Summit’s Hill Reaches the Peak

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By Mark S. Kuhar

Summit Materials was formed to acquire and grow building materials companies in the aggregates, ready-mix concrete, cement, asphalt paving and construction industries. By teaming up with established local businesses, the company is committed to creating value, providing access to growth capital, implementing best practices and offering a safe place to work while striving to exceed its environmental and social responsibilities.14 TOMHILL 400

Summit Materials CEO Tom Hill spoke to Rock Products right after the IPO kicked off.

What makes this IPO the right thing for Summit Materials to do at this time?

When we started Summit back in 2009, it was just an idea. We were lucky enough to team up with private equity firm Blackstone. And one of the things that attracted them to Summit was that they saw a lack of investment opportunities in the public markets in the heavy construction industries. From day one it was always part of the plan to go public. This was the right time in the development of the company. We see ourselves in the early stages of a construction-market recovery. It was a natural stage in the evolution of the company.

How will the capital raised from the IPO be used?

The primary use will be to pay down debt, and for other corporate general purposes.

Which segment of your business will benefit the most from the IPO?

We are a vertically integrated business. We have the benefit of strong aggregates positions that are carried forward into our downstream products and then into paving. This will really benefit all segments.

How do you view the construction market right now? What are some of the key indicators you see?

More than half of our business goes into private construction. We see that segment of the marketplace very strong over the next few years. We are in the early innings of a construction-market recovery. Not sure if we are in the first or second inning, but we are in the early part of the game. On the highway side, it really depends where you are geographically. It is discouraging that we can’t get our representatives in Washington to do the right thing and give us a long-term highway bill. But the states are starting to step up and increase funding. Texas passed Proposition 1 late last year which added $1.7 billion into their highway program. On the federal side, I am very involved with the American Road and Transportation Builders Association, our main lobbying group. There is a growing chance for a highway bill, but we are not counting on it. If it happens, that is more tailwinds for the overall market. We are working hard to put pressure on our elected officials. It does get discouraging, but at the end of the day, it is our hope that they will do the right thing.

Are there places in the United States where you are not competing right now, but would like to?

Right now we are in 17 states and there is no state where we would not look at a business, contingent upon the underlying highway market, outlook, market structure, etc. But our major focus is always filling in our existing geography with bolt-on acquisitions, and then we might look at additional platform acquisitions on an opportunistic basis but with strict parameters.

Do you plan to make any investments outside of the United States?

We have acquired one company near Vancouver, British Columbia, a company called Mainland Sand and Gravel, the largest aggregates producer in the Vancouver area. It is a great company run by the Carlson family and we are very excited about that. We continue to look for acquisitions in Western Canada. If the right one arose we would pursue that. It’s a great market.

With this new infusion of cash, will you be looking to invest in any of your existing plants with an eye toward upgrading equipment and technology?

We really didn’t need any capital raised to accomplish that, we have actually had a very significant capital expenditure budget over the past few years. We built an underground mine at our Continental cement plant near Hannibal, Mo. We put a new plant up outside of Houston, we are building another plant near Houston as well. No, it was really more important for us to pay down some expensive debt that we incurred early on. This really sets us up nicely for future growth.

Is there anything you want the aggregates industry to know about your company as you begin life as a publicly traded company?

The main differentiator we have with our peer companies is our decentralized structure. We keep it local, we keep the local brand, we keep the local management. We team up with good companies that are very successful in their local markets. Then we add in technology and ample capital, and try to have the best of both worlds. We have had great success using that formula.

Tom Hill, Chief Executive Officer, Summit Materials

Tom Hill is the chief executive officer and founder of Summit Materials. From 2006 to 2008, he was the chief executive officer of Oldcastle Inc. – the North American arm of CRH plc, one of the world’s leading building-materials companies based in Dublin, Ireland. Hill served on the CRH Board of Directors from 2002 to 2008.

Hill also has held a variety of leadership roles in the transportation industry. He served as chairman of the American Road and Transportation Builders Association from 2002 to 2004.  He helped develop legislative proposals to address the transportation infrastructure needs of the country and testified before Congress on the need for increased federal investment in transportation infrastructure.

Hill received his MBA from Trinity College in Dublin, Ireland, in 1980. He received a Bachelor of Arts in Economics and History from Duke University in 1978.

Summit Materials IPO in a Nutshell

Denver-based Summit Materials launched a $400 million IPO on the New York Stock Exchange on Thursday, March 12, 2015. 

  • During its IPO, Summit Materials Holding Inc. sold all of its 22.2 million offered class “A” shares, which were priced at $18 per share.
  • The IPO generated approximately $400 million for the company which it said would be used to pay down debt.
  • Shares of Summit Materials were up by 13 percent the day after the IPO.
  • Summit saw a revenue increase during 2014. The company booked $1.2 billion in sales last year (13 percent EBITDA margin) and stands to continue benefiting from the rebounding U.S. construction market.
  • Summit’s aggressive acquisition strategy has kept the company from showing a profit.
  • The company will trade under symbol SUM.

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