Summit Materials Inc. announced results for the fourth quarter and full year ended Jan. 1. Net revenue was down in the fourth quarter but higher for the full year 2021.
In the fourth quarter net revenue decreased $18.4 million, or 3.2% to $553.4 million. Operating income decreased $9.0 million, or 13.6% in the fourth quarter to $57.2 million, as the costs of revenue increased. This was partially offset by lower depreciation, depletion, amortization and accretion expenses. Summit’s operating margin percentage for the three months ended Jan. 1, decreased to 10.3% from 11.6%, from the comparable period a year ago.
Net income attributable to Summit Inc. increased to $43.8 million, or $0.37 per basic share, compared to $35.2 million, or $0.31 per basic share in the comparable prior year period. Summit reported adjusted diluted net income of $32.9 million, or $0.27 per adjusted diluted share as compared to $28.8 million, or $0.25 per adjusted diluted share in the prior year period.
While fourth-quarter net revenue was down 3.2% year-over-year, full-year 2021 net revenue was up 4.6%. Net revenue increased $97.9 million, or 4.6% in 2021 to $2.2 billion, despite one fewer reporting week in 2021 and reflects revenue growth in aggregates, cement, and ready-mix underpinned by strong demand conditions in most markets.
Operating income increased $27.9 million, or 12.4% in 2021 to $253.1 million, primarily due to higher revenue that more than offset higher cost of revenue and general and administrative expenses primarily associated with optimizing organizational efficiencies and implementing the Elevate Summit strategy. Summit’s operating margin percentage for 2021 increased to 11.3% from 10.5% in 2020, due to the factors noted above.
Net income attributable to Summit Inc. increased to $152.2 million, or $1.29 per basic share, compared to $138.0 million, or $1.21 per basic share in the comparable prior year period. Summit reported adjusted diluted net income of $133.5 million, or $1.12 per adjusted diluted share as compared to $95.3 million, or $0.81 per adjusted diluted share in the prior year period.
“Our fourth quarter and full year 2021 results are evidence that our Elevate Summit strategy is driving improved execution and financial performance,” said Summit Materials CEO Anne Noonan. “Today we are setting new annual records for Net Revenue, Net Income, Adjusted Cash Gross Profit and Adjusted EBITDA. With these results, we are either on track or have already achieved our Horizon One targets. That momentum continues into 2022 as we continue to optimize our portfolio, pursue self-help initiatives to improve performance, and drive market leadership to #1 or #2 positions in targeted exurban, higher growth communities underpinned by strong demand fundamentals.”
Brian Harris, CFO of Summit Materials added, “We continue to advance each of our strategic priorities, including our market leadership and asset light model with eight strategic divestitures already closed and more in progress. These divestitures, together with continued organic growth and a stronger balance sheet as evidenced by a Summit-best net leverage ratio, provides us the financial flexibility to support further greenfield investments and pursue attractive opportunities to further optimize our portfolio.”
During 2021, Summit received $128.3 million in proceeds from a total of eight divestitures as part of its Elevate Summit strategy.
Aggregates Business
In the fourth quarter, Aggregates net revenues increased by $6.5 million to $142.0 million in the fourth quarter. Aggregates adjusted cash gross profit margin decreased to 45.7% in the fourth quarter as compared to 49.9% in the fourth quarter 2020. Aggregates sales volume decreased 5.5% in the fourth quarter, due to the negative impact from comparisons to a 53rd week in 2020. Excluding this impact, volume growth was primarily driven by the East Segment, led by growth in Virginia and Missouri. Average selling prices for aggregates increased 8.6% in the fourth quarter with strong growth across both reporting segments.
For 2021, Aggregates net revenues increased by $75.2 million to $573.2 million in 2021. Aggregates adjusted cash gross profit margin increased to 51.7% in 2021 as compared to 51.4% in 2020. Aggregates sales volume increased 8.6% in 2021 with organic growth in both the East and West segments.
By market, volume growth in the Intermountain West, Virginia, Carolinas, Georgia, and British Columbia were partially offset by lower volumes in Kentucky. Average selling prices for aggregates increased 3.6% in 2021 with strong growth across both the East and West segments.
Cement Business
In the fourth quarter, Cement segment net revenues increased 9.8% to $79.2 million in the fourth quarter. Cement segment adjusted cash gross profit margin decreased to 42.7% in the fourth quarter, compared to 47.4% in the prior year period. Sales volume of cement increased 5.8% and average selling prices increased 2.7% in the fourth quarter.
For 2021, Cement segment net revenues increased 10.2% to $298.2 million in 2021. Cement segment adjusted cash gross profit margin increased to 39.9% in 2021, compared to 39.6% in 2020. The Green America Recycling facility is operational and continues to ramp up production after completing repair and commissioning activities late in the third quarter 2021 after its prolonged shutdown due to an explosion in April 2020. Sales volume of cement increased 6.3% and average selling prices increased 2.9% in 2021.
