Summit Materials, Inc. Reports Fourth Quarter and Full Year 2020 Results

– Record 2020 Net Income Attributable to Summit Inc of $138.0 million

– 4Q Net Income Attributable to Summit Inc. of $35.2 million

– Leverage ratio improved to 3.2x

– Record Full Year 2020 Adjusted EBITDA of $485.0 million, an increase of 5.1%

DENVER–(BUSINESS WIRE)–Summit Materials, Inc. (NYSE: SUM, “Summit,” “Summit Inc.” or the “Company”), a leading vertically integrated construction materials company, today announced results for the fourth quarter and full year 2020.

For the three months ended January 2, 2021, the Company reported net income attributable to Summit Inc. of $35.2 million, or $0.31 per basic share, compared to net income attributable to Summit Inc. of $35.7 million, or $0.32 per basic share in the comparable prior year period. Summit reported adjusted diluted net income of $28.8 million, or $0.25 per adjusted diluted share as compared to adjusted diluted net income of $71.5 million, or $0.62 per adjusted diluted share in the prior year period. For the full year 2020, net income attributable to Summit Inc. was $138.0 million, or $1.21 per basic share, compared to $59.1 million, or $0.53 per basic share, in 2019.

Summit’s net revenue increased 13.0% in the fourth quarter of 2020 to $571.9 million, compared to $506.3 million in the fourth quarter of 2019, on higher ready-mix concrete, aggregates, asphalt and paving revenue, relative to a year ago. Net revenue increased $104.1 million to $2,134.8 million in the year ended January 2, 2021, resulting from growth in all lines of business other than cement.

The Company reported operating income of $66.2 million in the fourth quarter 2020, compared to $59.9 million in the prior year period, and operating income of $225.2 million in the full year 2020, compared to $213.6 million in 2019. Operating income increased by $11.6 million, or 5.4%, in 2020 as compared to 2019, primarily due to net revenue gains, partially offset by higher G&A costs due in part to a management transition that occurred earlier in the year. Summit’s operating margin percentage for the three and twelve months ended January 2, 2021 decreased to 11.6% from 11.8%, and was unchanged at 10.5% respectively, from the comparable period a year ago, due to the factors noted above.

Adjusted EBITDA increased in the fourth quarter to $130.6 million as compared to $121.1 million in the fourth quarter 2019, and for full year 2020 Adjusted EBITDA increased to $485.0 million from $461.5 million in 2019.

For the three months ended January 2, 2021, sales volumes increased 24.7% in aggregates, 4.5% in cement, 6.4% in ready-mix concrete and 20.3% in asphalt relative to the same period last year. Organic average selling prices for aggregates decreased 3.6% in the fourth quarter of 2020 due to changes in product mix relative to a year ago as the fourth quarter 2019 included a contribution from flood repair work. Inclusive of acquisitions, average selling prices in the fourth quarter of 2020 decreased 6.2% in aggregates, and increased 2.8% in cement, 3.2% in ready-mix concrete and 2.1% in asphalt. For the full year 2020, sales volumes increased 9.5% in aggregates, 5.0% in ready-mix concrete and 4.7% in asphalt, and decreased 4.6% in cement. Average selling prices in full year 2020 decreased 2.0% in aggregates due to product mix, and increased 1.5% in cement, 4.7% in ready-mix concrete and 1.4% in asphalt. On a mix-adjusted basis, aggregates prices increased 1.7%.

Anne Noonan, CEO of Summit Materials, commented, “Summit delivered a strong finish to 2020 as migration trends continued to favor our rural and exurban markets, which directly benefited residential construction activity. In many of our key states, public spending activity was resilient and we had more working days. We are reporting record annual net income, Adjusted EBITDA and free cash flow. We are focused on sustainable growth with investments in greenfields and end markets that are underpinned by strong growth fundamentals. Our leverage ratio declined to 3.2x at year end, down from 3.6x a year ago. Most importantly, we continue to vigilantly practice safety and distancing protocols in response to the COVID-19 outbreak.”

