Market Overview

Summit Materials, Inc. Reports Second Quarter 2018 Results

Share:

-Y/Y Net Revenue Growth of 14.8%, Supported By Broad-Based Organic
Volume Improvements

-Completed Four Materials-Based Bolt-on Acquisitions For Total
Invested Capital of $75 million Since May 2018

-Reduced Midpoint of Adjusted EBITDA Guidance Range For The Full-Year
2018 By 7%

-Remain On Pace To Achieve Record Full-Year Adjusted EBITDA in 2018

Summit Materials, Inc. (NYSE:SUM, "Summit" or the "Company")), a leading
vertically integrated construction materials company, today announced
results for the second quarter 2018.

For the three months ended June 30, 2018, the Company reported basic
earnings per share of $0.32 on net income attributable to Summit Inc. of
$35.5 million, compared to basic earnings per share of $0.46 on net
income attributable to Summit Inc. of $50.0 million in the prior year
period. On an adjusted basis, Summit reported adjusted diluted earnings
per share of $0.32 on adjusted diluted net income of $37.1 million,
versus adjusted diluted earnings per share of $0.47 on adjusted diluted
net income of $53.6 million in the prior year period.

"While net revenue increased 14.8% on a year-over-basis in the second
quarter 2018, supported by organic volume growth in our aggregates and
products lines of business, Adjusted EBITDA was flat on a year-over-year
basis, given lower contributions from our cement segment and Houston
operations, together with inflation in our variable costs," stated Tom
Hill, CEO of Summit Materials. "With a finite number of days remaining
in the construction season, we have reduced the midpoint of our 2018
Adjusted EBITDA guidance by 7 percent."

"Organic sales volumes in our cement segment were impacted by a
combination of high precipitation levels during April and May, together
with competitive pressures in the markets we serve," stated Hill. "Our
Houston operations were impacted by a slower start to the construction
season than had been anticipated. Looking to the second half of the
year, we expect a strengthening in both our cement segment and Houston
operations, given accelerating demand in our residential, low-rise
commercial and public end-markets."

"The pace of cost inflation in raw materials, freight, labor and fuel
exceeded our expectations in the first half of 2018," continued Hill.
"Although we anticipated some measure of cost inflation entering the
year, the effective date of our announced price increases lagged behind
the impact of higher costs incurred by our business. Importantly, our
average selling prices on both materials and products have gained
traction entering the third quarter, which we expect will offset these
higher variable costs in the second half of the year."

"Demand conditions in most of our markets are strong and are expected to
remain so into 2019 and beyond," continued Hill. "Within our private
markets, we are seeing sustained growth in new single-family home
construction, given low inventories and positive demographic trends,
while in our public markets, state transportation funding measures in
Texas, coupled with steady increases in federal subsidies, are
contributing to increased lettings activity. In July 2018, aggregates
shipments per day increased 5% versus the prior year period and 13%
versus June 2018."

"Since May 2018, we have completed four materials-based acquisitions for
total invested capital of $75 million," continued Hill. "Recent
acquisitions have served to further establish our leadership in
well-structured, materials-based markets in Texas, Kansas, Missouri and
Virginia. On a year-to-date basis, we have completed eleven acquisitions
for total invested capital of $228 million. Across these eleven
transactions, we have added more than 300 million tons of aggregates
reserves to our portfolio. The acquisition pipeline remains active as we
look ahead to the remainder of the year, with multiple transactions
currently in various stages of diligence."

"As of June 30, 2018, our net leverage increased to 4.3x, due to the
timing of acquisition-related investments," stated Brian Harris, CFO of
Summit Materials. "By year-end 2018, we anticipate net leverage to be
approximately 3.5x, subject to the pace of acquisitions."

"We continue to generate significant free cash flow from operations that
is helping to support the overall growth of our business," continued
Harris. "Based on the midpoint of our revised guidance, we anticipate
Adjusted EBITDA less total capital spending will be approximately $250
million in 2018. Importantly, this includes approximately $100 million
of discretionary capital spending."

"Our vertically integrated, multi-local strategy continues to gain
momentum in our regional markets, positioning Summit as an emerging
leader in the North American heavy materials industry that remains on
pace to achieve record full-year Adjusted EBITDA in 2018," stated Hill.

