Summit Materials, Inc. Reports First Quarter 2021 Results
Summit Materials (NYSE: SUM) reported a net loss of $22.5 million, or $(0.19) per share, for Q1 2021, an improvement from a net loss of $45.0 million a year ago. Revenue rose 16.4% to $398.5 million, supported by increased demand across aggregates, ready-mix concrete, and asphalt. Adjusted EBITDA surged 166.5% to $41.7 million. Operating loss improved by 39.9% to $25.1 million, with an operating margin of (6.3)%. The company maintains its 2021 Adjusted EBITDA outlook of $490-$520 million. Cash on hand is $359.7 million, with $1.9 billion in debt.
- Net revenue increased by 16.4%, reaching $398.5 million.
- Adjusted EBITDA rose 166.5% to $41.7 million.
- Operating loss improved by 39.9% compared to last year.
- Aggregates sales volumes increased by 20.7%.
- Net loss of $22.5 million remains a concern for investors.
- Operating margin percentage is still negative at (6.3)%.
- Continued debt of $1.9 billion poses financial risk.
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
Summit's net revenue increased
The Company reported an operating loss of
Adjusted EBITDA increased in the first quarter to
For the three months ended April 3, 2021, sales volumes increased
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
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
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
Cement Business: Cement segment net revenues increased
Products Business: Products net revenues were
First Quarter 2021 | Results By Reporting Segment
Net revenue increased by
Net loss decreased to
West Segment: The West Segment reported operating income of
East Segment: The East Segment reported an operating loss of
Cement Segment: The Cement Segment reported an operating loss of
Liquidity and Capital Resources
As of April 3, 2021, the Company had cash on hand of
Financial Outlook
For the full year 2021, Summit has not made any changes to its outlook for Adjusted EBITDA of approximately
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.
SUMMIT MATERIALS, INC. AND SUBSIDIARIES |
||||||||||
Unaudited Consolidated Statements of Operations |
||||||||||
($ in thousands, except share and per share amounts) |
||||||||||
|
|
Three months ended |
||||||||
|
|
April 3, |
|
March 28, |
||||||
|
|
2021 |
|
|
2020 |
|
||||
Revenue: |
|
|
|
|
||||||
Product |
|
$ |
354,234 |
|
|
|
$ |
305,307 |
|
|
Service |
|
44,247 |
|
|
|
37,099 |
|
|
||
Net revenue |
|
398,481 |
|
|
|
342,406 |
|
|
||
Delivery and subcontract revenue |
|
29,363 |
|
|
|
24,784 |
|
|
||
Total revenue |
|
427,844 |
|
|
|
367,190 |
|
|
||
Cost of revenue (excluding items shown separately below): |
|
|
|
|
||||||
Product |
|
277,134 |
|
|
|
254,055 |
|
|
||
Service |
|
40,197 |
|
|
|
38,524 |
|
|
||
Net cost of revenue |
|
317,331 |
|
|
|
292,579 |
|
|
||
Delivery and subcontract cost |
|
29,363 |
|
|
|
24,784 |
|
|
||
Total cost of revenue |
|
346,694 |
|
|
|
317,363 |
|
|
||
General and administrative expenses |
|
51,642 |
|
|
|
41,686 |
|
|
||
Depreciation, depletion, amortization and accretion |
|
56,336 |
|
|
|
51,778 |
|
|
||
Gain on sale of property, plant and equipment |
|
(1,769 |
) |
|
|
(1,917 |
) |
|
||
Operating loss |
|
(25,059 |
) |
|
|
(41,720 |
) |
|
||
Interest expense |
|
24,186 |
|
|
|
27,818 |
|
|
||
Gain on sale of business |
|
(15,668 |
) |
|
|
— |
|
|
