Summit Materials Inc. announced that for the three months ended Sept. 28, the company is reporting net income attributable of $55.8 million, or $0.50 per basic share, compared to net income attributable to Summit Inc. of $71.3 million, or $0.64 per basic share in the comparable prior-year period.
Although operating income increased in the third quarter to $130.9 million as compared to $108.2 million in the prior-year period, net income declined due to an increase in income tax expense related to proposed U.S. tax reform regulations that would limit interest deductibility.
Summit reported adjusted diluted net income of $58.2 million, or $0.50 per adjusted diluted share as compared to adjusted diluted net income of $61.9 million, or $0.54 per adjusted diluted share in the prior-year period.
Summit’s net revenue increased 6.5% in the third quarter of 2019 relative to the comparable 2018 period. Adjusted EBITDA increased 12.4% to $193.3 million in the third quarter 2019 as compared to $172.0 million in 2018.
Tom Hill, CEO of Summit Materials, commented, “We delivered a double-digit percentage increase in third quarter Adjusted EBITDA with organic price increases and higher volumes in all lines of business on strong demand and improved weather conditions relative to a year ago. We experienced a return to volume growth and full utilization in our cement business as shipping traffic began to normalize on the Mississippi River. Levee repair work in Missouri and market conditions in Kansas drove aggregates volumes higher, and although ready-mix volumes were higher in the quarter, we did lose some sales due to Tropical Storm ‘Imelda’ in the Houston market.”
- Third quarter 2019 sales volumes increased 12.6% in aggregates, 3.8% in cement, 1.8% in ready-mixed concrete and 2.3% in asphalt relative to the year ago quarter.
- Third quarter 2019 average selling prices increased 6.9% in aggregates, 3.1% in cement, 2.9% in ready-mixed concrete, and 7.2% in asphalt relative to the prior-year period.
- Summit’s operating margin expanded to 19.7% in the third quarter 2019 from 17.3% in the third quarter 2018.
Hill added, “Our year-to-date performance includes a seasonally strong third quarter and the resumption of normal operations in our cement business that was impacted by shipping constraints during the first half of the year that has begun to normalize. Despite these challenges, our cement volumes were up 2.9% for the nine months ended Sept. 28, 2019. With the exception of our ready-mix business, where volumes were impacted by rainy conditions in Texas, we experienced solid volume growth in our aggregates and asphalt businesses and price growth in all lines of business, which helped us rebound from setbacks in the first half of the year.”
On a year-to-date basis through Sept. 28, Summit’s net revenue increased 4.1% over the comparable 2018 period. Adjusted EBITDA increased 8.8% to $340.4 million for the first nine months of 2019 as compared to $312.9 million for the same period in 2018.
Year-to-date through Sept. 28, 2019, sales volumes increased 12.6% in aggregates, 2.9% in cement, and 2.6% in asphalt, while ready-mixed concrete volume declined 3.1% relative to the same period last year.
Average selling prices for the first nine months of 2019 increased 7.9% in aggregates, 1.4% in cement, 2.3% in ready-mixed concrete, and 6.6% in asphalt relative to the prior-year period. Summit’s operating margin expanded to 10.1% in the first nine months of 2019 from 9.1% in the same period 2018.
Aggregates net revenues increased by 25.5% to $137.5 million in the third quarter 2019, when compared to the prior-year period. Aggregates adjusted cash gross profit margin declined slightly to 68.6% in the third quarter 2019 compared to 69.2% in the prior-year period on product mix.
Organic aggregates sales volumes increased 11.4% in the third quarter 2019, when compared to the prior-year period on higher organic volume growth in both the East and West segments. Organic average selling prices on aggregates increased 6.9% in the third quarter 2019 when compared to the prior-year period due to improvements in prices, particularly in the East segment related to levee repair work in Missouri.
Cement segment net revenues increased 5.3% to $99.0 million in the third quarter 2019, when compared to the prior-year period. Cement adjusted cash gross profit margin decreased to 46.0% in the third quarter, compared to 50.7% in the prior-year period, as the company incurred increased distribution costs to overcome the lingering effects of shipping delays on the Mississippi River in the first half of the year. Organic sales volume of cement increased 3.8% in the third quarter, when compared to the prior-year period. Organic average selling prices on cement increased 3.1% in the third quarter when compared to the prior-year period.
Net revenues were $324.7 million in the third quarter 2019, compared to $315.3 million in the prior-year period, which included the sale of a non-core business. Products adjusted cash gross profit margin increased to 24.4% in the third quarter, versus 22.5% in the prior-year period, due in part to increased pricing in Kansas, Texas and Intermountain geographies.
Organic average sales price for ready-mixed concrete increased 2.7%, coupled with a 1.3% increase in organic sales volumes of ready-mixed concrete. Organic average sales price for asphalt increased 7.2% while the company had a 2.3% increase in asphalt organic sales volumes, primarily driven by growth in Kansas and Missouri.