Summit Materials Inc. announced results for the first quarter 2021, reporting that net revenue increased $56.1 million, or 16.4% in the first quarter of 2021 to $398.5 million, compared to $342.4 million in the first quarter of 2020, on higher aggregates, ready-mix concrete, cement, asphalt and paving revenue relative to a year ago on strong demand in most markets.
The company, however, reported an operating loss of $25.1 million in the first quarter 2021, an improvement of 39.9%, compared to $41.7 million in the prior-year period.
Net revenue gains in all lines of business exceeded increases in costs of revenue and more than offset a $10.0 million increase in general and administrative expenses, which included $3.4 million in severance related costs and professional fees associated with optimizing organizational efficiencies. Summit’s operating margin percentage for the three months ended April 3 increased to -6.3% from -12.2%, from the comparable period a year ago, due to the factors noted above.
For the three months ended April 3, 2021, sales volumes increased 20.7% in aggregates, 13.7% in cement, 7.6% in ready-mix concrete and 15.9% in asphalt relative to the same period last year on strong demand in most markets.
Average selling prices in the first quarter of 2021 decreased 1.9% in aggregates, and increased 0.4% in cement, 3.7% in ready-mix concrete and 5.5% in asphalt.
While most of Summit’s geographies reported higher average selling prices for aggregates in the first quarter, slight changes in product mix in its Kansas and North Texas markets resulted in a lower company-wide average selling price than the prior-year quarter. Adjusted cash gross profit for aggregates expanded to $49.1 million in the first quarter 2021, an increase of 34.0% relative to $36.6 million in the prior-year quarter.
Anne Noonan, CEO of Summit Materials, commented, “After a strong finish to 2020, Summit has accelerated into 2021 with record first quarter Adjusted EBITDA. Migration activity continues to favor our rural and exurban markets and most of the state Departments of Transportation that we serve are on solid financial footing. We are in full implementation mode on our Elevate Summit strategy, and we are seeing early signs of success. In the first quarter we completed one strategic divestiture and made progress on others. We remain focused on sustainable growth with investments in greenfields and end markets that are underpinned by strong growth fundamentals.”
Aggregates net revenues increased by $21.2 million to $117.4 million in the first quarter 2021 when compared to the prior-year period. Aggregates adjusted cash gross profit margin increased to 41.8% in the first quarter 2021 as compared to 38.1% in the first quarter 2020.
Aggregates sales volumes increased 20.7% in the first quarter 2021 when compared to the prior-year period on organic growth in both the West and East segments. Volume increased in the Intermountain West, Virginia and British Columbia markets, partially offset by slight decreases in Kansas and Missouri as wind farm and flood repair volumes in the first quarter of 2020 did not repeat in 2021.
Average selling prices for aggregates decreased 1.9% in the first quarter 2021, primarily due to product mix in Kansas and North Texas markets. On an organic basis, average selling prices for aggregates remained flat.
Cement segment net revenues increased 7.2% to $40.7 million in the first quarter 2021, when compared to the prior-year period, on higher sales volume of cement. Cement adjusted cash gross profit margin increased to 1.9% in the first quarter, compared to (10.0)% in the prior-year period, as higher volumes resulted in lower unit plant costs.
Its Green America Recycling facility continues to ramp up production following an explosion that occurred in April 2020. Sales volume of cement increased 13.7% in the first quarter and average selling prices increased 0.4% when compared to the prior-year period.
Products segment net revenues were $198.7 million in the first quarter 2021, compared to $176.3 million in the prior-year period. Products adjusted cash gross profit margin increased to 13.6% in the first quarter, versus 11.4% in the prior year period. Its organic average sales price for ready-mix concrete increased 3.7% and organic sales volumes of ready-mix concrete increased 7.6%, as volume increased in our Intermountain West and North Texas markets, and prices increased in the Intermountain West market. Its organic average sales price for asphalt increased 5.5%, with strong pricing gains across Texas geographies, while volume increased 15.9%, on higher volumes in North Texas.
Looking at the company’s operating divisions, the West Segment reported operating income of $15.1 million in the first quarter 2021, compared to $0.4 million in the prior year period. Adjusted EBITDA increased to $40.6 million in the first quarter 2021, compared to $22.5 million in the prior year period, as we had increases in net revenue in all lines of business. Improvements in operating income reflected increased demand for aggregates and ready-mix concrete, particularly in the Houston and Salt Lake City areas.
Aggregates revenue in the first quarter increased 39.8% over the prior year period, while organic volumes and average sales prices increased 13.1% and 1.1%, respectively. Ready-mix concrete revenue in the first quarter 2021 increased 19.5% over the prior year period, as organic volumes increased 14.1% and organic average sales prices increased 4.7%, reflecting favorable market conditions for residential construction. Asphalt revenue increased by 18.2% in the first quarter 2021 over the prior year period. Asphalt volumes increased 11.7%, reflecting higher demand in North Texas, and sales prices increased 8.0%.
The East Segment reported an operating loss of $10.4 million in the first quarter 2021, compared to $11.8 million in the prior year period as net revenue increases in aggregates, asphalt and paving and related services exceeded a decrease in ready-mix concrete. Adjusted EBITDA increased to $11.7 million in the first quarter 2021, compared to $9.6 million in the prior-year period.
Aggregates revenue increased 2.6%, as volumes increased 2.7%, partially offset by decreased average selling prices of 0.2%. Ready-mix concrete revenue decreased 11.9% as volumes decreased by 12.4%, partially offset by organic average selling prices which increased 0.5% primarily due to lower volumes in Kansas as wind farm projects in 2020 were not fully replaced in 2021. Asphalt revenue increased 40.6% as organic volumes increased 55.0% on higher volumes in Kansas and Virginia, while organic average selling prices decreased 11.5% on lower liquid asphalt index prices in most markets.
The Cement Segment reported an operating loss of $10.0 million in the first quarter 2021, compared to $15.5 million in the prior year period. Adjusted EBITDA increased to $2.5 million in the first quarter 2021, compared to a loss of $7.6 million in the prior year period on higher volumes. The segment reported organic sales volumes and organic average selling prices increased 13.7% and increased 0.4%, respectively, during the first quarter 2021 as compared to the prior-year period. The company’s Green America Recycling facility continues to ramp up production following an explosion that occurred in April 2020. As a result, revenue from that facility is below 2020 levels for the first quarter 2021.
For the full year 2021, Summit has not made any changes to its outlook for Adjusted EBITDA of approximately $490 million to $520 million, but expects to revisit this forecast as the year progresses. The company continues to expect 2021 capital expenditure guidance of approximately $200 million to $220 million including approximately $25 million to $35 million for greenfield projects.