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Summit Materials announces results for fourth quarter

Published by , Deputy Editor
World Cement,

Construction materials company, Summit Materials, Inc., has announced results for the fourth quarter and full year 2019. For the three months ended 28 December 2019 the company reported net income attributable to Summit Inc. of US$35.7 million, or US$0.32 per basic share, compared to a net loss attributable to Summit Inc. of US$19.2 million, or US$(0.17) per basic share in the comparable prior year period. Summit reported adjusted diluted net income of US$71.5 million, or US$0.62 per adjusted diluted share, as compared to adjusted diluted net loss of US$18.6 million, or US$(0.16) per adjusted diluted share in the prior year period. The increase in adjusted diluted net income in the fourth quarter 2019 was partially due to an annual re-measurement of the company's Tax Receivable Agreement.

Summit's net revenue increased 13.7% in the fourth quarter and 6.4% in full year 2019 compared to the fourth quarter and full year 2018, respectively. While volume and price increased in all lines of business in 2019 relative to the prior year, aggregates contributed the largest proportion of incremental net revenue. The company reported operating income of US$213.6 million in 2019, compared to US$162.5 million in the prior year. Summit's operating margin expanded to 10.5% in 2019 from 8.5% in 2018 on net revenue gains in excess of cost of revenue, partially offset by increases in general and administrative, depreciation, depletion, amortisation and accretion expenses. Adjusted EBITDA increased 29.6% in the fourth quarter to US$121.1 million as compared to US$93.4 million in 2018. For the full year 2019, Adjusted EBITDA was US$461.5 million, an increase of 13.6% compared to 2018.

Tom Hill, CEO of Summit Materials, commented, "Sustained public sector demand coupled with improved pricing contributed to margin expansion in our aggregates and products lines of business late in the quarter, resulting in the highest fourth quarter adjusted EBITDA in the company's history. For the full year 2019, our aggregates business delivered strong results due in part to strong performance from our East Segment."

As of 28 December 2019, the company had US$311.3 million in cash and US$1.9 billion in debt outstanding. For the year ended 28 December, 2019, cash flow from operations was US$337.2 million while cash paid for capital equipment was US$177.5 million. Brian Harris, CFO of Summit Materials, added, "We were disciplined and selective on acquisitions while generating increased cash flow from operations, which combined with lower capital expenditures enabled us to lower our leverage ratio."

For the year ended 28 December 2019, organic sales volumes increased 9.5% in aggregates, 2.8% in cement, 0.1% in ready-mix concrete, and 2.6% in asphalt relative to the same period last year. Full year 2019 organic average selling prices increased 6.5% in aggregates, 1.7% in cement, 3.3% in ready-mix concrete, and 6.2% in asphalt relative to the prior year period.

Summit provided 2020 full year adjusted EBITDA guidance of US$460 million to US$500 million. Hill continued, "In 2020 we anticipate continued growth in public markets, as many states enact new fuel taxes, in residential markets where entry-level housing demand continues to exceed supply, and in non-residential markets where low rise commercial development and windfarm work present opportunities."

The company provided 2020 capital expenditure guidance of approximately US$185 million to US$205 million, which include US$65 million to US$80 million estimated for greenfield projects.

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