Summit Materials Inc. announced results for the second quarter ended July 1, reporting net revenue of $680.4 billion versus $631.9 billion in the second quarter of 2022, a 7.7% increase.
Operating income increased $18.4 million, or 16.5% in the second quarter to $129.6 million, driven by a combination of increases in average sales price that more than offset inflationary increases in cost of revenue and higher general and administrative expenses versus the prior year period. Summit’s operating margin percentage for the three months ended July 1, increased to 19.1% from 17.6%, from the comparable period a year ago.
Net income attributable to Summit Inc. decreased to $83.6 million, or $0.70 per basic share, compared to $190.1 million, or $1.58 per basic share in the comparable prior year period due primarily to gain on sale of business in the prior year period. Summit reported adjusted diluted net income of $84.7 million, or $0.71 per adjusted diluted share as compared to $71.8 million, or $0.59 per adjusted diluted share in the prior year period.
Aggregates net revenues increased by $21.0 million to $182.5 million in the second quarter. Aggregates adjusted cash gross profit margin was 53.6% in the second quarter as compared to 53.7% in the prior year period.
Aggregates sales volume decreased 2.5% in the second quarter due, in part, to divestitures in the East Segment. Organic aggregates sales volumes declined 2.0% as unfavorable weather conditions and residential softness in the West Segment more than offset organic aggregates volume growth from the East Segment.
Average selling prices for aggregates increased 14.5%, sustaining strong levels and reflecting the cumulative effects of January 1, 2023 pricing actions and those implemented in the second quarter.
Cement Segment net revenues increased 19.5% to $111.9 million in the second quarter. Cement Segment adjusted cash gross profit margin increased to 52.8% in the second quarter, compared to 48.6% in the prior year period as strong pricing gains coupled with a greater contribution from Green America Recycling more than offset inflationary cost conditions. Despite solid demand conditions, sales volume of cement decreased 0.3% reflecting sold-out conditions along the Mississippi River market. Average selling prices increased 16.0% in the second quarter due to the compounding effects of mid-year 2022 and January 1, 2023 pricing actions.
Products net revenues were $309.6 million in the second quarter, up 5.1% versus the prior year period. Products adjusted cash gross profit margin increased 3 percentage points to 21.2% in the second quarter reflecting margin expansion for both ready-mix concrete and asphalt relative to the year-ago period. Organic average sales price for ready-mix concrete increased 13.7% driven by strong, double-digit pricing growth across all markets, including our key residential markets of Houston and Salt Lake City. Organic sales volumes of ready-mix concrete decreased 11.0% due to reduced residential activity. Organic average selling prices for asphalt increased 15.0%, due to pricing gains in North Texas and the Intermountain West. Organic asphalt sales volume increased 2.1% fueled by growth in North Texas and public infrastructure demand.
“Sustained pricing momentum across the portfolio, together with solid demand fundamentals and very strong operational execution resulted in remarkable second quarter performance and several financial records for our business,” commented Anne Noonan, Summit Materials president and CEO. Importantly, we are delivering against our Elevate Summit goals, setting high-water marks for Adjusted EBITDA margin and surpassing our ROIC target minimum. Given these first half tailwinds, more favorable second half operating conditions, and contributions from recently completed acquisitions, we are on solid footing to again raise our financial commitments for this year. Underpinning these upgraded expectations is better-than-anticipated traction on recent pricing actions and a more robust demand environment, especially concerning residential demand resiliency. Bottom line is that the teams across our Summit footprint are capitalizing on market opportunities, raising the bar operationally, and delivering significant growth in 2023 for the organization and our shareholders.”
Scott Anderson, executive vice president and CFO of Summit Materials added, “Our financial progress is complemented by aggressive, yet purposeful efforts to draw on the Company’s fortified balance sheet for growth. In the second quarter, we completed three acquisitions that each fit nicely within our M&A framework, strengthen the overall portfolio, and will immediately be accretive to Adjusted EBITDA. These acquisitions further our materials-led portfolio strategy while, at the same time, enter Summit into the prioritized market of Phoenix, Arizona. With the purchase of Arizona Materials, we establish an integrated leadership position in one of the fastest growing markets in the country with the opportunity and intentions to build out a more extensive, materials-oriented growth platform in that geography. Collectively, we believe ongoing portfolio additions like these alongside existing organic opportunities is a powerful algorithm for Summit’s profitable growth.”
The West Segment operating income increased $12.1 million to $74.7 million and Adjusted EBITDA of $104.5 million in the second quarter increased 23.5% versus the prior year period. Aggregates revenue increased 12.8% as 17.6% organic pricing growth was partially offset by 6.6% organic volume declines. Pricing growth was strongest in Texas followed by British Columbia and then the Intermountain West. Ready-mix concrete revenue increased 10.2% as 13.5% organic pricing growth was more than offset by lower volumes, particularly in Houston while activity in Salt Lake City demonstrated robust sequential recovery. Asphalt revenue increased 25.6% due to organic pricing growth of 17.2% and organic volume growth of 3.8% driven by the North Texas market and, to a lesser extent, the Intermountain West.
The East Segment operating income of $31.6 million was essentially flat to the prior year period and Adjusted EBITDA increased 2.0% to $47.6 million, despite the impact of divestitures and reflective of a favorable pricing and demand environment. Aggregates revenue increased 10.4% versus the prior year period. Organic aggregates volumes increased 3.4% driven by strong growth in Kansas and Virginia. Aggregates pricing increased 10.3% with solid growth across markets. Ready-mix concrete revenue increased 1.6% due to average selling price growth of 14.2% that more than offset lower volumes. Due primarily to divestitures, asphalt revenue decreased to $9.2 million.
The Cement Segment operating income increased 27.6% to $43.0 million. Adjusted EBITDA increased $9.6 million as revenue growth combined with greater contribution from Green America Recycling to more than offset inflationary conditions. In the second quarter, the Cement Segment reported a volume decreased of 0.3% and average selling price growth of 16.0%.