As of January 2, 2021, the Company had $418.2 million in cash and $1.9 billion in debt outstanding. The Company’s $345 million revolving credit facility has $329 million available after letters of credit. For the year ended January 2, 2021, cash flow provided by operations was $408.9 million while cash paid for capital equipment was $177.2 million. Brian Harris, CFO of Summit Materials added, “Record annual net income and improved working capital management resulted in record annual free cash flow of $245.6 million. We ended 2020 at 3.2x leverage, which is the lowest year-end leverage ratio in Summit’s history, combined with nearly $750 million in available liquidity.”

For the full year 2021, Summit is currently projecting Adjusted EBITDA of approximately $490 million to $520 million.

The Company is announcing 2021 capital expenditure guidance of $200 million to $220 million including approximately $25 million to $35 million for greenfield projects.

Full-Year 2020 | Results by Line of Business

 

Aggregates Business: Aggregates net revenues were $498.0 million in 2020, compared to $469.7 million the prior year. Aggregates adjusted cash gross profit margin decreased to 59.2% in 2020 compared to 60.2% on a combination of higher volumes, and product mix. Aggregates sales volumes increased 9.5% in 2020, when compared to the prior year period on higher organic volume growth, particularly in Texas, Utah, and Kansas. Average selling prices for aggregates decreased 2.0% in 2020 when compared to the prior year period, which included some favorably priced levee repair work in 2019. On a mix-adjusted basis, Summit estimates that aggregates prices increased by approximately 1.7% in 2020.

Cement Business: Cement segment net revenues decreased 6.9% to $270.6 million in 2020 when compared to the prior year period. Cement adjusted cash gross profit margin decreased to 39.6%, compared to 40.3% in the prior year. Organic sales volume of cement decreased 4.6% in 2020 when compared to the prior year. Organic average selling prices on cement increased 1.5% in 2020 relative to 2019. In addition, our solid waste processing facility continued to undergo repairs related to an explosion that occurred in April 2020. The full year 2020 impact was approximately $14 million of foregone adjusted EBITDA.

Products Business: Products net revenues were $1,069.0 million in 2020, compared to $988.6 million in the prior year. Products adjusted cash gross profit margin increased to 23.8%, versus 22.1% in the prior year. Our organic average sales price for ready-mix concrete increased 4.7%, coupled with a 5.0% increase in organic sales volumes of ready-mix concrete, led by higher volumes in Utah and Kansas. Our organic average sales price for asphalt increased 1.4% while we had a 4.7% increase in asphalt organic sales volumes, driven in part by volume growth in Texas, Kansas and Virginia.

Fourth Quarter 2020 | Results by Line of Business

 

Aggregates Business: Aggregates net revenues increased by $19.8 million to $135.5 million in the fourth quarter 2020 when compared to the prior year period. Aggregates adjusted cash gross profit margin decreased to 57.6% in the fourth quarter 2020 as compared to 61.9% in the fourth quarter 2019 on differences in product mix. Aggregates sales volumes increased 24.7% in the fourth quarter 2020 when compared to the prior year period on higher volumes in Texas, partially offset by lower volumes in Missouri and Kansas. Average selling prices for aggregates decreased 6.2% in the fourth quarter 2020, reflecting acquisition related volumes. On an organic basis, average selling prices for aggregates decreased 3.6%. On a mix-adjusted basis, Summit estimates that aggregates prices increased by approximately 1.7% in 2020.

Cement Business: Cement segment net revenues increased 3.3% to $72.2 million in the fourth quarter 2020, when compared to the prior year period, on higher sales volume of cement. Cement adjusted cash gross profit margin increased to 47.5% in the fourth quarter, compared to 45.4% in the prior year period, as higher volumes resulted in lower unit plant costs. In addition, our solid waste processing facility continued to undergo repairs related to an explosion that occurred in April 2020. The Adjusted EBITDA impact from the down time at the facility was approximately $4.2 million in the fourth quarter 2020. Sales volume of cement increased 4.5% in the fourth quarter and average selling prices increased 2.8% when compared to the prior year period.

