Summit Materials Inc. announced results for the fourth quarter and full year ended Dec. 31, 2022. All comparisons are versus the quarter ended Jan. 1, 2022 unless noted otherwise.
Net revenue decreased $41.8 million, or 7.5% in the fourth quarter to $511.7 million, as increases in average sales prices across all lines of business were more than offset by lower volumes, which includes the impact of divestitures.
- Aggregates net revenues decreased by $6.4 million to $135.6 million in the fourth quarter. Aggregates adjusted cash gross profit margin increased to 47.8% in the fourth quarter as compared to 45.7% in the prior year period. Aggregates sales volume decreased 17.0% in the fourth quarter due primarily to divestitures in the East Segment. Organic aggregates sales volumes declined 12.0% driven by a combination of unfavorable weather conditions, supply chain related disruptions, and moderating residential demand. Average selling prices for aggregates increased 13.9% in the fourth quarter with growth across all markets and led by the strongest gains in Texas, the Intermountain West, and the Carolinas.
- Cement Segment net revenues increased 23.6% to $97.9 million in the fourth quarter. Cement Segment adjusted cash gross profit margin increased to 47.1% in the fourth quarter, compared to 42.7% in the prior year period as strong pricing gains more than offset higher variable costs and a greater proportion of sales from imports. Sales volume of cement increased 1.7% reflecting a healthy demand environment. Average selling prices increased 16.6% in the fourth quarter driven by compounding pricing actions taken in 2022 and an ongoing focus to improve customer mix.
- Products net revenues were $221.5 million in the fourth quarter, compared to $263.2 million in the prior year period. Products adjusted cash gross profit margin decreased to 17.1% in the fourth quarter, versus 18.3% in the prior year period. Organic average sales price for ready-mix concrete increased 20.7% driven by pricing growth across all markets, with strong, double-digit growth in Texas and the Intermountain West. Organic sales volumes of ready-mix concrete decreased 16.3% due to wet conditions, particularly in Texas and, to a lesser extent, moderating residential activity. Organic average selling prices for asphalt increased 19.3%, driven by strong pricing gains in North Texas and the Intermountain West. Organic asphalt sales volume decreased 12.3% as volume growth in the Intermountain West was more than offset by lower sales volumes in North Texas.
For full-year 2022, net revenue decreased $10.6 million, or 0.5% to $2.2 billion, as strong pricing growth across all lines of business nearly offset lower volumes and the impact of divestitures.
- Aggregates net revenues increased $10.8 million to $584.0 million in 2022. Aggregates adjusted cash gross profit margin decreased to 48.5% in 2022 as compared to 51.7% in 2021. Aggregates sales volume decreased 7.3% in 2022, primarily reflecting the impact of divestitures and unfavorable weather conditions. Excluding divestitures, organic sales volume decreased 2.8% in 2022. By market, volume performance was strongest in Virginia, Houston and the Intermountain West. 2022 was a record pricing year as average selling prices for aggregates increased 8.2% fueled by 10.4% pricing growth in the West Segment and 7.3% pricing growth in the East Segment.
- Cement Segment net revenues increased 20.0% to $357.7 million in 2022. Cement Segment adjusted cash gross profit margin of 39.6% in 2022 was relatively flat compared to 2021 adjusted cash gross profit margin of 39.9%. Sales volume of cement increased 4.2% and average selling prices increased 12.0% in 2022.
- Products net revenues decreased 4.8% in 2022. Products adjusted cash gross profit margin of 17.1% in 2022 decreased from 18.3% in 2021. Ready-mix concrete average selling prices increased 13.3% reflecting inflation-justified price increases and sales volumes decreased 13.5%, which includes the impact of divestitures. Ready-mix volumes in Houston and Salt Lake City, the company’s two primary residential markets, decreased 4.3% and 4.7%, respectively in 2022. Average selling prices for asphalt increased 19.0% with pricing growth across both reporting segments. Asphalt volume decreased 26.4% due to the divestiture of a paving business in 2021.
“Our fourth quarter caps a year of tremendous strategic progress. I am proud that, despite challenging macro conditions, in 2022 Summit Materials effectively completed our divestiture program, further fortified our balance sheet, set an Elevate Summit high water mark for ROIC, returned over $100 million to shareholders, and delivered record organic pricing growth across all lines of business,” commented Anne Noonan, Summit Materials president and CEO. “Thanks to our team’s dedicated focus on our Elevate Summit strategy we navigated dynamic market conditions and delivered admirable financial results consistent with the expectations we previously laid out. Achieving solid Adjusted EBITDA growth on a pro forma basis in the midst of historic cost inflation represents very strong operating performance and provides substantial momentum heading into 2023.
“More importantly, as we look to 2023, we strongly believe that the outlook we provide today is both achievable and appropriate given the level of uncertainty in the marketplace. We are well positioned and prepared to execute on the commercial and operational plans that are within our control with especially strong tailwinds from pricing expected in the year ahead. That said, cost trends and residential end market visibility are cause for a certain amount of managerial caution as we move into 2023. We believe we are taking a balanced, if not prudent, approach in setting expectation for next year and will leverage Summit’s organizational agility to mitigate risk and capitalize on all market opportunities available to us,” Noonan concluded.
Brian Harris, CFO of Summit Materials added, “The portfolio-optimizing transactions we’ve completed since the launch of Elevate Summit together with a materials-led approach to M&A not only enhances our product mix and profitability, but also strengthens our balance sheet and the economic durability of our company. We continue to pursue a capital allocation approach that first prioritizes investments in high return organic and inorganic opportunities and then looks to opportunistically return capital to shareholders. This, coupled with sound operational execution, is a powerful combination to drive attractive shareholder value.”