November 9, 2017
For the third quarter 2017, Summit Materials, Inc. reported diluted net income per share of $0.72 on net income of $79.1 million, compared to $0.60 diluted earnings per share on net income of $44.8 million during the same period of 2016; and adjusted diluted net income of $0.73 per share on net income of $82.0 million, compared to $0.71 on adjusted net income of $73.5 million during the same period of 2016. Operating income increased by 28.8 percent to $113.9 million in Q3 2017, versus $88.4 million in the same period of 2016. Net revenue increased by 19.6 percent to $574.4 million in Q3 2017, versus $480.2 in Q3 2016, which was primarily attributable to acquisition-related contributions, increased organic sales volumes of cement, aggregates, and asphalt, together with increased organic selling prices on cement, ready-mix concrete, and asphalt. Operating income increased by 28.8 percent to $113.9 million in Q3 2017, when compared to Q3 2016. Adjusted EBITDA increased 18.1 percent year-over-year to $172.7 million compared to $146.2 million in 2016.
“We delivered double-digit year-over-year growth in net revenue, operating income, and net income during the third quarter, driven by a combination of increased organic sales volumes in our materials businesses, together with contributions from recently completed acquisitions,” stated Tom Hill, CEO of Summit Materials, in a press release. “Adjusted EBITDA increased 18.1 percent year-over-year to $172.7 million, supported by organic growth in our Cement Segment and East Segment. Organic growth contributed nearly 30 percent of the year-over-year improvement in third quarter Adjusted EBITDA, as we continue to leverage efficiencies afforded by our vertically integrated, decentralized model.”
Organic sales volumes of cement and aggregates increased 10.0 percent and 2.6 percent, respectively, in Q3 2017, when compared to Q3 2016. Cement prices grew organically by 3.6 percent during the third quarter of 2017, and the company anticipates additional growth in cement prices along the Mississippi River corridor in 2018. Organic aggregates prices declined less than 1 percent in Q3 2017, due mainly to sales mix related factors isolated to the West Segment. Adjusted cash gross profit margin on aggregates increased 130 basis points to a record 73.0 percent, while adjusted cash gross profit margin on cement increased 160 basis points to 50.6 percent.
“Since our last update in August 2017, we closed on four additional materials-based acquisitions,” Hill noted in the press release. “Our acquisitions of Georgia Stone/McLanahan provide us with an entry point into the growing Georgia market, while the acquisition of Alan Ritchey Materials provides us an entry point into the Dallas market. Columbia Silica and Stockman are attractive bolt-on acquisitions that expand our existing footprint in South Carolina and Missouri, respectively. As before, we remain disciplined acquirors, transacting on quality aggregates reserves with high synergy potential. For the full-year 2017, we are maintaining our annualized acquired EBITDA target range of $50 million to $70 million.”
“We ended the third quarter with significant available liquidity on our balance sheet with which to support a combination of organic and acquisition-related growth,” stated Brian Harris, CFO of Summit Materials, in the press release. “As of September 30, 2017, we had $506 million in cash and availability under our revolving credit facility, up from $224 million in the prior year period. Net leverage was 3.7x exiting the third quarter 2017, versus 4.3x in the prior year period. Looking ahead, we expect net leverage to be at approximately 3.5x by year-end 2017.”
“We are pleased with our year-to-date performance,” Hill concluded. “Although historic volumes of rainfall resulting from the current hurricane season have impacted our full-year outlook, underlying demand conditions remain strong in our private and public end-markets, positioning us for continued profitable growth as we look ahead to 2018.”
Aggregates net revenues increased by 15.7 percent to $90.6 million in Q3 2017 compared to Q3 2016. Aggregates adjusted cash gross profit margin increased to 73.0 percent in Q3 2017 compared to 71.7 percent in Q3 2016. Organic aggregates sales volumes increased 2.6 percent in Q3 2017. Organic aggregates average selling prices declined 0.8 percent in the third quarter, mainly where hurricane-related weather impacted business conditions.