Summit Materials, Inc. Reports Fourth Quarter and Full Year 2020 Results
Summit Materials, a leader in construction materials, reported its Q4 and full year 2020 results, showing a net income of $35.2 million, down from $35.7 million year-over-year. Full-year net income reached $138 million, marking a significant increase from $59.1 million in 2019. Q4 net revenue rose by 13% to $571.9 million, driven by higher sales in concrete, aggregates, and asphalt. However, adjusted diluted net income dropped to $28.8 million from $71.5 million in Q4 2019. The company is projecting 2021 Adjusted EBITDA between $490 million and $520 million, with capital expenditure guidance set at $200 million to $220 million.
- Record annual net income of $138 million in 2020, up from $59.1 million in 2019.
- Net revenue increased 13% in Q4 2020 to $571.9 million, up from $506.3 million.
- Operating income rose by 5.4% in 2020 to $225.2 million compared to $213.6 million in 2019.
- Adjusted EBITDA increased 5.1% in 2020 to $485 million, up from $461.5 million.
- Adjusted diluted net income decreased to $28.8 million in Q4 2020, down from $71.5 million in Q4 2019.
- Operating margin percentage slightly decreased to 11.6% in Q4 2020 from 11.8% year-over-year.
- Cement segment net revenues fell by 6.9% in 2020 compared to the prior year.
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
Summit's net revenue increased
The Company reported operating income of
Adjusted EBITDA increased in the fourth quarter to
For the three months ended January 2, 2021, sales volumes increased
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
For the full year 2021, Summit is currently projecting Adjusted EBITDA of approximately
The Company is announcing 2021 capital expenditure guidance of
Full-Year 2020 | Results by Line of Business
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Aggregates Business: Aggregates net revenues were
Cement Business: Cement segment net revenues decreased
Products Business: Products net revenues were
Fourth Quarter 2020 | Results by Line of Business
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Aggregates Business: Aggregates net revenues increased by
Cement Business: Cement segment net revenues increased
Products Business: Products net revenues were
Full-Year 2020 | Results By Reporting Segment
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Net revenue increased by
West Segment: The West Segment reported operating income of
East Segment: The East Segment reported operating income of
Cement Segment: The Cement Segment reported operating income of
Fourth Quarter 2020 | Results By Reporting Segment
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Net revenue increased by
Net income decreased to
West Segment: The West Segment reported operating income of
East Segment: The East Segment reported operating income of
Cement Segment: The Cement Segment reported operating income of
Liquidity and Capital Resources
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As of January 2, 2021, the Company had cash on hand of
Financial Outlook
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For the full year 2021, Summit is currently projecting Adjusted EBITDA of approximately
The Company is announcing 2021 capital expenditure guidance of
Webcast and Conference Call Information
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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
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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
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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
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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 December 28, 2019 and Quarterly Report on Form 10-Q for the fiscal period ended March 28, 2020, each 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 Consolidated Statements of Operations ($ in thousands, except share and per share amounts) |
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Three months ended |
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Year ended |
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January 2, |
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December 28, |
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January 2, |
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December 28, |
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2021 |
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2019 |
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2021 |
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2019 |
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Revenue: |
|
|
|
|
|
|
|
|
||||||||
Product |
|
$ |
490,208 |
|
|
$ |
430,463 |
|
|
$ |
1,824,679 |
|
|
$ |
1,724,462 |
|
Service |
|
81,654 |
|
|
75,796 |
|
|
310,075 |
|
|
306,185 |
|
||||
Net revenue |
|
571,862 |
|
|
506,259 |
|
|
2,134,754 |
|
|
2,030,647 |
|
||||
Delivery and subcontract revenue |
|
52,771 |
|
|
50,269 |
|
|
197,697 |
|
|
191,493 |
|
||||
Total revenue |
|
624,633 |
|
|
556,528 |
|
|
2,332,451 |
|
|
2,222,140 |
|
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Cost of revenue (excluding items shown separately below): |
|
|
|
|
|
|
|
|
||||||||
Product |
|
308,354 |
|
|
269,960 |
|
|
1,166,266 |
|
|
1,116,662 |
|
||||
Service |
|
57,554 |
|
|
50,627 |
|
|
220,033 |
|
|
218,177 |
|
||||
Net cost of revenue |
|
365,908 |
|
|
320,587 |
|
|
1,386,299 |
|
|
1,334,839 |
|
||||
Delivery and subcontract cost |
|
52,771 |
|
|
50,269 |
|
|
197,697 |
|
|
191,493 |
|
||||
Total cost of revenue |
|
418,679 |
|
|
370,856 |
|
|
1,583,996 |
|
|
1,526,332 |
|
||||
General and administrative expenses |
|
84,000 |
|
|
75,420 |
|
|
309,531 |
|
|
275,813 |
|
||||
Depreciation, depletion, amortization and accretion |
|
57,560 |
|
|
52,962 |
|
|
221,320 |
|
|
217,102 |
|
||||
Gain on sale of property, plant and equipment |
|
(1,822) |
|
|
(2,636) |
|
|
(7,569) |
|
|
(10,665) |
|
||||
Operating income |
|
66,216 |
|
|
59,926 |
|
|
225,173 |
|
|
213,558 |
|
||||
Interest expense |
|
25,546 |
|
|
28,086 |
|
|
103,595 |
|
|
116,509 |
|
||||
Loss on debt financings |
|
— |
|
|
— |
|
|
4,064 |
|
|
14,565 |
|
||||
Tax receivable agreement (benefit) expense |
|
(7,559) |
|
|
16,237 |
|
|
(7,559) |
|
|
16,237 |
|
||||
Other income, net |
|
(1,229) |
|
|
(3,623) |
|
|
(3,982) |
|
|
(11,977) |
|
||||
Income from operations before taxes |
|
49,458 |
|
|
19,226 |
|
|
129,055 |
|
|
78,224 |
|
||||
Income tax expense (benefit) |
|
13,148 |
|
|
(17,171) |
|
|
(12,185) |
|
|
17,101 |
|
||||
Net income |
|
36,310 |
|
|
36,397 |
|
|
141,240 |
|
|
61,123 |
|
||||
Net income attributable to Summit Holdings (1) |
|
1,158 |
|
|
726 |
|
|
3,273 |
|
|
2,057 |
|
||||
Net income attributable to Summit Inc. |
|
$ |
35,152 |
|
|
$ |
35,671 |
|
|
$ |
137,967 |
|
|
$ |
59,066 |
|
Earnings per share of Class A common stock: |
|
|
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