Products Business
Products net revenues were $263.2 million in the fourth quarter, compared to $286.0 million in the prior year period. Products adjusted cash gross profit margin decreased to 18.3% in the fourth quarter, versus 19.6% in the prior year period. Average sales price for ready-mix concrete increased 3.5% driven primarily by pricing growth in the Intermountain West market.
Sales volumes of ready-mix concrete decreased 4.8%, despite strong demand and favorable weather conditions, particularly in Houston. Average selling prices for asphalt increased 4.2%, driven by strong pricing growth across the East Segment markets that was partially offset by lower pricing in North Texas and Salt Lake City. Asphalt volume decreased 25.7% due largely to a paving business divestiture earlier in the year.
Products net revenues of $1.1 billion in 2021 were relatively unchanged versus 2020. Products adjusted cash gross profit margin decreased to 18.3% in 2021, down from 19.2% in 2020. Ready-mix concrete average selling prices increased 3.4% and sales volumes increased 1.6% primarily reflecting a strong demand environment in the Intermountain West market that more than offset wet conditions in Texas. Average selling prices for asphalt increased 2.2%, with pricing growth across both reporting segments. Asphalt volume decreased 13.2% due to the divestiture of a paving business in 2021.
West Segment
In the fourth quarter, the West Segment operating income decreased 24.9% to $35.5 million and Adjusted EBITDA decreased 19.3% to $59.8 million in the fourth quarter. Lower operating income and Adjusted EBITDA were primarily due to the impact from a divestiture. Aggregates revenue in the fourth quarter decreased 4.9% as volumes declined 10.2% more than offsetting average sales price growth of 5.8%. Ready-mix concrete revenue in the fourth quarter decreased 0.3% with volumes down 4.3%, which was mostly offset by 4.2% pricing growth. Asphalt revenue decreased 39.1% in the fourth quarter as volumes decreased 37.0%, due to a divestiture in the second quarter. Asphalt sales prices increased 3.3% in the period.
For 2021, the West Segment operating income decreased 3.0% to $171.2 million and Adjusted EBITDA increased 0.2% to $271.6 million in 2021. Aggregates revenue in 2021 increased 16.9% as volumes and average sales prices increased 13.8% and 2.7%, respectively. Ready-mix concrete revenue in 2021 increased 9.0% with volume growth of 5.4% and average sales prices growth of 3.5% on favorable demand and weather conditions in Salt Lake City. Asphalt revenue decreased by 25.8% as volumes decreased 24.4% due to a divestiture in the second quarter 2021 that was only partially offset by 2.5% growth in average selling prices in 2021.
East Segment
In the fourth quarter, the East Segment operating income increased 1.8% to $21.2 million and Adjusted EBITDA increased 2.3% to $43.4 million in the fourth quarter. Despite unfavorable comparisons with an extra week in 2020, operating income and Adjusted EBITDA growth reflects strong pricing gains across all lines of business. Aggregates revenue increased 9.7%, as volumes decreased 0.4% and average selling prices increased 10.1%. Ready-mix concrete revenue decreased 4.7% as volumes decreased by 6.2%, partially offset by average selling price growth of 1.7%. Asphalt revenue increased 15.1% as volumes increased 1.1% on strong volume growth in Kentucky that more than offset volume declines elsewhere. Asphalt average selling prices increased 9.4% on higher liquid asphalt index prices across Summit’s markets.
For 2021, the East Segment operating income increased 29.5% to $90.4 million and Adjusted EBITDA increased 11.8% to $181.5 million in 2021. Aggregates revenue increased 9.1%, on volume growth of 3.8% and 5.1% growth in average selling prices with higher pricing across all markets. Ready-mix concrete revenue decreased 6.4% as volumes decreased by 9.2%, partially offset by average selling price growth of 3.1%. Lower ready-mix concrete volumes were primarily due to Kansas wind farm projects in the 2020 period that were not fully replaced in 2021. Asphalt revenue increased 27.7% as volumes increased 17.0% on volume growth in Kentucky, Kansas, and Virginia. Asphalt average selling prices increased 4.4% on higher liquid asphalt index prices across several markets.
Cement Segment
In the fourth quarter, the Cement Segment operating income decreased 1.9% to $20.4 million in the fourth quarter. Adjusted EBITDA increased 17.1% to $34.9 million on higher volumes and pricing growth. In the fourth quarter, the Cement Segment reported volume growth of 5.8% and average selling price growth of 2.7%
For 2021, the Cement Segment operating income increased 19.5% to $66.1 million. Adjusted EBITDA increased 26.0% to $117.2 million in 2021 on volume and pricing growth. The segment reported growth in sales volumes and average selling prices of 6.3% and 2.9%, respectively in 2021.