Summit Materials, Inc. Reports First Quarter 2021 Results

- Record First Quarter Net Revenue of $398.5 million, an increase of 16.4%

-Net loss attributable to Summit Inc. of $22.5 million

-Record First Quarter Adjusted EBITDA of $41.7 million, an increase of 166.5%

-Aggregates volumes increased 20.7%

-Cement volumes increased 13.7%

Summit Materials, Inc. (NYSE: SUM, “Summit,” “Summit Materials,” "Summit Inc." or the “Company”), a leading vertically integrated construction materials company, today announced results for the first quarter 2021.

For the three months ended April 3, 2021, the Company reported net loss attributable to Summit Inc. of $22.5 million, or $(0.19) per basic share, compared to net loss attributable to Summit Inc. of $45.0 million, or $(0.40) per basic share in the comparable prior year period. Summit reported adjusted diluted net loss of $38.9 million, or $(0.33) per adjusted diluted share as compared to adjusted diluted net loss of $56.3 million, or $(0.48) per adjusted diluted share in the prior year period.

Summit's net revenue increased $56.1 million, or 16.4% in the first quarter of 2021 to $398.5 million, compared to $342.4 million in the first quarter of 2020, on higher aggregates, ready-mix concrete, cement, asphalt and paving revenue relative to a year ago on strong demand in most markets.

The Company reported an operating loss of $25.1 million in the first quarter 2021, an improvement of 39.9%, compared to $41.7 million in the prior year period. Net revenue gains in all lines of business exceeded increases in costs of revenue and more than offset a $10.0 million increase in general and administrative expenses, which included $3.4 million in severance related costs and professional fees associated with optimizing organizational efficiencies. Summit's operating margin percentage for the three months ended April 3, 2021 increased to (6.3)% from (12.2)%, from the comparable period a year ago, due to the factors noted above.

Adjusted EBITDA increased in the first quarter to $41.7 million as compared to $15.7 million in the first quarter 2020.

For the three months ended April 3, 2021, sales volumes increased 20.7% in aggregates, 13.7% in cement, 7.6% in ready-mix concrete and 15.9% in asphalt relative to the same period last year on strong demand in most of our markets. Average selling prices in the first quarter of 2021 decreased 1.9% in aggregates, and increased 0.4% in cement, 3.7% in ready-mix concrete and 5.5% in asphalt. While most of Summit's geographies reported higher average selling prices for aggregates in the first quarter, slight changes in product mix in our Kansas and North Texas markets resulted in a lower company-wide average selling price than the year ago quarter. Adjusted cash gross profit for aggregates expanded to $49.1 million in the first quarter 2021, an increase of 34.0% relative to $36.6 million in the year ago quarter.

Anne Noonan, CEO of Summit Materials, commented, "After a strong finish to 2020, Summit has accelerated into 2021 with record first quarter Adjusted EBITDA. Migration activity continues to favor our rural and exurban markets and most of the state Departments of Transportation that we serve are on solid financial footing. We are in full implementation mode on our Elevate Summit strategy, and we are seeing early signs of success. In the first quarter we completed one strategic divestiture and made progress on others. We remain focused on sustainable growth with investments in greenfields and end markets that are underpinned by strong growth fundamentals."

As of April 3, 2021, the Company had $359.7 million in cash and $1.9 billion in debt outstanding. The Company's $345 million revolving credit facility has $329 million available after outstanding letters of credit. For the quarter ended April 3, 2021, cash flow used in operations was $21.3 million and cash paid for capital expenditures was $69.8 million.

Brian Harris, CFO of Summit Materials added, "Our Q1 2021 leverage ratio was steady from the prior quarter, which is the lowest first quarter leverage ratio in Summit's history, and a significant improvement from a year ago. Our leverage ratio typically increases in the first quarter, as Q1 typically has the lowest EBITDA contribution of the year, but that did not happen in Q1 2021 due to our excellent financial performance. Our Elevate Summit goal is less than 3x leverage, and we believe that is within our sights in 2021."

For the full year 2021, Summit has not made any changes to its outlook for Adjusted EBITDA of approximately $490 million to $520 million, but expects to revisit this forecast as the year progresses. The Company continues to expect 2021 capital expenditure guidance of approximately $200 million to $220 million including approximately $25 million to $35 million for greenfield projects.

