Summit Materials Inc. announced results for the first quarter 2018. Net revenue increased by 11.9 percent to $289.9 million in the first quarter 2018, versus $259.0 million in the prior-year period. The improvement in net revenue was primarily attributable to acquisition-related contributions in the East and West segments, coupled with organic growth in the West Segment.
For the three months ended March 31, 2018, the company reported a basic loss per share of $0.49 on a net loss attributable to Summit Inc. of $53.7 million, compared to a basic loss per share of $0.49 on a net loss attributable to Summit Inc. of $52.4 million in the prior-year period.
“While demand fundamentals remain strong in our core markets, weather conditions were challenging during the first quarter, resulting in lower materials sales volumes in the period,” stated Tom Hill, CEO of Summit Materials. “Importantly, given the inherent seasonality of our business, the first quarter has a very limited impact on our full-year outlook. Our businesses have strong momentum heading into the start of construction season. For the full-year 2018, we anticipate organic price and volume growth in both aggregates and cement.
“Heavy materials selling prices are trending higher in our core regional markets,” stated Hill. “Organic average selling prices on aggregates increased on a reported and mix-adjusted basis in the first quarter 2018, with both Houston and Salt Lake City achieving high-single digit organic growth in aggregates selling prices, when compared to the prior-year period.
“We anticipate our average realized selling price on cement sold in the Mississippi River corridor will grow in the low- to mid-single-digit percent range in 2018,” continued Hill. “As supplies of domestically produced cement continue to tighten, we anticipate price growth could escalate above current levels in 2019. Cement prices have now risen for six consecutive years in the United States, with no indications of abating.
“On a year-to-date basis, we have completed seven acquisitions for total invested capital of $154 million,” continued Hill. “Recent acquisitions have served to further establish our leadership in well-structured, materials-based markets in Utah, Texas, Oklahoma, Kansas, Kentucky and Missouri. The acquisition pipeline remains very active as we look ahead to the remainder of the year, with multiple transactions currently in various stages of diligence.
“Summit’s diesel fuel forward purchase program has helped to mitigate the impact of commodity price volatility within our business, particularly given the recent increase in the price of crude oil-linked hydrocarbon products,” stated Brian Harris, CFO of Summit Materials. “Diesel fuel represents our single most significant variable cost each year, with an estimated 30 million gallons consumed annually by our operating companies. Our program, which utilizes physical contracts to pre-purchase a portion of our required diesel fuel volumes up to 12 months in advance, provides visibility into our overall diesel fuel expense each year. To date, we have pre-purchased 62 percent of our current year fuel requirements at an average ultra-low sulfur diesel NYMEX price of less than $1.90 per gal.”
Aggregates net revenues increased by 9.5 percent to $67.5 million in the first quarter 2018, when compared to the prior-year period. Aggregates adjusted cash gross profit margin declined to 41.5percent in the first quarter, versus 43.6 percent in the prior-year period.
Organic aggregates sales volumes declined 6.8 percent in the first quarter, due mainly to lower organic aggregates sales volumes in the East Segment, where challenging weather impacted working conditions. Organic average selling prices on aggregates increased 1.6 percent in the first quarter 2018 due to year-over-year improvements in prices within both the West and East segments during the period.
- Cement segment net revenues declined 14.3 percent to $37.6 million in the first quarter 2018, when compared to the prior-year period.
- Products Business net revenues increased 26.0 percent to $156.2 million in the first quarter 2018, when compared to the prior-year period. Organic sales volumes of ready-mix concrete increased 2.8 percent in the first quarter, while organic average selling prices increased 4.2 percent, versus the prior-year period.
As of May 8, 2018, the company has completed seven acquisitions on a year-to-date basis, including four transactions that have closed since the company’s last quarterly update on Feb. 14, 2018. Total investment spent across the seven acquisitions completed year-to-date 2018 was approximately $154 million, including approximately $34 million for the four acquisitions completed since the last update.
- Stoner Sand (Missouri). Stoner Sand is a high synergy, bolt-on aggregates acquisition that is an excellent fit with the company’s existing operations in the region. Summit closed on the acquisition of Stoner Sand in late February 2018.
- Midwest Minerals (Kansas). Midwest Minerals is an aggregates company with extensive, high-quality reserves. The acquisition expands Summit’s market presence in southeast Kansas. Summit closed on the acquisition of Midwest Minerals in April 2018.
- Day Concrete (Oklahoma). Day Concrete is long-established ready-mix concrete company that has a leading position in its local market, and is an excellent fit with the company’s existing aggregates and ready-mix concrete operations in the state. Summit closed on the acquisition of Day Concrete in April 2018.
- Superior Ready-Mix (Kentucky). Superior Ready-Mix is a ready-mix concrete company that enhances the company’s market coverage in the region and will integrate seamlessly into existing operations. Summit closed on the acquisition of Superior Ready-Mix in April 2018.
“We believe that demand for construction materials could increase meaningfully during the second half of 2018, given recent feedback from our customers and operating companies,” stated Hill. “Our outlook for North Texas, Austin, Vancouver, Utah and the Carolinas has improved within the last 90 days, given strong growth in single family residential, stable growth in low-rise commercial and accelerating growth in state public lettings. Despite the slow start to the year, the combination of accelerating organic growth within our larger platform markets, together with a solid pipeline of acquisition targets, positions Summit for another strong year ahead.”