interest | 8,090 | 0.08 | 225 |
- |
(13,247 | ) | (0.13 | ) | (67,479 | ) | (0.69 | ) | |||||||||||||||||
| IPO/ Legacy equity modification costs | 24,751 | 0.25 |
- |
- |
24,751 | 0.25 | 28,296 | 0.29 | |||||||||||||||||||||
| Loss on debt financings, net of tax |
- |
- |
25,589 | 0.27 |
- |
- |
26,371 | 0.28 | |||||||||||||||||||||
| Adjusted diluted net income (loss) | $ | 46,212 | $ | 0.46 | $ | 25,609 | $ | 0.27 | $ | 3,757 | $ | 0.04 | $ | (23,168 | ) | $ | (0.23 | ) | |||||||||||
| Weighted-average shares: | |||||||||||||||||||||||||||||
| Class A common stock | 61,607,457 | 27,319,846 | 55,677,214 | 27,319,846 | |||||||||||||||||||||||||
| LP Units outstanding | 38,418,311 | 69,007,297 | 44,339,891 | 69,007,297 | |||||||||||||||||||||||||
| Total equity interest | 100,025,768 | 96,327,143 | 100,017,105 | 96,327,143 | |||||||||||||||||||||||||
The following table reconciles operating income (loss) to gross profit for the three and six months ended July 2, 2016 and June 27, 2015.
| Three months ended | Six months ended | |||||||||||||
| Reconciliation of Operating Income (Loss) to Gross Profit | July 2, | June 27, | July 2, | June 27, | ||||||||||
| (exclusive of items shown separately) | 2016 | 2015 | 2016 | 2015 | ||||||||||
| (in thousands) | ||||||||||||||
| Operating income (loss) | $ | 46,732 | $ | 42,300 | $ | 17,177 | $ | (16,706 | ) | |||||
| General and administrative expenses | 75,644 | 39,711 | 121,014 | 106,945 | ||||||||||
| Depreciation, depletion, amortization and accretion | 37,408 | 27,386 | 69,768 | 53,512 | ||||||||||
| Transaction costs | 290 | 6,376 | 3,606 | 7,740 | ||||||||||
| Gross Profit | $ | 160,074 | $ | 115,773 | $ | 211,565 | $ | 151,491 | ||||||
| Gross Margin (1) | 38.8 | % | 35.2 | % | 34.1 | % | 30.0 |
% |
|
|||||
(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 outflow for the three and six months ended July 2, 2016 and June 27, 2015.
| Three months ended | Six months ended | |||||||||||||||
| July 2, | June 27, | July 2, | June 27, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income (loss) | $ | 21,505 | $ | 33 | $ | (21,029 | ) | $ | (79,804 | ) | ||||||
| Non-cash items | 55,158 | 22,737 | 92,441 | 64,946 | ||||||||||||
| Net income (loss) adjusted for non-cash items | 76,663 | 22,770 | 71,412 | (14,858 | ) | |||||||||||
| Change in working capital accounts | (61,205 | ) | (65,195 | ) | (97,912 | ) | (65,366 | ) | ||||||||
| Net cash provided by (used in) operating activities | 15,458 | (42,425 | ) | (26,500 | ) | (80,224 | ) | |||||||||
| Capital expenditures, net of asset sales | (49,121 | ) | (22,373 | ) | (82,227 | ) | (37,340 | ) | ||||||||
| Free cash outflow | $ | (33,663 | ) | $ | (64,798 | ) | $ | (108,727 | ) | $ | (117,564 | ) | ||||