Summit Materials, Inc. reports fourth quarter and full year 2023 results

"Summit is at an exciting and pivotal point in our company's history", commented Anne Noonan, Summit Materials President and CEO. "Our team has effectively capitalised on dynamic, yet constructive market conditions to drive record revenue and profitability. And we're building on our record setting performance by swiftly and safely advancing our Argos integration – a move that we expect will only strengthen our materials-led business. For 2024, with an improved footprint and increased scale we anticipate delivering another year of strong growth and returns. Our positive outlook is supported by robust commercial conditions, an improving demand backdrop, and a full set of growth opportunities that are unique to Summit Materials. Crucially, our high-quality execution, financial performance, and strategic focus has afforded us the balance sheet flexibility to continue our pursuit of value-accretive capital allocation priorities. Today and moving forward, we firmly believe Summit is very well-positioned to generate superior value creation for our shareholders."

2024 Guidance

For the full year 2024, Summit is currently projecting Adjusted EBITDA of approximately US$950 million to US$1010 million and expects 2024 capital expenditures 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, Summit Materials 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.

Full Year 2023 | Total Company Results

Net revenue increased US$220.7 million, or 9.9%, in 2023 to US$2.4 billion, as strong pricing across all lines of business and contributions from acquisitions more than offset lower volumes and the impact of divestitures.

Operating income increased US$41.6 million, or 15.5% in 2023 to US$310.6 million, as higher revenue more than offset increases in cost of revenue, depreciation, depletion, amortisation and accretion, general and administrative expenses, and transaction costs. Summit's operating margin percentage for 2023 increased to 12.7% from 12.1% in 2022, due to the factors noted above.

Net income attributable to Summit Inc. increased to US$285.9 million, or US$2.40 per basic share, compared to US$272.1 million, or US$2.27 per basic share, in the comparable prior year period. Summit reported adjusted diluted net income of US$189.4 million, or US$1.58 per adjusted diluted share, as compared to US$153.9 million, or US$1.27 per adjusted diluted share, in the prior year period.

Adjusted EBITDA increased US$86.5 million, or 17.6%, to US$578.0 million, due primarily to a strong pricing environment and, to a lesser extent, contributions from acquisitions.

Fourth Quarter 2023 | Total Company Results

Net revenue increased US$101.5 million, or 19.8% in the fourth quarter to US$613.1 million, as average sales prices across all lines of business increased.

Operating income increased US$3.4 million, or 5.3% in the fourth quarter to US$68.5 million, driven by increases in average sales price that more than offset a combination of inflationary increases in cost of revenue, higher general and administrative expenses, and increased transaction and integration costs versus the prior year period. Summit's operating margin percentage for the three months ended 30 December 2023, decreased to 11.2% from 12.7%, from the comparable period a year ago primarily reflecting the aforementioned transaction and integration costs related to the Argos USA transaction.

Net income attributable to Summit Inc. increased to US$3.0 million, or US$0.02 per basic share, compared to US$29.8 million, or US$0.25 per basic share in the comparable prior year period. Summit reported adjusted diluted net income of US$37.8 million, or US$0.31 per adjusted diluted share, compared to US$38.3 million, or US$0.32 per adjusted diluted share, in the prior year period.

Adjusted EBITDA increased US$17.3 million, or 14.5%, to US$136.5 million primarily reflecting strong pricing across all lines of business.

Full Year 2023 | Results by Line of Business

Aggregates Business: Aggregates net revenues increased US$79.6 million to US$663.6 million in 2023. Aggregates adjusted cash gross profit margin increased to 49.9% in 2023 as compared to 48.5% in 2022. Aggregates sales volume decreased 1.9% in 2023. Excluding acquisitions and divestitures, organic sales volume decreased 3.1% in 2023, primarily reflecting unfavourable weather conditions early in the year and soft residential demand. Average selling prices for aggregates increased 14.6%, fuelled by 16.7% pricing growth in the West Segment and 12.0% pricing growth in the East Segment.

Cement Business: Cement Segment net revenues increased 7.0% to US$382.7 million in 2023. Cement Segment adjusted cash gross profit margin increased to 43.4% in 2023 as compared to 39.6% in 2022. Sales volume of cement decreased 6.8% and average selling prices increased 13.2% in 2023.

Products Business: Products net revenues increased 10.0% in 2023. Products adjusted cash gross profit margin of 18.2% in 2023 increased from 17.1% in 2022. Ready-mix concrete average selling prices increased 11.2% and organic sales volumes decreased 12.2%. Average selling prices for asphalt increased 15.6%, and asphalt volume increased 10.1% when excluding the impacts of acquisitions and divestitures.

Fourth Quarter 2023 | Results by Line of Business

Aggregates Business: Aggregates net revenues increased by US$22.0 million to US$157.6 million in the fourth quarter. Aggregates adjusted cash gross profit margin was 48.7% in the fourth quarter as compared to 47.8% in the prior year period. Aggregates sales volume increased 5.7% in the fourth quarter. Organic aggregates sales volumes increased 2.8% reflecting relatively accommodating weather conditions in many markets. Average selling prices for aggregates increased 9.2%, maintaining strong levels and reflecting the cumulative effects of multiple pricing actions implemented in 2023.

