In 3Q15, net revenue increased by 22.4%, from US$348.1 million in 3Q14, to US$426.3 million. This increase in net revenue was primarily attributable to an increase in volumes and price across all lines of business. Net revenue grew organically by 1.3% compared with the previous year.
Further adjusted EBITDA increased to US120.4 million, a 55.2% increase from US$77.6 million in the same quarter of 2014, with growth in all regions. The West Region increased by 52.3%, primarily driven by a higher mix of revenue from aggregates, organic volume or price growth across all lines of business and the impact of acquisitions, mainly in the Houston and Midland/Odessa, Texas and British Columbia, Canada markets. The Central region saw an increase of 74.4% due to the favourable impact of acquisition activity, including the addition of the Davenport Assets in cements, along with volume and price growth in aggregates and ready-mixed concrete. A 12.8% increase was seen in the East Region and is attributable to the higher price of aggregates, leading to a larger mix of net revenue derived from materials and cost controls.
Gross profit was US$159.5 million, a 46% increase compared to the same quarter the previous year. Net revenue from materials increased by 60.9%. Aggregates volumes grew 21.9%, primarily due to acquisitions. Aggregates organic prices increased 5% due to higher prices across all regions. Cement volume and price increased by 77% and 13.1% respectively, mainly attributable to the acquisition of the Davenport Assets and an overall improved pricing in the market. Net revenue from products increased by 16.9% to US$208.5 million, in comparison to US$178.4 million in 3Q14. Due to acquisitions, ready-mixed concrete volumes increased 20.5%. Price increased by 5%. Asphalt volume and price increased 10.7% and 1.4% respectively, reflecting stronger market demand.
In July 2015, Summit completed the acquisition of the Davenport Assets for a purchase price of US$450 million and a cement distribution terminal in Bettendorf, Iowa. The Davenport Assets were integrated into the operations of Summit’s subsidiary, Continental Cement Company.
In August 2015, Summit’s acquisition of LeGrand was completed. LeGrand, a vertically integrated construction materials company based in Utah, operated five sand and gravel pits, along with four ready-mix concrete plants and five asphalt plants.
Tom Hill, CEO of Summit, stated, “The significant improvement in our results reflects our sustained efforts to capitalise on steadily rising demand trends across our markets, the contributions from our highly strategic acquisitions and continued progress on our internal initiatives. We were especially pleased to record a 55.2% increase in our Further Adjusted EBITDA representing another quarter of incremental margins in excess of 50%. This is a strong accomplishment and largely tied to the successful completion and ongoing integration of our Davenport Assets acquisition, which remains on track. Our expanded cement network was a meaningful contributor to the 600 basis point increase in our gross margin to 37.4%, reflecting a 970 basis point increase in the mix of our gross profit from materials, increased profitability across all of our lines of business and lower energy costs. On an organic basis, aggregate price increased 5% year over year, which is a third straight quarter of improved pricing, highlighting our disciplined focus on price optimisation, especially on incremental project activity in our private and public construction markets. Looking more broadly, our organic prices increased across all of our lines of business reflecting the relative health and stability of our geographic footprint and our ability to enhance our profitability at each stage of our vertically integrated network of businesses.
Mr. Hill continued, “In Texas, our markets that were affected by severe weather during the first half of 2015 have experienced a rebound in activity during the second half of 2015. In Houston, we have seen continued strong demand in traditional residential and non-residential markets. Concerning the broader market, we are encouraged by the favourable long-term outlook for construction activity, especially in our West and Central regions. Across the nation, state budgets are improving, as are the local political climates for public infrastructure. As a result, many states, including Texas, Iowa, Utah and Idaho, are allocating additional resources to invest in public construction. Additionally, we have experienced steady improvement in private non-residential and residential activity that we anticipate will continue. As we enter the fourth quarter, we are excited by the strong momentum in our business and believe we are in an attractive position to continue accomplishing our growth objectives in 2015 and beyond.”
Adapted from press release by Rebecca Bowden
Read the article online at: https://www.worldcement.com/the-americas/05112015/summit-materials-announces-3q15-results-922/