Second Quarter 2018 | Results by Line of
Business

Aggregates Business: Aggregates net revenues increased by 23.1%
to $103.7 million in the second quarter 2018, when compared to the prior
year period. Aggregates adjusted cash gross profit margin declined to
64.8% in the second quarter, versus 68.3% in the prior year period,
given higher variable costs. Organic aggregates sales volumes increased
2.3% in the second quarter 2018, when compared to the prior-year period.
Excluding contributions from the Company's project-dependent sand
business in Vancouver, organic aggregates sales volumes increased 4.3%
in the second quarter 2018. Organic growth in aggregates sales volumes
was due mainly to higher volumes in the East Region, which more than
offset a decline in sales volumes in the West Region, which was impacted
by adverse weather conditions during the period. Organic average selling
prices on aggregates increased 3.6% in the second quarter 2018 due to
year-over-year improvements in prices within both the West and East
segments during the period.

Cement Business: Cement segment net revenues declined 2.8% to
$81.8 million in the second quarter 2018, when compared to the
prior-year period. Cement adjusted cash gross profit margin declined to
46.5% in the second quarter, versus 57.4% in the prior-year period, due
to higher freight, storage and demurrage costs related to
weather-affected cement inventories. Organic sales volume of cement
declined 4.8% in the second quarter, when compared to the prior year
period, due mainly to high levels of precipitation that disrupted
project work during the period, together with competitive pressures in
the market. Organic average selling prices on cement increased 1.9% in
the second quarter, when compared to the prior year period.

Products Business: Net revenues increased 19.3% to $279.9 million
in the second quarter 2018, when compared to the prior year period.
Products adjusted cash gross profit margin declined to 22.0% in the
second quarter, versus 25.6% in the prior year period, as the timing of
product price increases lagged behind increases in raw materials and
labor costs. Organic sales volumes of ready-mix concrete increased 0.2%
in the second quarter, while organic average selling prices increased
2.7%, versus the prior year period. Organic sales volumes of asphalt
increased 2.0% in the second quarter, while organic average selling
prices declined 1.3%, versus the prior year period.

Second Quarter 2018 | Results By Reporting
Segment

Net revenue increased by 14.8% to $549.2 million in the second quarter
2018, versus $478.4 million in the prior year period. The improvement in
net revenue was primarily attributable to both organic and
acquisition-related contributions in the East and West segments, offset
by a decline in the Cement segment. The Company reported operating
income of $77.3 million in the second quarter 2018, versus $82.4 million
in the prior year period. Adjusted EBITDA was $135.3 million in the
second quarter 2018, versus $135.2 million in the prior year period.

West Segment: The West Segment reported operating income of $38.4
million in the second quarter 2018, versus operating income of $42.9
million in the prior year period. Adjusted EBITDA increased to $61.2
million in the second quarter 2018, versus $60.5 million in the prior
year period. The year-over-year improvement in West Segment Adjusted
EBITDA was attributable to increased average selling prices on
aggregates and ready-mix concrete, together with higher organic sales
volumes of asphalt, that offset lower organic aggregates sales in the
Company's Houston operations.

East Segment: The East Segment reported operating income of $26.9
million in the second quarter 2018, versus operating income of $21.1
million in the prior year period. Adjusted EBITDA increased to $45.4
million in the second quarter 2018, versus $38.8 million in the prior
year period. The year-over-year improvement in East Segment Adjusted
EBITDA was mainly attributable to organic volume growth in aggregates
and ready-mix concrete, which increased 11.0% and 10.3%, respectively in
the period.

Cement Segment: The Cement Segment reported operating income of
$25.8 million in the second quarter 2018, versus operating income of
$33.7 million in the prior year period. Adjusted EBITDA declined to
$34.7 million in the second quarter 2018, versus $43.8 million in the
prior year period. Higher organic average selling prices were more than
offset primarily by high levels of precipitation in the Company's
Mississippi River markets and price-driven competitive pressures that
resulted in a year-over-year decline in organic sales volume during the
second quarter 2018.

Acquisition Program

As of August 1, 2018, the Company has completed eleven acquisitions on a
year-to-date basis, including four transactions that have closed since
the Company's last quarterly update on May 8, 2018. Total investment
spend across the eleven acquisitions completed year-to-date 2018 was
approximately $228 million, including approximately $75 million for the
four bolt-on acquisitions completed since the last update.

Olathe Assets (Kansas). The Olathe Assets comprise two quarries,
two asphalt plants and two construction and landfill sites. These assets
expand the Company's existing operations into the southwestern Kansas
City metropolitan area. Summit closed on the acquisition of the Olathe
Assets in July 2018.

