Strong pricing and demand conditions continue
Results in line with expectations
Net Leverage Ratio remains below Elevate Summit target
DENVER--(BUSINESS WIRE )--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 ended April 2, 2022 (“first quarter”). All comparisons are versus the quarter ended April 3, 2021 unless noted otherwise.
"Our first quarter 2022 results demonstrate that we have sustained the momentum we built in 2021 and are on solid footing as we head into the prime construction season," said Summit Materials CEO Anne Noonan. "Our unwavering focus is squarely on our strategic execution and controlling what we can control to make further progress towards our Horizon One financial objectives of driving margin expansion, controlling leverage, and increasing ROIC. Price increases were communicated across all markets and lines of business with effective dates varying from January 1 to April 1, 2022, depending upon seasonality. We expect those increases will be fully reflected in the second quarter of 2022. We would characterize current market conditions as favorable towards the potential for additional price increases this year in all lines of business. We are diligently moving forward with portfolio optimization moves, implementing our Value Pricing principles, and pulling all available self-help margin levers to improve performance, offset inflation, and upgrade our quality of earnings. We are updating our 2022 Adjusted EBITDA guidance to reflect the impact of a divestiture and we remain confident that Summit Materials is on track for another year of solid growth."
Brian Harris, CFO of Summit Materials, added, "Sound strategic execution has put Summit in a position to pursue a broader range of high return capital allocation priorities. As part of our Elevate Summit strategy, we have closed nine strategic divestitures with line of sight to completing the ten to twelve as part of our Horizon One goal. We believe these divestitures advance our market leadership and asset light priorities and together with continued organic growth, provides Summit the financial flexibility to invest in greenfields, pursue attractive M&A opportunities, and opportunistically buy back our shares when they present compelling value."
In the three months ended April 2, 2022, Summit Materials sold one business in the East segment, resulting in cash proceeds of $47.8 million and a total gain on disposition of $14.2 million. To date, as part of its Elevate Summit Strategy, the Company has received $176.1 million in proceeds from a total of nine divestitures. As of April 2, 2022, Summit reclassified an operating unit in its East segment as held for sale, and expects to close the transaction in the second quarter of 2022.
In March 2022, the Company repurchased 1.5 million shares of Class A common stock for $47.5 million. As of April 2, 2022, approximately $202.5 million remained available for share repurchases under the share repurchase program.
For the full year 2022, Summit is updating its Adjusted EBITDA guidance to approximately $529 million to $557 million, from $535 million to $565 million previously, and continues to expect 2022 capital expenditures of approximately $270 million to $290 million, including greenfield projects.
First Quarter 2022 | Total Company Results
Net Revenue decreased $6.0 million, or 1.5% in the first quarter to $392.5 million, primarily resulting from divestitures completed in 2021, partially offset by increases in average sales prices.
Operating loss increased $9.2 million, or 36.9% in the first quarter to $34.3 million, as timing of price increases temporarily lagged increased costs from inflation, timing of repair and maintenance expenditures and certain stripping activities, unplanned downtime at a few of our locations, mitigated by a $5.1 million decrease in depreciation, depletion, amortization and accretion expenses. Summit's operating margin percentage for the three months ended April 2, 2022 decreased to (8.7)% from (6.3)%, from the comparable period a year ago.
Net loss attributable to Summit Inc. increased to $34.3 million, or $(0.29) per basic share, compared to $22.5 million, or $(0.19) per basic share in the comparable prior year period. Summit reported adjusted diluted net loss of $49.0 million, or $(0.41) per adjusted diluted share as compared to $38.9 million, or $(0.33) per adjusted diluted share in the prior year period.
Adjusted EBITDA decreased $18.5 million, or 44.3% to $23.3 million.
First Quarter 2022 | Results by Line of Business
Aggregates Business: Aggregates net revenues increased by $6.0 million to $123.4 million in the first quarter. Aggregates adjusted cash gross profit margin decreased to 36.3% in the first quarter as compared to 41.8% in the first quarter 2021. Aggregates sales volume decreased 0.8% in the first quarter as solid organic volume growth in several markets was more than offset by volume decreases in certain markets due to divestitures. Average selling prices for aggregates increased 4.8% in the first quarter with growth across both reporting segments.