Cement Business: Cement Segment net revenues decreased 2.7% to US$95.3 million in the fourth quarter. Cement Segment adjusted cash gross profit margin increased to 48.1% in the fourth quarter, compared to 47.1% in the prior year period as strong pricing combined with Green America Recycling performance and reduced mix of import volumes relative to the prior year period more than offset inflationary cost conditions. Sales volume of cement decreased 11.1% reflecting, in part, lower imports. Average selling prices increased 9.4% in the fourth quarter due to the compounding effects of pricing actions implemented earlier in 2023.

Products Business: Products net revenues were US$282.4 million in the fourth quarter, up 27.5% versus the prior year period. Products adjusted cash gross profit margin decreased to 16.5% in the fourth quarter. Organic average sales price for ready-mix concrete increased 5.8% driven by pricing growth across all markets, including our key markets of Houston and Salt Lake City. Organic sales volumes of ready-mix concrete decreased 4.8% due to reduced residential activity. Organic average selling prices for asphalt increased 9.5%, due to pricing gains both the West and East Segment. Organic asphalt sales volume increased 27.5%, fuelled by public infrastructure growth.

Full Year 2023 | Results By Reporting Segment

West Segment: The West Segment operating income increased 19.8% to US$217.8 million and Adjusted EBITDA increased 18.0% to US$331.1 million in 2023. Aggregates revenue in 2023 increased 10.8% driven by a 16.7% increase in average sales prices that was only partially offset by a 5.0% decrease in volume. Despite lower volumes in Texas and Utah, ready-mix concrete revenue in 2023 increased 11.3% with average sales price growth of 11.0%, including double-digit pricing growth in Houston and Salt Lake City. Asphalt revenue increased by 34.0% as volumes increased 17.4% and average selling prices increased 14.2% in 2023.

East Segment: The East Segment operating income increased 34.2% to US$86.6 million and Adjusted EBITDA increased 16.6% to US$150.6 million in 2023. Aggregates revenue increased 14.0%, driven by 12.0% growth in average selling prices as volumes increased 1.8%. Ready-mix concrete revenue decreased 10.3% as volumes decreased by 18.9% and average selling price increased 10.5%. Due to divestitures, asphalt revenue decreased 56.7% with volumes down 59.7% and average selling prices up 15.1%.

Cement Segment: The Cement Segment operating income increased 17.7% to US$104.9 million. Adjusted EBITDA increased 14.7% to US$144.0 million in 2023 as favourable supply/demand conditions supported strong pricing growth that more than offset cost inflation. The segment reported a decrease in sales volumes of 6.8% including the impact of lower import volume while average selling prices increased of 13.2%.

Fourth Quarter 2023 | Results By Reporting Segment

West Segment: The West Segment operating income increased US$9.6 million to US$47.8 million and Adjusted EBITDA of US$76.1 million in the fourth quarter increased 17.2% versus the prior year period. Aggregates revenue increased 13.9%, including 7.3% pricing growth led by Houston and British Columbia performance. Volume growth of 6.1% includes the benefit of acquisitions and more favourable weather conditions in key markets. Ready-mix concrete revenue increased 26.2% as 5.4% pricing growth combined with 19.8% volume growth. Asphalt revenue increased 51.3% due to volumes growth of 39.3%, including organic growth of 31.2%. Asphalt pricing increased 8.6% with strong gains in North Texas and the Intermountain West.

East Segment: The East Segment operating income of US$17.9 million increased 17.5% versus the prior year period and Adjusted EBITDA increased 12.6% to $34.1 million. Aggregates revenue increased 17.1% versus the prior year period. Organic aggregates volumes increased 4.1%, primarily driven by double digit growth in Georgia. Aggregates pricing increased 11.3% with solid growth across several markets. Ready-mix concrete revenue decreased 5.9% and asphalt revenue increased 1.7% versus the prior year period.

Cement Segment: The Cement Segment operating income decreased 5.8% to US$31.6 million. Adjusted EBITDA decreased US$0.8 million and Adjusted EBITDA margin increased to 42.8%. As noted above, in the fourth quarter, the Cement Segment reported a volume decrease of 11.1% and average selling price growth of 9.4%.

Liquidity and Capital Resources

As of 30 December 2023, the Company had US$374.2 million in cash and US$2.3 billion in debt outstanding. The Company's US$800 million in restricted cash reflects proceeds from the December 2023 issuance of senior notes due 2031 related to the transaction with Argos North America Corporation. Subsequent to year end, the proceeds were released and used to consummate the Argos USA transaction.

In January 2024, the Company amended the credit agreement governing the Senior Secured Credit Facilities, which among other things established new term loans in an aggregate principal amount of US$1010 million and extended the maturity date for the Term Loan Facility to January 2029. The proceeds of the new term loans were used to fund a portion of the cash consideration in connection with the Argos USA closing, refinance the existing term loans outstanding and pay fees, commissions and expenses. Additionally, the Company amended its senior secured revolving credit facility, increasing the total availability from $395 million to $625 million. The Company's US$625 million revolving credit facility has US$604.1 million available after outstanding letters of credit.

For the year ended 30 December 2023, cash flow provided by operations was US$438.9 million and cash paid for capital expenditures was US$255.6 million.

Read the article online at: https://www.worldcement.com/the-americas/15022024/summit-materials-inc-reports-fourth-quarter-and-full-year-2023-results/