Buckingham Slate (Virginia). Buckingham is an aggregates
acquisition that expands the Company's market position and reserve base
in central Virginia. Summit closed on the acquisition of Buckingham
Slate in June 2018.

Buildex (Missouri). Buildex is a lightweight aggregates business
based in western Missouri that provides a complementary product offering
to the Company's existing portfolio in the region. Summit closed on the
acquisition of Buildex in July 2018.

XIT (Texas). XIT is an aggregates company that provides further
vertical integration of the Company's operations in north Texas. Summit
closed on its acquisition of XIT in July 2018.

Liquidity and Capital Resources

As of June 30, 2018, the Company had cash on hand of $50.4 million and
borrowing capacity under its revolving credit facility of $219.6
million. The borrowing capacity on the revolving credit facility is
fully available to the Company within the terms and covenant
requirements of its credit agreement. As of June 30, 2018, the Company
had $1.8 billion in debt outstanding.

Financial Outlook

For the full-year 2018, the Company has reduced its Adjusted EBITDA
guidance from a range of $495 million to $515 million to a range of $460
million to $480 million, including acquisition-related contributions
from four transactions that closed since the Company's last update in
May 2018. No additional potential acquisitions are included within the
Company's full-year 2018 Adjusted EBITDA guidance. For the full-year
2018, the Company has reiterated its capital expenditure guidance in the
range of $210 million to $225 million.

Webcast and Conference Call Information

Summit Materials will conduct a conference call today at 11:00 a.m.
eastern time (9:00 a.m. mountain time) to review the Company's second
quarter 2018 financial results. 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.

To participate in the live teleconference:

Domestic Live:         1-877-407-0784
International Live: 1-201-689-8560
Conference ID: 57511368

To listen to a replay of the teleconference, which will be available
through September 1, 2018:

Domestic Replay:         1-844-512-2921
International Replay: 1-412-317-6671
Conference ID: 13681575

About Summit Materials

Summit Materials is a leading vertically integrated materials-based
company that supplies aggregates, cement, ready-mix 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 (Loss),
Adjusted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash
Gross Profit, Adjusted Cash Gross Profit Margin, Free Cash Flow and Net
Leverage 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 EPS, Adjusted EBITDA, Adjusted
EBITDA Margin , Adjusted Cash Gross Profit, Adjusted Cash Gross Profit
Margin, Free Cash Flow and Net Leverage 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. This press release also includes certain unaudited financial
information for the last twelve months ("LTM") ended June 30, 2018,
which is calculated as the six months ended June 30, 2018 plus the
actual for the year-ended December 30, 2017 less the actual six months
ended June 30, 2017. This presentation is not in accordance with GAAP.
However, we believe that this information is useful to investors as we
use LTM financial information to evaluate our financial performance for
ongoing planning purposes, including a continuous assessment of our
financial performance in comparison to budgets and internal projections.
In addition, we use such LTM financial information to test compliance
with covenants under our senior secured credit facilities.

Adjusted EBITDA, Adjusted EBITDA Margin, LTM financial information 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, 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
EPS, Free Cash Flow and Net Leverage 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. 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 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 December 30, 2017 (the
"Annual Report"), as filed with the Securities and Exchange Commission
(the "SEC"), any factors discussed in the section entitled "Risk
Factors" in any of our subsequently filed quarterly reports on Form 10-Q
or other SEC filings 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 dependence on securing and permitting aggregate reserves in
    strategically located areas;
  • declines in public infrastructure construction and delays or
    reductions in governmental funding, including the funding by
    transportation authorities and other state agencies;
  • environmental, health, safety and climate change laws or governmental
    requirements or policies concerning zoning and land use;
  • 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;
  • our substantial current level of indebtedness;
  • our dependence on senior management and other key personnel;
  • supply constraints or significant price fluctuations in electricity
    and the petroleum-based resources that we use;
  • unexpected operational difficulties;
  • interruptions in our information technology systems and infrastructure;
  • potential labor disputes; and
  • rising prices for commodities, labor and other production and delivery
    costs as a result of inflation or otherwise.