Cement Business: Cement segment net revenues increased 13.7% to $46.2 million in the first quarter. Cement segment adjusted cash gross profit margin decreased to (2.0)% in the first quarter, compared to 1.9% in the prior year period, reflecting the impact of an annual maintenance shutdown and slightly slower than expected resumption of operations. Sales volume of cement increased 0.3% and average selling prices increased 10.1% in the first quarter.
Products Business: Products net revenues were $189.7 million in the first quarter, compared to $198.7 million in the prior year period. Products adjusted cash gross profit margin decreased to 11.6% in the first quarter, versus 13.6% in the prior year period. Average sales price for ready-mix concrete increased 7.3% driven by pricing growth in all markets, with strong, double-digit growth in the Intermountain West. Sales volumes of ready-mix concrete decreased 7.2% due to lower volumes in Kansas and north Texas due to weather. Average selling prices for asphalt increased 10.2%, driven by strong pricing gains in Virginia and the Intermountain West market. Asphalt volume decreased 45.1% due primarily to the impact of divestitures.
First Quarter 2022 | Results By Reporting Segment
West Segment: The West Segment operating income decreased 46.9% to $8.0 million and Adjusted EBITDA decreased 19.6% to $32.7 million in the first quarter primarily due to higher sub contractor costs, as well as increased repair and maintenance and fuel costs that were realized ahead of price increases broadly going into effect. Aggregates revenue in the first quarter increased 7.8% on 3.7% pricing growth and 3.9% volume growth, which was driven by strong demand in Texas and the Intermountain West geography, as well as increased projects in British Columbia. Ready-mix concrete revenue in the first quarter increased 6.0% as 7.0% pricing growth was partially offset by lower volumes. Asphalt revenue decreased 50.9% in the first quarter as volumes decreased 50.7%, due to a divestiture made in the second quarter of 2021. Asphalt sales prices increased 10.3% in the period.
East Segment: The East Segment operating loss increased 3.4% to $10.7 million and Adjusted EBITDA decreased 30.7% to $8.1 million in the first quarter. Lower operating income and Adjusted EBITDA reflects increased cost of revenue that exceeded pricing growth. Aggregates revenue was flat to prior year. Aggregates volumes decreased 6.5% primarily due to divestitures and partially offset by growth in Georgia. Average selling prices for aggregates increased 7.0%. Ready-mix concrete revenue decreased 26.6% as volumes decreased by 32.5%, partially offset by average selling price growth of 8.9%. Asphalt revenue increased 10.3% as lower volumes were more than offset by pricing growth. Asphalt average selling prices increased 14.5% due to product mix and asphalt mix design.
Cement Segment: The Cement Segment operating loss increased 34.4% to $13.5 million in the first quarter. Adjusted EBITDA decreased $8.3 million as our repair and maintenance costs associated our annual shutdown were elevated relative to the comparable prior period. In first quarter, the Cement Segment reported volume growth of 0.3% and average selling price growth of 10.1%.
As of April 2, 2022, the Company had $287.4 million in cash and $1.6 billion in debt outstanding. The Company's $345 million revolving credit facility has $324.6 million available after outstanding letters of credit. For the quarter ended April 2, 2022, cash flow used in operations was $16.7 million and cash paid for capital expenditures was $57.8 million.
In March 2022, the Company repurchased 1.5 million shares of Class A common stock for $47.5 million. As of April 2, 2022, approximately $202.5 million remained available for share repurchases under the share repurchase program.
Webcast and Conference Call Information
Summit Materials will conduct a conference call on Thursday, May 5, 2022, at 11:00 a.m. eastern time (9:00 a.m. mountain time) to review the Company’s first quarter 2022 financial results, discuss recent events and conduct a question-and-answer session.
A webcast of the first quarter results conference call and accompanying presentation materials will be available in the Investors section of Summit’s website at investors.summit-materials.com or at the following link: https://events.q4inc.com/attendee/420213312. 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 for first quarter 2022 financial results:
To listen to a replay of the teleconference, which will be available through May 12, 2022:
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.
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 1, 2022, as filed with the SEC, and any factors discussed in the section entitled “Risk Factors” in any of our subsequently filed SEC filings.
All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements. Any forward-looking statement that we make herein speaks only as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law.
