Aggregate revenue, pricing up at Summit Materials

Hill

Summit Materials‘ net revenue in aggregate increased 23 percent in the second quarter this year to $103.7 million.

The company’s adjusted cash gross profit margin declined to 64.8 percent in the quarter, versus 68.3 percent in the prior-year period.

Aggregate sales volumes increased 2.3 percent in the quarter, due mainly to higher volumes in the company’s east region, which more than offset a decline in sales volumes in the west region.

Average selling prices on aggregate, meanwhile, jumped 3.6 percent in the second quarter due to year-over-year improvements in prices within both the west and east regions, the company says.

“Demand conditions in most of our markets are strong and are expected to remain so into 2019 and beyond,” says Tom Hill, CEO of Summit Materials. “Within our private markets, we are seeing sustained growth in new single-family home construction, given low inventories and positive demographic trends, while in our public markets, state transportation funding measures in Texas, coupled with steady increases in federal subsidies, are contributing to increased lettings activity.

“In July 2018, aggregates shipments per day increased 5 percent versus the prior-year period and 13 percent versus June 2018,” Hill adds.

As a whole, Summit Materials’ net revenue in the second quarter increased 14.8 percent to $549.2 million. The improvement was primarily attributable to both organic and acquisition-related contributions, offset by a decline in cement.

The pace of cost inflation in raw materials, freight, labor and fuel exceeded Summit’s expectations in the first half of 2018.

“Although we anticipated some measure of cost inflation entering the year, the effective date of our announced price increases lagged behind the impact of higher costs incurred by our business,” Hill says. “Importantly, our average selling prices on both materials and products have gained traction entering the third quarter, which we expect will offset these higher variable costs in the second half of the year.”