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

Consolidated Statements of Operations
($ in thousands, except share and per share amounts)
 
      Three months ended     Six months ended
June 30,     July 1, June 30,     July 1,
2018 2017 2018 2017
Revenue:
Product $ 459,967 $ 397,726 $ 716,774 $ 622,743
Service   89,268     80,642     122,377     114,669  
Net revenue 549,235 478,368 839,151 737,412
Delivery and subcontract revenue   51,655     45,725     76,160     70,958  
Total revenue   600,890     524,093     915,311     808,370  
Cost of revenue (excluding items shown separately below):
Product 295,147 233,592 492,580 400,560
Service   64,130     56,587     90,053     81,958  
Net cost of revenue 359,277 290,179 582,633 482,518
Delivery and subcontract cost   51,655     45,725     76,160     70,958  
Total cost of revenue   410,932     335,904     658,793     553,476  
General and administrative expenses 61,657 58,086 131,518 116,554
Depreciation, depletion, amortization and accretion 49,731 45,039 96,689 84,787
Transaction costs   1,291     2,620     2,557     3,893  
Operating income 77,279 82,444 25,754 49,660
Interest expense 28,943 25,986 57,727 50,955
Loss on debt financings 149 149 190
Tax receivable agreement expense 1,525 1,525
Other income, net   (916 )   (590 )   (8,571 )   (1,247 )
Income (loss) from operations before taxes 49,103 55,523 (23,551 ) (1,763 )
Income tax expense (benefit)   12,190     3,435     (4,516 )   1,257  
Net income (loss) 36,913 52,088 (19,035 ) (3,020 )
Net income (loss) attributable to noncontrolling interest in
subsidiaries
12 (86 )
Net income (loss) attributable to Summit Holdings (1)   1,404     2,076     (815 )   (490 )
Net income (loss) attributable to Summit Inc. $ 35,509   $ 50,000   $ (18,220 ) $ (2,444 )
Income (loss) per share of Class A common stock:
Basic $ 0.32 $ 0.46 $ (0.16 ) $ (0.02 )
Diluted $ 0.32 $ 0.46 $ (0.16 ) $ (0.02 )
Weighted average shares of Class A common stock:
Basic 111,564,190 108,419,568 111,111,644 107,556,143
Diluted 112,583,321 109,429,944 111,111,644 107,556,143

_______________________

(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)
 
    June 30,     December 30,
2018 2017
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 50,404 $ 383,556
Accounts receivable, net 268,819 198,330
Costs and estimated earnings in excess of billings 44,481 9,512
Inventories 245,238 184,439
Other current assets   12,381   7,764
Total current assets 621,323 783,601
Property, plant and equipment, less accumulated depreciation,
depletion and amortization (June 30, 2018 - $711,216 and December
30, 2017 - $631,841)
1,733,653 1,615,424
Goodwill 1,114,967 1,036,320
Intangible assets, less accumulated amortization (June 30, 2018 -
$7,337 and December 30, 2017 - $6,698)
16,294 16,833
Deferred tax assets, less valuation allowance (June 30, 2018 and
December 30, 2017 - $1,675)
287,606 284,092
Other assets   50,413   51,063
Total assets $ 3,824,256 $ 3,787,333
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of debt $ 6,354 $ 4,765
Current portion of acquisition-related liabilities 15,634 14,087
Accounts payable 144,284 98,744
Accrued expenses 118,494 116,629
Billings in excess of costs and estimated earnings   14,724   15,750
Total current liabilities 299,490 249,975
Long-term debt 1,807,290 1,810,833
Acquisition-related liabilities 28,904 58,135
Tax receivable agreement liability 333,028 331,340
Other noncurrent liabilities   77,773   65,329
Total liabilities   2,546,485   2,515,612
 
Stockholders' equity:
Class A common stock, par value $0.01 per share; 1,000,000,000
shares authorized, 111,629,238 and 110,350,594 shares issued and
outstanding as of June 30, 2018 and December 30, 2017, respectively
1,117 1,104
Class B common stock, par value $0.01 per share; 250,000,000 shares
authorized, 99 and 100 shares issued and outstanding as of June 30,
2018 and December 30, 2017, respectively
Additional paid-in capital 1,183,071 1,154,220
Accumulated earnings 77,613 95,833
Accumulated other comprehensive income   4,645   7,386
Stockholders' equity 1,266,446 1,258,543
Noncontrolling interest in Summit Holdings   11,325   13,178
Total stockholders' equity   1,277,771   1,271,721
Total liabilities and stockholders' equity $ 3,824,256 $ 3,787,333
 
 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows
($ in thousands)
 
