Summit Materials, Inc. reports second quarter 2024 results

"We are pleased and proud to report that our teams safely and successfully managed through weather-related disruptions to deliver a strong quarter of strategic execution and solid financial results", remarked Anne Noonan, Summit Materials President and CEO. "Our resilient performance was supported by positive pricing momentum across all lines of business, ongoing cost savings initiatives underway across our network, and a more durable portfolio. As a result, our 2024 financial targets are virtually unchanged. Namely, we are still on track to generate at least US$40 million of Argos USA synergies, drive significant pro forma margin expansion this year, and confidently deliver 2024 Adjusted EBITDA within our previous guidance range. Without question, Summit Materials is well positioned to capitalise on a constructive pricing environment and tap operation improvements across our enterprise to profitably grow in an uneven demand environment. This growth, together with a fortified and capable balance sheet will help generate significant shareholder value this year and the years ahead. Our team remains focused on controlling what we can, acting with agility, and delivering on all of our 2024 stakeholder commitments."

2024 guidance

For the full year 2024, Summit is reaffirming its Adjusted EBITDA range of approximately US$970 million to US$1010 million and its 2024 capital expenditures range of approximately US$430 million to US$470 million.

Adjusted EBITDA is a non-GAAP measure. Refer to the 'Non-GAAP Financial Measures' section for more information. Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, the company has not provided reconciliations for forward-looking non-GAAP measures. For the same reasons, the company is unable to address the probable significance of the unavailable information, which could be material to future results.

Second quarter 2024: Total company results

Net revenue increased US$395.1 million, or 58.1%, in the second quarter to US$1075.5 million. In the quarter, US$464.0 million of net revenue was due to acquisitions, primarily the Argos USA transaction. Divestitures decreased net revenue by US$46.6 million in the period. All lines of business experienced organic pricing growth.

Operating income increased in the second quarter by 33.4% to US$172.9 million largely due to the Argos USA transaction. Summit's operating margin percentage for the three months ended 29 June 2024, decreased to 16.1% from 19.1%.

Net income attributable to Summit Inc. increased to US$106.1 million, or US$0.60 per basic share, compared to US$83.6 million, or US$0.70 per basic share in the prior year period. Summit reported adjusted diluted net income of US$115.2 million, or US$0.66 per adjusted diluted share, compared to an adjusted diluted net income of US$84.7 million, or US$0.71 per adjusted diluted share, in the prior year period.

Adjusted EBITDA increased US$104.4 million, or 54.5%, to US$296.2 million reflecting the contribution from the Argos USA assets, continued pricing gains, and operational improvements across the enterprise, including integration synergies.

Second quarter 2024: Results by line of business

Aggregates business: Aggregates net revenues increased by US$4.6 million to US$187.1 million in the second quarter. Aggregates adjusted cash gross profit margin expanded to 54.1% in the second quarter as compared to 53.6% in the prior year period, reflecting strong commercial and operational execution. Aggregates sales volume decreased 10.0% in the second quarter. Organic aggregates sales volumes decreased 9.4% as a result of wet weather conditions and restrained private end-market activity. Average selling prices for aggregates increased 11.8%, with organic pricing increasing 10.8%. Pricing growth was strong throughout the footprint and led by the East Segment, which increased 14.8% versus the prior year period.

Cement business: Cement Segment net revenues increased to US$324.8 million in the second quarter. Cement segment adjusted cash gross profit margin decreased to 49.4% in the second quarter, compared to 52.8% in the prior year period, due primarily to margin mix impacts from inclusion of the Argos USA assets. Sales volume of cement increased 238.0%. Organic sales volumes decreased 16.5% due to reduced import volume in the River Markets and moderating demand conditions. Organic average selling prices increased 7.3% in the second quarter, primarily reflecting traction from increases implemented earlier in the year.

Products business: Products net revenues were US$495.5 million in the second quarter, up 60.0% versus the prior year period. Products adjusted cash gross profit margin decreased to 17.3% in the second quarter. Organic average sales price for ready-mix concrete increased 5.6%, with pricing growth in both segments. Organic sales volumes of ready-mix concrete decreased 14.9% due to adverse weather conditions in Houston and restrained private end-market activity. Organic average selling prices for asphalt increased 0.5%. Organic sales volume decreased 6.6%, driven, in part, by unfavourable timing on activity.

Second quarter 2024: Results by reporting segment

West segment: The west segment operating income decreased US$3.9 million to US$70.7 million. Adjusted EBITDA decreased US$2.9 million, or 2.8%, to US$101.6 million in the second quarter largely reflecting unfavourable weather conditions in the Houston market. Aggregates revenue decreased 4.9%, driven by a volume decline of 12.2%. Pricing grew 8.3% over the prior period led by double-digit growth in Houston and Arizona markets. Ready-mix concrete revenue increased 16.7% on 3.8% pricing growth and 12.4% volume growth. Organic ready-mix pricing increased 5.3%. Subdued private construction activity drove organic ready-mix volumes down 13.9% in the period. Asphalt revenue decreased 6.1% reflecting a volume decline of 6.6% while pricing remained relatively flat.

East segment: The east segment operating income increased US$15.3 million to US$46.9 million and Adjusted EBITDA increased US$22.9 million to US$70.6 million. Aggregates revenue increased 6.0% versus the prior year period driven by strong pricing. Organic aggregates volumes decreased 8.9%, with softness in Kansas and Missouri markets that more than offset growth in Georgia and the Carolinas. Aggregates pricing increased 14.8% with most markets realising double-digit growth. Ready-mix concrete revenue increased US$164.7 million to US$191.9 million due to the acquisition of the Argos USA ready-mix concrete operations in Florida, Georgia, and the Carolinas. Asphalt revenue decreased US$9.2 million versus the prior year period due to divestiture of certain asphalt assets.

Cement segment: The cement segment operating income increased 113.8% to US$92.0 million. Adjusted EBITDA increased US$87.9 million, primarily from the Argos USA transaction. Adjusted EBITDA margin decreased to 43.3% from 47.3% in the year-ago period due to margin mix from inclusion of the Argos USA cement assets and planned maintenance at certain cement plants. As noted above, the cement segment reported an organic volume decrease of 16.5% and organic selling price growth of 7.3%.

Liquidity and capital resources

As of 29 June 2024, the company had US$538.7 million in cash and US$2.8 billion in debt outstanding. The company's US$625 million revolving credit facility has US$592.7 million available after outstanding letters of credit.

For the six months ended 29 June 2024, cash flow provided by operations was US$111.4 million and cash paid for capital expenditures was US$176.0 million.

As of 29 June 2024, approximately US$149.0 million remained available for share repurchases under the share repurchase programme.

Read the article online at: https://www.worldcement.com/the-americas/07082024/summit-materials-inc-reports-second-quarter-2024-results/