Summit Materials Inc. reported a first-quarter 2019 net loss of $68.8 million, compared to a net loss of $53.7 million in the comparable prior-year period.
Summit’s net revenue increased 5.5% in the first quarter of 2019 compared to the comparable 2018 period, while net income and earnings per share decreased in 2019 as compared to the comparable 2018 period, primarily due to the $14.6 million loss on debt financing to redeem the 8.5% senior notes in March 2019.
Tom Hill, CEO of Summit Materials, stated, “We were very pleased to see our organic average sales prices for aggregates increased by 6.3% in the first quarter as compared to a year ago. We continue to believe end market fundamentals remain intact for the construction industry going into 2019.”
Hill commented, “Cement sales volumes were up slightly in the first quarter of 2019 as compared to 2018 despite challenging weather conditions. However, an extended annual maintenance shutdown and record flooding on the Mississippi River that has continued into the second quarter has negatively impacted our Cement business.
“Underlying demand conditions in most of our markets remain favorable and are expected to remain so during the remainder of 2019,” continued Hill.
In Summit’s public markets, state transportation funding measures in Texas, coupled with steady increases in federal subsidies, are contributing to increased lettings activity. Single-family housing starts and permits remain well below peak levels in Summit’s major markets.
Aggregates net revenues increased by 30.3% to $87.9 million in the first quarter 2019, when compared to the prior-year period. Aggregates adjusted cash gross profit margin improved to 43.2% in the first quarter 2019, compared to 41.5% in the prior-year period, as pricing gains exceeded input costs.
Organic aggregates sales volumes increased 6.6% in the first quarter 2019, when compared to the prior-year period. Organic average selling prices on aggregates increased 6.3% in the first quarter 2019 when compared to the prior year period due to improvements in prices within both the West and East segments during the period.
Cement segment net revenues declined 0.7% to $37.3 million in the first quarter 2019, when compared to the prior-year period. Cement adjusted cash gross profit margin decreased to 3.1% in the first quarter, compared to 19.5% in the prior-year period, as margins were impacted by lower production levels in 2019.
Organic sales volume of cement increased 1.0% in the first quarter, when compared to the prior-year period. Organic average selling prices on cement decreased 1.5% in the first quarter, when compared to the prior-year period due to changes of the customer mix across its geographies.
- The West Segment reported operating loss of $11.6 million in the first quarter 2019, compared to a loss of $6.1 million in the prior-year period. Aggregates revenue in the first quarter increased 12.3% over the prior-year period as a result of contributions from acquisitions, resulting in a 4.2% increase in organic volumes and a 4.7% increase in organic average sales prices.
- The East Segment reported operating loss of $17.3 million in the first quarter 2019, compared to a loss of $20.9 million in the prior-year period. Aggregates revenue increased 36.8%, primarily due to increases resulting from its acquisition program as well as a 9.1% and 7.6% increase in organic volumes and average sales prices, respectively.
As previously announced, in February 2019 Summit extended and amended its revolving credit facility, which now has maximum availability of $345 million and matures in 2024. Further, in March 2019, Summit retired $250 million of 8.5% senior notes due 2022 by issuing $300 million of 6.5% senior notes due in 2027. Brian Harris, CFO of Summit Materials, stated, “We were very pleased with both of those transactions, which increased our overall liquidity position and lowers our cash interest outlays in the future. Further, we are pleased to reaffirm our guidance for 2019 capital expenditures of approximately $160 million to $175 million.”