Products Business: Products net revenues were $286.0 million in the fourth quarter 2020, compared to $251.4 million in the prior year period. Products adjusted cash gross profit margin increased to 24.0% in the fourth quarter, versus 23.9% in the prior year period. Our organic average sales price for ready-mix concrete increased 3.2% and organic sales volumes of ready-mix concrete increased 6.4%, as higher volumes in residential construction markets were offset by flat to slightly lower volumes in other parts of Texas (Permian) and Kentucky. Our organic average sales price for asphalt increased 2.1%, while asphalt organic sales volumes increased 20.3%, as lower volume in Kentucky was offset by higher volumes in North Texas and Kansas.

Full-Year 2020 | Results By Reporting Segment

 

Net revenue increased by 5.1% to $2.1 billion in 2020, versus $2.0 billion in 2019. The increase in consolidated net revenue relative to 2019 was primarily attributable to a 12.2% increase in West Segment net revenue, partially offset by a 0.1% decrease in East Segment net revenue, combined with a 6.9% decrease in Cement Segment net revenue. The Company reported operating income of $225.2 million in 2020, compared to $213.6 million in the prior year. Adjusted EBITDA was $485.0 million in 2020, an increase of 5.1% compared to $461.5 million in 2019.

West Segment: The West Segment reported operating income of $176.5 million in 2020, compared to $109.2 million in 2019, due to higher revenue from all lines of business. Adjusted EBITDA increased to $271.1 million in 2020, an increase of 32.2% compared to $205.0 million in 2019. Aggregates revenue in 2020 increased 15.9% over 2019, partly as a result of a 4.4% increase in organic volumes, led by volume growth in Texas, and a 1.8% increase in organic average selling prices. Ready-mix concrete revenue in 2020 increased 7.8% over 2019, reflecting improved weather conditions relative to a year ago. Organic ready-mix concrete volumes increased 3.0% while organic average sales prices increased 4.7%. Asphalt revenue increased by 12.7% in 2020, as organic volumes increased 10.3% and average sales prices increased 2.9% compared to 2019. The Company completed the acquisition of Multisources of Houston, Texas and Valley Gravel of Abbotsford, British Columbia, in 2020, both of which are primarily aggregates businesses.

East Segment: The East Segment reported operating income of $69.8 million in 2020, compared to $101.8 million in 2019, primarily due to decreased asphalt and paving activity in Kentucky. Adjusted EBITDA decreased to $162.3 million in 2020, compared to $187.6 million in 2019. Aggregates net revenue increased 1.3%, primarily due to a 3.0% increase in organic volume despite a decrease in organic average sales prices of 2.1%, as sales prices decreased in Missouri relative to 2019, which included more higher priced flood and levy volumes related to public repair work. Organic ready-mix concrete revenue increased 16.4% due to a 11.2% increase in volume and a 4.6% increase in price. Organic asphalt revenue decreased 18.8%, reflecting a 7.9% decrease in volume, combined with a 3.3% decrease in price, reflecting less activity in Kentucky, partially offset by higher volume in Kansas and Virginia.

Cement Segment: The Cement Segment reported operating income of $55.3 million in 2020, compared to $64.7 million in 2019. Adjusted EBITDA declined to $93.0 million in 2020, compared to $103.4 million in 2019. Cement Segment revenue decreased 6.9%, reflecting a 4.6% decrease in volume despite a 1.5% increase in price. Cement segment operating income declined in part due to lower sales volumes related to COVID-19, notably in our southern markets. Additionally, our solid waste processing facility that provides fuel for one of our plants remained closed to processing solid waste due to an explosion in April 2020, which increased our operating costs.

Fourth Quarter 2020 | Results By Reporting Segment

 

Net revenue increased by 13.0% to $571.9 million in the fourth quarter 2020, versus $506.3 million in the prior year period on higher volume in all lines of business. Aggregates reported average selling prices declined 6.2% in the fourth quarter 2020 relative to the prior year, but on a product mix adjusted basis, year to date aggregates pricing has increased approximately 2.1%. The Company reported operating income of $66.2 million in the fourth quarter 2020, compared to $59.9 million in the prior year period.