Beginning in the first quarter of 2021, the Company is reporting fixed overhead expenses related to production in its cost of revenue to align more closely to industry peers. Previously, the Company reported fixed overhead expenses in its general and administrative costs.

First Quarter 2021 | Results by Line of Business

Aggregates Business: Aggregates net revenues increased by $21.2 million to $117.4 million in the first quarter 2021 when compared to the prior year period. Aggregates adjusted cash gross profit margin increased to 41.8% in the first quarter 2021 as compared to 38.1% in the first quarter 2020. Aggregates sales volumes increased 20.7% in the first quarter 2021 when compared to the prior year period on organic growth in both the West and East segments. Volume increased in the Intermountain West, Virginia and British Columbia markets, partially offset by slight decreases in Kansas and Missouri as wind farm and flood repair volumes in the first quarter of 2020 did not repeat in 2021. Average selling prices for aggregates decreased 1.9% in the first quarter 2021, primarily due to product mix in Kansas and North Texas markets. On an organic basis, average selling prices for aggregates remained flat.

Cement Business: Cement segment net revenues increased 7.2% to $40.7 million in the first quarter 2021, when compared to the prior year period, on higher sales volume of cement. Cement adjusted cash gross profit margin increased to 1.9% in the first quarter, compared to (10.0)% in the prior year period, as higher volumes resulted in lower unit plant costs. Our Green America Recycling facility continues to ramp up production following an explosion that occurred in April 2020. Sales volume of cement increased 13.7% in the first quarter and average selling prices increased 0.4% when compared to the prior year period.

Products Business: Products net revenues were $198.7 million in the first quarter 2021, compared to $176.3 million in the prior year period. Products adjusted cash gross profit margin increased to 13.6% in the first quarter, versus 11.4% in the prior year period. Our organic average sales price for ready-mix concrete increased 3.7% and organic sales volumes of ready-mix concrete increased 7.6%, as volume increased in our Intermountain West and North Texas markets, and prices increased in our Intermountain West market. Our organic average sales price for asphalt increased 5.5%, with strong pricing gains across our Texas geographies, while volume increased 15.9%, on higher volumes in North Texas.

First Quarter 2021 | Results By Reporting Segment

Net revenue increased by 16.4% to $398.5 million in the first quarter 2021, versus $342.4 million in the prior year period on organic growth in our aggregates and ready-mix concrete operations. The Company reported an operating loss of $25.1 million in the first quarter 2021, compared to $41.7 million in the prior year period.

Net loss decreased to $23.2 million in the first quarter of 2021, compared to loss of $46.7 million in the prior year period. Adjusted EBITDA increased 166.5% to $41.7 million in the first quarter of 2021, compared to $15.7 million in the prior year period on higher revenue.

West Segment: The West Segment reported operating income of $15.1 million in the first quarter 2021, compared to $0.4 million in the prior year period. Adjusted EBITDA increased to $40.6 million in the first quarter 2021, compared to $22.5 million in the prior year period, as we had increases in net revenue in all lines of business. Improvements in operating income reflected increased demand for aggregates and ready-mix concrete, particularly in the Houston and Salt Lake City areas. Aggregates revenue in the first quarter increased 39.8% over the prior year period, while organic volumes and average sales prices increased 13.1% and 1.1%, respectively. Ready-mix concrete revenue in the first quarter 2021 increased 19.5% over the prior year period, as organic volumes increased 14.1% and organic average sales prices increased 4.7%, reflecting favorable market conditions for residential construction. Asphalt revenue increased by 18.2% in the first quarter 2021 over the prior year period. Asphalt volumes increased 11.7%, reflecting higher demand in North Texas, and sales prices increased 8.0%.

East Segment: The East Segment reported an operating loss of $10.4 million in the first quarter 2021, compared to $11.8 million in the prior year period as net revenue increases in aggregates, asphalt and paving and related services exceeded a decrease in ready-mix concrete. Adjusted EBITDA increased to $11.7 million in the first quarter 2021, compared to $9.6 million in the prior year period. Aggregates revenue increased 2.6%, as volumes increased 2.7%, partially offset by decreased average selling prices of 0.2%. Ready-mix concrete revenue decreased 11.9% as volumes decreased by 12.4%, partially offset by organic average selling prices which increased 0.5% primarily due to lower volumes in Kansas as wind farm projects in 2020 were not fully replaced in 2021. Asphalt revenue increased 40.6% as organic volumes increased 55.0% on higher volumes in Kansas and Virginia, while organic average selling prices decreased 11.5% on lower liquid asphalt index prices in most of our markets.

