Summit Materials Inc. announced that for the 12 months ended Dec. 31, 2016, the company's net income was $36.8 million and adjusted net income was $98.3 million. For the three months ended Dec. 31, 2016, the company is reporting a net loss of $300,000 and adjusted net income of $21.0 million.
Net revenue increased 15.4 percent year-over-year to $1.5 billion, versus $1.3 billion in 2015. The year-over-year improvement in net revenue was primarily attributable to higher acquisition-related sales volumes across all lines of business, coupled with improved organic and acquisition-related pricing on aggregates, cement and ready-mix concrete.
Gross profit increased 25.4 percent year-over-year to $554.0 million, versus $441.7 million in 2015. Gross profit generated from the company’s aggregates and cement assets represented 52.5 percent of total gross profit in 2016, versus 48.4 percent of gross profit in 2015.
“Our strong full-year performance further validates the unique competitive advantages afforded by our integrated, materials-based model,” stated Tom Hill, CEO of Summit Materials. “Our leading positions in well-structured, early-cycle markets drove sustained margin expansion throughout all lines of business in 2016, as both gross margin and Adjusted EBITDA margin increased to record levels. Adjusted EBITDA exceeded the high-end of our guided range for the full-year, given sustained growth in materials pricing, contributions from completed acquisitions and improved cost efficiencies.
“Gross profit generated from our materials lines of business increased by more than 35 percent year-over-year in 2016, despite temporary softness in organic sales volumes of aggregates in our Texas and Vancouver markets,” continued Hill. “Excluding Texas and Vancouver, organic sales volumes of aggregates and ready-mix increased 1.2 percent and 5.1 percent, respectively, in the full-year 2016, versus the prior year. Looking ahead to 2017, we anticipate positive growth in materials pricing and volumes across all of our reporting segments.
“In January 2017, we entered into definitive agreements to acquire Colorado-based Everist Materials and Arkansas-based Razorback Concrete Co. for a combined $110 million in cash,” stated Hill. “Collectively, these acquisitions bring aggregates operations with more than 100 million tons of permitted reserves and an extensive network of vertically integrated ready-mix concrete and asphalt plants in close proximity to our existing portfolio of materials-based assets. In addition to Everist, which closed in January 2017, and Razorback, which is expected to close during the first quarter 2017, our acquisition pipeline remains robust, with more than 20 additional transactions currently under review.
“Our cement business represents a clear catalyst for growth heading into 2017,” continued Hill. “Limited domestic production capacity and continued growth in U.S. demand have combined to create opportunities for sustained growth in industry cement pricing. During the fourth quarter, our cement segment generated organic price and volume growth of 6.8 percent and nearly 1 percent, respectively. Looking ahead to the remainder of 2017, we anticipate continued Adjusted EBITDA growth in our cement business, as supported by sustained growth in organic cement prices and sales volumes along the Mississippi River corridor.
“Following the recent election cycle, we have entered a new era of bipartisan support for funding that will help to properly maintain and modernize our nation’s aging transportation infrastructure,” continued Hill. “In the markets we serve, nearly 60 cents of every dollar spent by states on transportation infrastructure is federally funded. Given that nearly 40 percent of our net revenue is derived from public infrastructure work, Summit is well positioned to benefit from this opportunity. With the support of appropriations from the FAST Act, we anticipate an acceleration in state-level infrastructure spending beginning in mid-to-late 2017. Further, given ongoing advocacy by Congress and the current Administration for increased investment in state transportation infrastructure, we see numerous opportunities for multi-year growth in our public-facing businesses."
Aggregates net revenues in 2016 increased 20.8 percent to $264.6 million when compared to the prior year period. Aggregates gross profit as a percentage of aggregates net revenues increased nearly 260 basis points to 62.0 percent in 2016, when compared to the prior year period.
Including acquisitions, sales volumes increased 11.8 percent and average sales price increased 7.2 percent, when compared to the prior year period. Excluding acquisitions, organic sales volume declined 5.5 percent and organic average sales price increased 4.8 percent, when compared to the prior year period.
In the full-year 2016, organic sales volumes were affected by severe weather conditions throughout Texas and lower year-over-year contributions from the Vancouver, B.C., Canada, market, given the completion of a large sand river project in 2015.
Aggregates net revenues in the fourth quarter 2016 increased 10.9 percent to $63.4 million when compared to the prior year period. Aggregates gross profit as a percentage of aggregates net revenues declined 140 basis points to 63.7 percent in the fourth quarter 2016, versus 65.1 percent in the prior year period.
Including acquisitions, sales volumes and average selling prices increased 5.3 percent and 2.7 percent, respectively, in the fourth quarter 2016, when compared to the prior year period. Excluding acquisitions, organic sales volumes declined 11.8 percent and average selling prices were flat in the fourth quarter 2016, versus the prior year period.
Organic sales volumes in the fourth quarter 2016 were impacted by a combination of transitory softness in Houston’s residential market, lower contributions from continued delays in public spending within the Kentucky market and tough prior-year comparisons in the Vancouver, B.C., Canada, market, the company stated.