        Six months ended
June 30,     July 1,
2018 2017
Cash flow from operating activities:
Net loss $ (19,035 ) $ (3,020 )
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
Depreciation, depletion, amortization and accretion 98,562 90,781
Share-based compensation expense 14,190 9,424
Net gain on asset disposals (7,508 ) (4,052 )
Non-cash loss on debt financings 85
Change in deferred tax asset, net (6,934 ) 391
Other 162 710
(Increase) decrease in operating assets, net of acquisitions:
Accounts receivable, net (57,763 ) (68,539 )
Inventories (44,428 ) (19,272 )
Costs and estimated earnings in excess of billings (34,525 ) (21,571 )
Other current assets (1,766 ) 3,535
Other assets 780 (1,565 )
Increase (decrease) in operating liabilities, net of acquisitions:
Accounts payable 23,912 28,550
Accrued expenses 1,674 (6,789 )
Billings in excess of costs and estimated earnings (2,187 ) 1,252
Tax receivable agreement liability 1,688 1,525
Other liabilities   (540 )   (296 )
Net cash (used in) provided by operating activities   (33,718 )   11,149  
Cash flow from investing activities:
Acquisitions, net of cash acquired (153,196 ) (213,124 )
Purchases of property, plant and equipment (131,657 ) (109,088 )
Proceeds from the sale of property, plant and equipment 14,110 8,411
Other   684     137  
Net cash used for investing activities   (270,059 )   (313,664 )
Cash flow from financing activities:
Proceeds from equity offerings 237,600
Capital issuance costs (627 )
Proceeds from debt issuances 302,000
Debt issuance costs (550 ) (5,308 )
Payments on debt (10,772 ) (9,288 )
Payments on acquisition-related liabilities (31,224 ) (17,204 )
Distributions from partnership (69 ) (79 )
Proceeds from stock option exercises 15,615 5,736
Other   (1,904 )   (832 )
Net cash (used in) provided by financing activities   (28,904 )   511,998  
Impact of foreign currency on cash (471 ) 188
Net (decrease) increase in cash   (333,152 )   209,671  
Cash and cash equivalents—beginning of period   383,556     143,392  
Cash and cash equivalents—end of period $ 50,404   $ 353,063  
 
 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Revenue Data by Segment and Line of Business
($ in thousands)
 
    Three months ended     Six months ended     Twelve Months Ended
June 30,     July 1, June 30,     July 1, June 30,     July 1,
2018 2017 2018 2017 2018 2017
 
Segment Net Revenue:
West $ 293,685 $ 249,849 $ 462,629 $ 381,823 $ 980,798 $ 795,575
East 173,709 144,290 257,130 227,525 578,209 513,890
Cement   81,841     84,229     119,392     128,064     295,141     295,546  
Net Revenue $ 549,235   $ 478,368   $ 839,151   $ 737,412   $ 1,854,148   $ 1,605,011  
 
Line of Business - Net Revenue:
Materials
Aggregates $ 103,690 $ 84,221 $ 171,140 $ 145,843 $ 338,680 $ 287,509
Cement (1) 76,413 78,893 109,530 118,328 273,243 270,173
Products   279,864     234,612     436,104     358,572     932,044     766,626  
Total Materials and Products   459,967     397,726     716,774     622,743     1,543,967     1,324,308  
Services   89,268     80,642     122,377     114,669     310,181     280,703  
Net Revenue $ 549,235   $ 478,368   $ 839,151   $ 737,412   $ 1,854,148   $ 1,605,011  
 
Line of Business - Net Cost of Revenue:
Materials
Aggregates $ 36,472 $ 26,740 $ 75,954 $ 61,522 $ 123,161 $ 106,724
Cement 38,359 30,511 64,147 63,684 139,521 134,290
Products   218,315     174,622     349,452     272,363     721,099     568,668  
Total Materials and Products   293,146     231,873     489,553     397,569     983,781     809,682  
Services   66,131     58,306     93,080     84,949     217,945     197,889  
Net Cost of Revenue $ 359,277   $ 290,179   $ 582,633   $ 482,518   $ 1,201,726   $ 1,007,571  
 
Line of Business - Adjusted Cash Gross Profit (2):
Materials
Aggregates $ 67,218 $ 57,481 $ 95,186 $ 84,321 $ 215,519 $ 180,785
Cement (3) 38,054 48,382 45,383 54,644 133,722 135,883
Products   61,549     59,990     86,652     86,209     210,945     197,958  
Total Materials and Products   166,821     165,853     227,221     225,174     560,186     514,626  
Services   23,137     22,336     29,297     29,720     92,236     82,814  
Adjusted Cash Gross Profit $ 189,958   $ 188,189   $ 256,518   $ 254,894   $ 652,422   $ 597,440  
 