Cement Segment: The Cement Segment reported an operating loss of $10.0 million in the first quarter 2021, compared to $15.5 million in the prior year period. Adjusted EBITDA increased to $2.5 million in the first quarter 2021, compared to $(7.6) million in the prior year period on higher volumes. The segment reported organic sales volumes and organic average selling prices increased 13.7% and increased 0.4%, respectively, during the first quarter 2021 as compared to the prior year period. Our Green America Recycling facility continues to ramp up production following an explosion that occurred in April 2020. As a result, revenue from that facility is below 2020 levels for the first quarter 2021.

Liquidity and Capital Resources

As of April 3, 2021, the Company had cash on hand of $359.7 million and borrowing capacity under its $345 million revolving credit facility of $329.1 million. The borrowing capacity on the revolving credit facility is currently fully available to the Company within the terms and covenant requirements of its credit agreement. As of April 3, 2021, the Company had $1.9 billion in debt outstanding.

Financial Outlook

For the full year 2021, Summit has not made any changes to its outlook for Adjusted EBITDA of approximately $490 million to $520 million, but expects to revisit this forecast as the year progresses. The Company continues to expect 2021 capital expenditure guidance of approximately $200 million to $220 million including approximately $25 million to $35 million for greenfield projects.

Webcast and Conference Call Information

Summit Materials will conduct a conference call on Tuesday, May 11, 2021, at 11:00 a.m. eastern time (9:00 a.m. mountain time) to review the Company’s first quarter 2021 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.

To participate in the live teleconference on May 11, 2021:

Domestic Live: 1-877-823-8690

International Live: 1-825-312-2236

Conference ID: 2395906

Password: Summit

To listen to a replay of the teleconference, which will be available through May 18, 2021:

Domestic Replay: 1-800-585-8367

International Replay: 1-416-621-4642

Conference ID: 2395906

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 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 Diluted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Free Cash Flow, Net Leverage and Net Debt 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, Adjusted Diluted EPS, Adjusted EBITDA, Further Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Free Cash Flow, Net Leverage and Net Debt 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 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, Further Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Adjusted Net Income (Loss), Adjusted Diluted Net Income, Adjusted Diluted EPS, Free Cash Flow, Net Leverage and Net Debt 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 January 2, 2021, as filed with the SEC, and any factors discussed in the section entitled “Risk Factors” in any of our subsequently filed SEC filings.

• the impact of the COVID-19 pandemic, or any similar crisis, on our business;
• 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;
• our reliance on private investment in infrastructure, which may be adversely affected by periods of economic stagnation and recession;
• environmental, health, safety and climate change laws or governmental requirements or policies concerning zoning and land use;
• costs associated with pending and future litigation;
• rising prices for commodities, labor and other production and delivery inputs as a result of inflation or otherwise;
• conditions in the credit markets;
• our ability to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us;
• material costs and losses as a result of claims that our products do not meet regulatory requirements or contractual specifications;
• cancellation of a significant number of contracts or our disqualification from bidding for new contracts;
• special hazards related to our operations that may cause personal injury or property damage not covered by insurance;
• unexpected factors affecting self-insurance claims and reserve estimates;
• our substantial current level of indebtedness, including our exposure to variable interest rate risk;
• our dependence on senior management and other key personnel, and our ability to retain and attract qualified personnel;
• supply constraints or significant price fluctuations in the electricity and petroleum-based resources that we use, including diesel and liquid asphalt;
• climate change and climate change legislation or regulations;
• unexpected operational difficulties;
• interruptions in our information technology systems and infrastructure; including cybersecurity and data leakage risks; and
• potential labor disputes, strikes, other forms of work stoppage or other union activities.

All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. Any forward-looking statement that we make herein speaks only as of the date of this 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.

The table below reconciles our net loss attributable to Summit Materials, Inc. to adjusted diluted net loss per share for the three months ended April 3, 2021 and March 28, 2020. The per share amount of the net 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 loss per share.

The following table reconciles operating loss to Adjusted Cash Gross Profit and Adjusted Cash Gross Profit Margin for the three months ended April 3, 2021 and March 28, 2020.

The following table reconciles net cash used in operating activities to free cash flow for the three months ended April 3, 2021 and March 28, 2020.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210510005824/en/