Net income decreased to $36.3 million in the fourth quarter of 2020, compared to income of $36.4 million in the prior year period. Adjusted EBITDA increased 7.9% to $130.6 million in the fourth quarter of 2020, compared to $121.1 million in the prior year period on higher revenue.

West Segment: The West Segment reported operating income of $47.2 million in the fourth quarter 2020, compared to $30.7 million in the prior year period. Adjusted EBITDA increased to $74.2 million in the fourth quarter 2020, compared to $53.9 million in the prior year period. Improvements in operating income reflected increased demand for aggregates and ready-mix concrete in Utah and Texas. Aggregates revenue in the fourth quarter increased 43.1% over the prior year period, while organic volumes and average sales prices increased 15.9% and 2.3%, respectively. Ready-mix concrete revenue in the fourth quarter 2020 increased 12.3% over the prior year period, as organic volumes increased 8.8% and organic average sales prices increased 3.3%, reflecting favorable market conditions in Utah and Texas. Asphalt revenue increased by 38.9% in the fourth quarter 2020 over the prior year period. Asphalt volumes increased 33.5%, reflecting higher demand in Texas and Utah, and sales prices increased 4.0%.

East Segment: The East Segment reported operating income of $20.8 million in the fourth quarter 2020, compared to $29.8 million in the prior year period as lower asphalt revenues due to the ongoing fiscal constraints in Kentucky more than offset strength in ready-mix concrete. Adjusted EBITDA decreased to $42.4 million in the fourth quarter 2020, compared to $53.1 million in the prior year period. Aggregates revenue decreased 0.3%, as average selling prices decreased 7.0% on a difference in product mix from the year-ago quarter, which reflected significant flood repair work. The decrease in revenue was partially offset by a 6.4% increase in organic volumes on higher volumes in Kansas, Kentucky, and Virginia. Ready-mix concrete revenue increased 2.7% as organic average selling prices increased 2.7% due in part to wind farm work in Kansas. Asphalt revenue decreased 12.1% as organic volumes decreased 2.6% on a lower contribution from Kentucky, and organic average selling prices decreased 3.9%.

Cement Segment: The Cement Segment reported operating income of $20.8 million in the fourth quarter 2020, compared to $20.6 million in the prior year period. The segment reported organic sales volumes and organic average selling prices increased 4.5% and increased 2.8%, respectively, during the fourth quarter 2020 as compared to the prior year period. Adjusted EBITDA increased to $29.8 million in the fourth quarter 2020, compared to $27.9 million in the prior year period as volumes improved relative to the prior year, resulting in lower unit plant costs. In addition, our solid waste processing facility continued to undergo repairs related to an explosion that occurred in April 2020. The Adjusted EBITDA impact from the down time at the facility was approximately $4.0 million in the quarter.

Liquidity and Capital Resources

 

As of January 2, 2021, the Company had cash on hand of $418.2 million and borrowing capacity under its $345 million revolving credit facility of $329 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 January 2, 2021, the Company had $1.9 billion in debt outstanding.

Financial Outlook

 

For the full year 2021, Summit is currently projecting Adjusted EBITDA of approximately $490 million to $520 million.

The Company is announcing 2021 capital expenditure guidance of $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 Wednesday, February 24, 2021, at 11:00 a.m. eastern time (9:00 a.m. mountain time) to review the Company’s fourth quarter and full year 2020 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 February 24, 2021:

Domestic Live: 1-877-823-8690

International Live: 1-825-312-2236

Conference ID: 1994474

Password: Summit

To listen to a replay of the teleconference, which will be available through March 3, 2021:

Domestic Replay: 1-800-585-8367

International Replay: 1-416-621-4642

Conference ID: 1994474

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.

Contacts

Karli Anderson

Vice President, Investor Relations

[email protected]
303-515-5152

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