State funding measures, tax reform fuel optimism at Summit

The fourth-quarter and 2017 year-end results continue to come in for the nation’s publicly traded aggregate producers.

Summit Materials is among the latest to publish its results. Upon releasing them, CEO Tom Hill offered an outlook for the months ahead at Summit and the construction materials industry.

“Within our public markets, we anticipate the impact of recently passed state funding measures, coupled with continued federal investment in transportation infrastructure through the FAST Act, will help to support ratable increases in road and highway investments,” Hill says. “In Texas, a market that represented more than 20 percent of our total revenue last year, the state Department of Transportation has forecasted that infrastructure funding will increase by more than 50 percent between fiscal 2018 and fiscal 2020, an exciting opportunity that stands to benefit our operating companies in the region.”

Hill

For 2018, Summit anticipates its adjusted earnings before interest, tax, depreciation and amortization (EBITDA) to be in the range of $490 million to $510 million. This includes contributions from three transactions completed earlier this year.

“As we complete additional acquisitions throughout the year, we intend to adjust this range accordingly,” Hill says. “We have strong momentum entering 2018, given opportunities for continued organic growth in our existing base of assets, together with favorable underlying demand conditions in our private and public end markets.”

The recent passage of federal tax reform legislation is another positive development for the company.

“As a result of this legislation, we estimate that our tax receivable agreement (TRA) liability has been reduced by approximately 40 percent to $332 million,” says Brian Harris, CFO of Summit Materials.