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Increased sales volumes, pricing drive Summit’s first quarter 2017

By |  May 3, 2017

Summit Materials increased its net revenue by 24.5 percent to $259 million in the first quarter of 2017, although the company reported a $52.4 million loss in the quarter.

According to the The Associated Press, Summit had a loss of 50 cents per share.

The improvement in net revenue was largely attributable to acquisition-related sales volumes, higher organic sales volumes of aggregate, cement and asphalt, and higher organic sales prices on aggregate and cement, the company says.

Gross profit increased 29.3 percent to $66.7 million in the first quarter of 2017, versus $51.6 million in the prior-year period. Gross profit generated from the company’s aggregate and cement assets represented 50 percent of total gross profit in the first quarter 2017. That percentage is consistent with the prior-year period, Summit says.

Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) increased 62 percent year-over-year to $13.6 million, versus $8.4 million in the prior-year period.

“Our business performed ahead of expectations during the first quarter, as organic growth in materials sales volumes and average selling prices contributed to strong year-over-year increases in gross margins and adjusted EBITDA,” says Tom Hill, CEO of Summit Materials.

“Demand within our core early-cycle residential and commercial construction markets continues to accelerate, while a combination of federal- and state-level funding for critical infrastructure projects remains a significant opportunity for us, particularly in Texas where a combination of FAST Act, Proposition 1 and Proposition 7 funding combine to support robust multi-year investment in public infrastructure.”

Specifically, aggregate net revenues increased 23.5 percent to $61.6 million in the first quarter. Aggregate gross profit as a percentage of aggregate net revenues increased 43.6 percent in the quarter.

Also, organic aggregate sales volumes and average selling prices increased 0.6 percent and 2.9 percent, respectively, the company says.

Summit forecasts positive organic materials volume and price growth for 2017.

“Within our aggregates businesses, Utah, Virginia and the Carolinas are poised for another strong year, while our businesses in Austin (Texas) and Vancouver (British Columbia, Canada) have rebounded from prior-year levels, with both regions reporting solid organic volume growth in the first quarter.”

Considering the contributions from recently completed acquisitions, coupled with expectations for continued organic growth, Summit increased its full-year adjusted EBITDA guidance.

“For the full-year 2017, we project total adjusted EBITDA in the range of $430 million to $445 million, up from the prior range of $410 million to $425 million,” Hill says. “On a year-to-date basis, we have invested $180 million across six transactions, positioning us to meet or possibly exceed our full-year acquired EBITDA target of $40 million to $60 million per year. We are pleased with our strong start to the year and look forward to building on this momentum.”

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Kevin Yanik

About the Author:

Kevin Yanik is the editor-in-chief of Pit & Quarry magazine. Yanik can be reached at 216-706-3724 or kyanik@northcoastmedia.net.

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