Adjusted Cash Gross Profit Margin (2)
Materials
Aggregates 64.8 % 68.3 % 55.6 % 57.8 % 63.6 % 62.9 %
Cement (3) 46.5 % 57.4 % 38.0 % 42.7 % 45.3 % 46.0 %
Products 22.0 % 25.6 % 19.9 % 24.0 % 22.6 % 25.8 %
Services 25.9 % 27.7 % 23.9 % 25.9 % 29.7 % 29.5 %
Total Adjusted Cash Gross Profit Margin 34.6 % 39.3 % 30.6 % 34.6 % 35.2 % 37.2 %

_______________________

(1)   Net revenue for the cement line of business excludes revenue
associated with 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.
(2)

Previously, we presented gross profit as a non-GAAP metric. We
have renamed that metric adjusted cash gross profit to be more
descriptive of the calculation. Adjusted cash gross profit
calculated as net revenue by line of business less net cost of
revenue by line of business. Adjusted cash gross profit margin is
defined as adjusted cash gross profit divided by net revenue.

(3) The cement adjusted cash gross profit includes the earnings from the
waste processing operations, cement swaps and other products. Cement
line of business adjusted cash gross profit margin is defined as
cement adjusted cash gross profit divided by cement segment net
revenue.
 
 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Volume and Price Statistics
(Units in thousands)
 
    Three months ended     Six months ended
Total Volume June 30, 2018     July 1, 2017 June 30, 2018     July 1, 2017
Aggregates (tons) 13,151 11,286 21,966 19,249
Cement (tons) 680 714 974 1,075
Ready-mix concrete (cubic yards) 1,503 1,237 2,645 2,143
Asphalt (tons) 1,611 1,517 1,961 1,880
 
Three months ended Six months ended
Pricing June 30, 2018 July 1, 2017 June 30, 2018 July 1, 2017
Aggregates (per ton) $ 10.21 $ 9.97 $ 10.07 $ 9.92
Cement (per ton) 114.21 112.09 114.46 111.89
Ready-mix concrete (per cubic yards) 107.09 104.23 107.09 103.73
Asphalt (per ton) 54.70 54.94 54.23 54.76
 
Year over Year Comparison Volume Pricing Volume Pricing
Aggregates (per ton) 16.5 % 2.4 % 14.1 % 1.5 %
Cement (per ton) (4.8 )% 1.9 % (9.4 )% 2.3 %
Ready-mix concrete (per cubic yards) 21.5 % 2.7 % 23.4 % 3.2 %
Asphalt (per ton) 6.2 % (0.4 )% 4.3 % (1.0 )%
 
Year over Year Comparison (Excluding acquisitions) Volume Pricing Volume Pricing
Aggregates (per ton) 2.3 % 3.6 % (1.5 )% 2.8 %
Cement (per ton) (4.8 )% 1.9 % (9.4 )% 2.3 %
Ready-mix concrete (per cubic yards) 0.2 % 2.7 % 1.3 % 3.4 %
Asphalt (per ton) 2.0 % (1.3 )% (2.7 )% (1.7 )%
 
 

SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Reconciliations of Gross Revenue to Net Revenue by Line of
Business
($ and Units in thousands, except pricing information)
 
    Three months ended June 30, 2018
        Gross Revenue     Intercompany     Net
Volumes Pricing by Product Elimination/Delivery Revenue
Aggregates 13,151 $ 10.21 $ 134,213 $ (30,523 ) $ 103,690
Cement 680   114.21   77,714   (1,301 )   76,413
Materials $ 211,927 $ (31,824 ) $ 180,103
Ready-mix concrete 1,503 107.09 160,930 (322 ) 160,608
Asphalt 1,611 54.70 88,120 (185 ) 87,935
Other Products   108,164   (76,843 )   31,321
Products $ 357,214 $ (77,350 ) $ 279,864
 
                   
Six months ended June 30, 2018
Gross Revenue Intercompany Net
Volumes Pricing by Product Elimination/Delivery Revenue
Aggregates 21,966 $ 10.07 $ 221,092 $ (49,952 ) $ 171,140
Cement 974   114.46   111,480   (1,950 )   109,530
Materials $ 332,572 $ (51,902 ) $ 280,670
Ready-mix concrete 2,645 107.09 283,238 (614 ) 282,624
Asphalt 1,961 54.23 106,340 (264 ) 106,076
Other Products   170,659   (123,255 )   47,404
Products $ 560,237 $ (124,133 ) $ 436,104
 

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 by
segment for the three and six months ended June 30, 2018 and July 1,
2017.

