Summit Materials Inc. announced results for the quarter ended Sept. 26, 2015. The company is reporting:
- Volume and price increased across all lines of business, including aggregates organic pricing up 5.0 percent.
- Net revenue increased 22.4 percent to $426.3 million, led by West and Central Regions.
- Adjusted net income attributable to Summit Materials Inc. of $27.4 million, or Adjusted EPS of $0.72; GAAP net income of $14.7 million, or EPS of $0.39.
- Further Adjusted EBITDA grew 55.2 percent to $120.4 million; approximately 60 percent of increase attributable to acquisitions
- Operating income improved 74.6 percent to $83.4 million.
- Gross profit increased 46.0 percent to $159.5 million.
- Completed previously announced acquisition of a 1.2 million short ton capacity cement plant in Davenport, Iowa, along with seven cement distribution terminals. Summit is now the third largest cement producer along the Mississippi River system with 2.4 million short tons of cement production capacity across its two cement plants with eight distribution terminals.
- Acquired LeGrand Johnson Construction Co., a vertically integrated construction materials company based in Utah and servicing the northern and central Utah, western Wyoming and southern Idaho markets.
Tom Hill, CEO of Summit, stated, “The significant improvement in our results reflects our sustained efforts to capitalize 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 percent increase in our Further Adjusted EBITDA representing another quarter of incremental margins in excess of 50 percent. 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 percent, 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 percent year over year, which is a third straight quarter of improved pricing, highlighting our disciplined focus on price optimization, 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.
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 favorable 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 nonresidential and residential activity which 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."
In the third quarter 2015, net revenue increased 22.4 percent to $426.3 million, compared to $348.1 million in the prior year quarter. The increase in net revenue was primarily attributable to an increase in volumes and price across all lines of business, led by the West and Central regions. Net revenue grew organically by $4.7 million, or 1.3 percent, compared to the prior year quarter.
Further Adjusted EBITDA increased 55.2 percent to $120.4 million, compared to $77.6 million in the prior year quarter, with growth in all regions. As a percentage of net revenue, Further Adjusted EBITDA improved to 28.2 percent compared to 22.3 percent in the prior year quarter. Adjusted EBITDA by region in the third quarter 2015 compared to the prior year quarter was as follows:
- The West Region increased $20.5 million, or 52.3 percent, primarily driven by a higher mix of revenue from aggregates, organic volume and 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 grew $22.9 million, or 74.4 percent, largely attributable to the favorable impact of acquisition activity, including the addition of the Davenport Assets in cement, along with volume and price growth in aggregates and ready-mixed concrete.
- The East Region improved $1.5 million, or 12.8 percent, mainly as a result of higher price in aggregates, leading to a larger mix of net revenue derived from materials, and cost controls.