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
($ in thousands, except share and per share amounts)
Cost of revenue (excluding items shown separately below):
Depreciation, depletion, amortization and accretion
Gain on sale of property, plant and equipment
Gain on sale of businesses
Loss from operations before taxes
Net loss attributable to Summit Holdings (1)
Net loss attributable to Summit Inc.
Loss per share of Class A common stock:
Weighted average shares of Class A common stock:
(1) Represents portion of business owned by pre-IPO investors rather than by Summit.
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
($ in thousands, except share and per share amounts)
Costs and estimated earnings in excess of billings
Current assets held for sale
Property, plant and equipment, less accumulated depreciation, depletion and amortization (April 2, 2022 - $1,290,560 and January 1, 2022 - $1,266,513)
Intangible assets, less accumulated amortization (April 2, 2022 - $16,218 and January 1, 2022 - $15,269)
Deferred tax assets, less valuation allowance (April 2, 2022 - $1,675 and January 1, 2022 - $1,675)
Noncurrent assets held for sale
Current portion of acquisition-related liabilities
Billings in excess of costs and estimated earnings
Current liabilities held for sale
Noncurrent liabilities held for sale
Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 118,041,848 and 118,705,108 shares issued and outstanding as of April 2, 2022 and January 1, 2022, respectively
Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 99 shares issued and outstanding as of April 2, 2022 and January 1, 2022
Noncontrolling interest in Summit Holdings
Total liabilities and stockholders’ equity
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, amortization and accretion
Net gain on asset and business disposals
Change in deferred tax asset, net
Decrease (increase) in operating assets, net of acquisitions and dispositions:
Costs and estimated earnings in excess of billings
(Decrease) increase in operating liabilities, net of acquisitions and dispositions:
Billings in excess of costs and estimated earnings
Net cash used in operating activities
Cash flows from investing activities:
Purchases of property, plant and equipment
Proceeds from the sale of property, plant and equipment
Proceeds from sale of businesses
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from stock option exercises
Net cash used in financing activities
Impact of foreign currency on cash
Cash and cash equivalents—beginning of period
Cash and cash equivalents—end of period
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Revenue Data by Segment and Line of Business
Line of Business - Net Revenue:
Line of Business - Net Cost of Revenue:
Line of Business - Adjusted Cash Gross Profit (2):
Adjusted Cash Gross Profit Margin (2)
Total Adjusted Cash Gross Profit Margin
(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) Adjusted cash gross profit is 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
Ready-mix concrete (per cubic yards)
Ready-mix concrete (per cubic yards)
Year over Year Comparison (Excluding acquisitions)
Ready-mix concrete (per cubic yards)
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Reconciliations of Gross Revenue to Net Revenue by Line of Business
($ and Units in thousands, except pricing information)
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 loss to Adjusted EBITDA by segment for the three months ended April 2, 2022 and April 3, 2021.
Reconciliation of Net Income (Loss) to Adjusted EBITDA
Gain on sale of businesses
Reconciliation of Net Income (Loss) to Adjusted EBITDA
Gain on sale of business
(1) Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of net revenue.
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 2, 2022 and April 3, 2021. 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.
Reconciliation of Net Loss Per Share to Adjusted Diluted EPS
Net loss attributable to Summit Materials, Inc.
Net loss attributable to noncontrolling interest
Gain on sale of businesses
Basic Class A common stock
The following table reconciles operating loss to Adjusted Cash Gross Profit and Adjusted Cash Gross Profit Margin for the three months ended April 2, 2022 and April 3, 2021.
Reconciliation of Operating Loss to Adjusted Cash Gross Profit
Depreciation, depletion, amortization and accretion
Gain on sale of property, plant and equipment
Adjusted Cash Gross Profit (exclusive of items shown separately)
Adjusted Cash Gross Profit Margin (exclusive of items shown separately) (1)
(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 used in operating activities to free cash flow for the three months ended April 2, 2022 and April 3, 2021.
Net loss adjusted for non-cash items
Change in working capital accounts
Net cash used in operating activities
Capital expenditures, net of asset sales
Andy Larkin VP, Investor Relations andy.larkin@summit-materials.com 720-618-6013
Summit Materials, Inc. Reports First Quarter 2022 Results
Andy Larkin VP, Investor Relations andy.larkin@summit-materials.com 720-618-6013