   
Reconciliation of Net Income (Loss) to Adjusted EBITDA Three months ended June 30, 2018
by Segment West     East     Cement     Corporate     Consolidated
($ in thousands)
Net income (loss) $ 36,532 $ 26,421 $ 27,458 $ (53,498 ) $ 36,913
Interest expense (income) 1,554 947 (1,479 ) 27,921 28,943
Income tax expense (benefit) 431 (84 ) 11,843 12,190
Depreciation, depletion and amortization   22,445     17,606     8,716     635     49,402  
EBITDA $ 60,962   $ 44,890   $ 34,695   $ (13,099 ) $ 127,448  
Accretion 144 220 (35 ) 329
Loss on debt financings 149 149
Transaction costs (2 ) 1,293 1,291
Non-cash compensation 5,683 5,683
Other   123     285         33     441  
Adjusted EBITDA $ 61,227   $ 45,395   $ 34,660   $ (5,941 ) $ 135,341  
Adjusted EBITDA Margin (1) 20.8 % 26.1 % 42.4 % 24.6 %
                   
Reconciliation of Net Income (Loss) to Adjusted EBITDA Three months ended July 1, 2017
by Segment West East Cement Corporate Consolidated
($ in thousands)
Net income (loss) $ 40,529 $ 20,600 $ 34,442 $ (43,483 ) $ 52,088
Interest expense (income) 1,843 929 (684 ) 23,898 25,986
Income tax expense (benefit) 533 (21 ) 2,923 3,435
Depreciation, depletion and amortization   17,224     16,740     9,961     662     44,587  
EBITDA $ 60,129   $ 38,248   $ 43,719   $ (16,000 ) $ 126,096  
Accretion 195 193 64 452
Loss on debt financings
Tax receivable agreement expense 1,525 1,525
Transaction costs (28 ) 2,648 2,620
Non-cash compensation 4,676 4,676
Other   224     325         (683 )   (134 )
Adjusted EBITDA $ 60,520   $ 38,766   $ 43,783   $ (7,834 ) $ 135,235  
Adjusted EBITDA Margin (1) 24.2 % 26.9 % 52.0 % 28.3 %
                   
Reconciliation of Net Income (Loss) to Adjusted EBITDA Six months ended June 30, 2018
by Segment West East Cement Corporate Consolidated
($ in thousands)
Net income (loss) $ 36,604 $ 4,777 $ 26,361 $ (86,777 ) $ (19,035 )
Interest expense (income) 2,734 1,553 (3,085 ) 56,525 57,727
Income tax expense (benefit) 49 (270 ) (4,295 ) (4,516 )
Depreciation, depletion and amortization   44,453     35,118     15,029     1,345     95,945  
EBITDA $ 83,840   $ 41,178   $ 38,305   $ (33,202 ) $ 130,121  
Accretion 287 435 22 744
Loss on debt financings 149 149
Transaction costs (6 ) 2,563 2,557
Non-cash compensation 14,190 14,190
Other (2)   (6,721 )   579         (765 )   (6,907 )
Adjusted EBITDA $ 77,400   $ 42,192   $ 38,327   $ (17,065 ) $ 140,854  
Adjusted EBITDA Margin (1) 16.7 % 16.4 % 32.1 % 16.8 %
                   
Reconciliation of Net Income (Loss) to Adjusted EBITDA Six months ended July 1, 2017
by Segment West East Cement Corporate Consolidated
($ in thousands)
Net income (loss) $ 38,503 $ 8,507 $ 29,729 $ (79,759 ) $ (3,020 )
Interest expense (income) 3,747 1,614 (1,334 ) 46,928 50,955
Income tax expense (benefit) 535 (21 ) 743 1,257
Depreciation, depletion and amortization   32,692     31,927     17,951     1,321     83,891  
EBITDA $ 75,477   $ 42,027   $ 46,346   $ (30,767 ) $ 133,083  
Accretion 390 384 122 896
Loss on debt financings 190 190
Tax receivable agreement expense 1,525 1,525
Transaction costs 9 3,884 3,893
Non-cash compensation 9,424 9,424
Other   343     703         (1,192 )   (146 )
Adjusted EBITDA $ 76,219   $ 43,114   $ 46,468   $ (16,936 ) $ 148,865  
Adjusted EBITDA Margin (1) 20.0 % 18.9 % 36.3 % 20.2 %

_______________________

(1)   Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage
of net revenue.
(2) In the six months ended June 30, 2018, we negotiated a $6.9 million
reduction in the amount of a contingent liability from one of our
acquisitions. As we had passed the period to revise the opening
balance sheet for this acquisition, the adjustment was recorded as
other income.
 