||
Other (income) loss, net |
|
(4,889 |
) |
|
|
89 |
|
|
||
Loss from operations before taxes |
|
(28,688 |
) |
|
|
(69,627 |
) |
|
||
Income tax benefit |
|
(5,443 |
) |
|
|
(22,901 |
) |
|
||
Net loss |
|
(23,245 |
) |
|
|
(46,726 |
) |
|
||
Net loss attributable to Summit Holdings (1) |
|
(728 |
) |
|
|
(1,747 |
) |
|
||
Net loss attributable to Summit Inc. |
|
$ |
(22,517 |
) |
|
|
$ |
(44,979 |
) |
|
Loss per share of Class A common stock: |
|
|
|
|
||||||
Basic |
|
$ |
(0.19 |
) |
|
|
$ |
(0.40 |
) |
|
Diluted |
|
$ |
(0.20 |
) |
|
|
$ |
(0.40 |
) |
|
Weighted average shares of Class A common stock: |
|
|
|
|
||||||
Basic |
|
115,664,725 |
|
|
|
113,602,110 |
|
|
||
Diluted |
|
115,411,204 |
|
|
|
113,602,110 |
|
|
||
(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) |
||||||||
|
|
April 3, |
|
January 2, |
||||
|
|
2021 |
|
2021 |
||||
|
|
(unaudited) |
|
(audited) |
||||
Assets |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
359,741 |
|
|
$ |
418,181 |
|
Accounts receivable, net |
|
250,058 |
|
|
254,696 |
|
||
Costs and estimated earnings in excess of billings |
|
17,124 |
|
|
8,666 |
|
||
Inventories |
|
210,934 |
|
|
200,308 |
|
||
Other current assets |
|
20,578 |
|
|
11,428 |
|
||
Total current assets |
|
858,435 |
|
|
893,279 |
|
||
Property, plant and equipment, less accumulated depreciation, depletion and amortization (April 3, 2021 - |
|
1,897,117 |
|
|
1,850,169 |
|
||
Goodwill |
|
1,201,426 |
|
|
1,201,291 |
|
||
Intangible assets, less accumulated amortization (April 3, 2021 - |
|
71,486 |
|
|
47,852 |
|
||
Deferred tax assets, less valuation allowance (April 3, 2021 - |
|
240,565 |
|
|
231,877 |
|
||
Operating lease right-of-use assets |
|
28,796 |
|
|
28,543 |
|
||
Other assets |
|
53,432 |
|
|
55,000 |
|
||
Total assets |
|
$ |
4,351,257 |
|
|
$ |
4,308,011 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Current portion of debt |
|
$ |
6,354 |
|
|
$ |
6,354 |
|
Current portion of acquisition-related liabilities |
|
13,372 |
|
|
10,265 |
|
||
Accounts payable |
|
150,243 |
|
|
120,813 |
|
||
Accrued expenses |
|
130,338 |
|
|
160,570 |
|
||
Current operating lease liabilities |
|
7,480 |
|
|
8,188 |
|
||
Billings in excess of costs and estimated earnings |
|
13,930 |
|
|
16,499 |
|
||
Total current liabilities |
|
321,717 |
|
|
322,689 |
|
||
Long-term debt |
|
1,891,522 |
|
|
1,892,347 |
|
||
Acquisition-related liabilities |
|
31,015 |
|
|
12,246 |
|
||
Tax receivable agreement liability |
|
325,832 |
|
|
321,680 |
|
||
Noncurrent operating lease liabilities |
|
22,246 |
|
|
21,500 |
|
||
Other noncurrent liabilities |
|
144,365 |
|
|
121,281 |
|
||
Total liabilities |
|
2,736,697 |
|
|
2,691,743 |
|
||
Stockholders’ equity: |
|
|
|
|
||||
Class A common stock, par value |
|
1,167 |
|
|
1,145 |
|
||
Class B common stock, par value |
|
— |
|
|
— |
|
||
Additional paid-in capital |
|
1,289,267 |
|
|
1,264,681 |
|
||
Accumulated earnings |
|
304,255 |
|
|
326,772 |
|
||
Accumulated other comprehensive income |
|
6,838 |
|
|
5,203 |
|
||
FAQ
What were Summit Materials' Q1 2021 net revenue and net loss figures?
How much did Summit Materials' Adjusted EBITDA increase in Q1 2021?
What is the 2021 outlook for Adjusted EBITDA for Summit Materials?
How much cash does Summit Materials have as of April 3, 2021?
What is Summit Materials' current debt level as reported in Q1 2021?