 

The table below reconciles our net income (loss) per share attributable
to Summit Materials, Inc. to adjusted diluted net income (loss) per
share for the three and six months ended June 30, 2018 and July 1, 2017.
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 diluted net
income (loss) per share.

    Three months ended     Six months ended
June 30, 2018     July 1, 2017 June 30, 2018     July 1, 2017
Reconciliation of Net Income (Loss) Per Share to Adjusted Diluted
EPS
Net Income     Per Equity Unit Net Income     Per Equity Unit Net Loss     Per Equity Unit Net Loss     Per Equity Unit
Net income (loss) attributable to Summit Materials, Inc. $ 35,509 $ 0.31 $ 50,000 $ 0.44 $ (18,220 ) $ (0.16 ) $ (2,444 ) $ (0.02 )
Adjustments:
Net income (loss) attributable to noncontrolling interest 1,404 0.01 2,076 0.02 (815 ) (0.01 ) (490 )
Adjustment to acquisition deferred liability (6,947 ) (0.06 )
Loss on debt financings   149         149         190      
Adjusted diluted net income (loss) before tax related adjustments   37,062   0.32   52,076   0.46   (25,833 )   (0.23 )   (2,744 )   (0.02 )
Tax receivable agreement expense       1,525   0.01           1,525     0.01  
Adjusted diluted net income (loss) $ 37,062 $ 0.32 $ 53,601 $ 0.47 $ (25,833 ) $ (0.23 ) $ (1,219 ) $ (0.01 )
Weighted-average shares:
Basic Class A common stock 111,564,190 108,419,568 111,111,644 107,556,143
LP Units outstanding   3,517,602   4,574,104   3,583,407     4,821,955  
Total equity units   115,081,792   112,993,672   114,695,051     112,378,098  
 

The following table reconciles operating income to Adjusted Cash Gross
Profit and Adjusted Cash Gross Profit Margin for the three and six
months ended June 30, 2018 and July 1, 2017.

    Three months ended     Six months ended
June 30,     July 1, June 30,     July 1,
Reconciliation of Operating Income to Adjusted Cash Gross Profit 2018 2017 2018 2017
($ in thousands)
Operating income $ 77,279 $ 82,444 $ 25,754 $ 49,660
General and administrative expenses 61,657 58,086 131,518 116,554
Depreciation, depletion, amortization and accretion 49,731 45,039 96,689 84,787
Transaction costs   1,291     2,620     2,557     3,893  
Adjusted Cash Gross Profit (exclusive of items shown separately) $ 189,958   $ 188,189   $ 256,518   $ 254,894  
Adjusted Cash Gross Profit Margin (exclusive of items shown
separately) (1)
34.6 % 39.3 % 30.6 % 34.6 %

_______________________

(1)   Adjusted Cash Gross Profit Margin is defined as Adjusted Cash Gross
Profit as a percentage of net revenue.
 
 

The following table reconciles net cash provided by (used in) operating
activities to free cash flow for the three and six months ended June 30,
2018 and July 1, 2017.

        Three months ended     Six months ended
June 30,     July 1, June 30,     July 1,
($ in thousands) 2018 2017 2018 2017
Net income (loss) $ 36,913 $ 52,088 $ (19,035 ) $ (3,020 )
Non-cash items   64,277     52,382     98,472     97,339  
Net income adjusted for non-cash items 101,190 104,470 79,437 94,319
Change in working capital accounts   (83,541 )   (47,782 )   (113,155 )   (83,170 )
Net cash provided by (used in) operating activities 17,649 56,688 (33,718 ) 11,149
Capital expenditures, net of asset sales   (75,830 )   (53,946 )   (117,547 )   (100,677 )
Free cash flow $ (58,181 ) $ 2,742   $ (151,265 ) $ (89,528 )
 

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