Summit’s agg revenues, sales volumes up in first quarter 2020

Aggregate net revenues at Summit Materials increased 9.4 percent to $96.2 million in the first quarter of 2020, compared to the same period in 2019, the company reports.

Aggregate sales volumes also increased 9.7 percent in the first quarter compared to the prior-year period on higher organic volume growth, particularly in Kansas, Missouri, Utah and Virginia.

On average, selling prices increased 2.2 percent in the first quarter, compared to first-quarter 2019.

In addition, aggregate adjusted cash gross profit margin increased to 47.7 percent in the first quarter, compared to 43.2 percent on higher volumes, increased average selling prices and product mix.

“We experienced strong demand and favorable pricing conditions in our East and West regions throughout the first quarter, resulting in record Q1 net revenue,” says Tom Hill, CEO of Summit Materials.

The coronavirus’ impact

Hill

In response to the coronavirus (COVID-19) pandemic, Summit Materials’ employees continue to work as construction has been deemed essential in its markets. Extensive safety, hygiene and distancing protocols were implemented, and the company has been following CDC guidelines, Summit says.

In addition, employees in office-related functions have been working from home since early March.

“We implemented safety and distancing protocols at all of our operations in early March in response to the COVID-19 outbreak, and we are committed to the continuous improvement of those safety measures,” Hill says. “Construction has been deemed essential in all of Summit’s markets, and the health and safety of our workforce, customers and local communities is our highest priority.”

Summit is withdrawing its previously announced adjusted EBITDA (earnings before interest, tax, depreciation and amortization) guidance of $460 million to $500 million.

“While demand for our products and services has not yet been materially impacted by COVID-19, the near-term impact to construction activity is less clear,” Hill says. “We believe it is prudent to withdraw guidance at this time, pending better visibility into the extent of economic disruption related to COVID-19 and the ultimate resumption of normal business conditions.”

In addition, Summit is reducing its 2020 capital expenditure guidance to $145 million to $160 million, including $50 million to $60 million for greenfield projects, from its prior 2020 capital expenditure guidance of $185 million to $205 million, which included $65 million to $85 million for greenfield projects. Certain items have been deferred at Summit’s option to later periods, the company says.

“While we’ve only seen a limited impact from COVID-19 to date, we have been proactively engaging in contingency planning,” says Brian Harris, CFO of Summit Materials. “We are conducting regular reviews of our capital spending, cost structure, receivables and working capital under various demand scenarios. Summit has over $500 million in available liquidity and is in a strong financial position.”

Summit’s overall first quarter

Summit Materials reported a net loss of $45 million for the three months ending March 28 of this year.

Summit’s net revenue increased 11.9 percent in the first quarter of 2020, compared to first-quarter 2019, as aggregate and ready-mixed concrete contributed to the largest proportion of incremental net revenue.

However, the company reports an operating loss of $41.7 million in the first quarter of 2020, compared to $57.7 million in the first quarter of 2019.

Summit’s operating margin increased 12.2 percent for the three months ending March 28, compared to 18.8 percent in the same period of last year, on net revenue gains in excess of the company’s cost revenue, which was partially offset by increases in both general and administrative expenses.

By segment, for the three months ending March 28, organic sales volumes increased 9.7 percent in aggregate; 14 percent in concrete; and 0.7 percent in cement. Organic sales volumes in asphalt decreased 2.9 percent, compared to the prior-year period.

Organic average selling prices, by segment, increased 2.2 percent in aggregate; 6 percent in concrete; 2.6 percent in cement; and 4.1 percent in asphalt, compared to the prior-year period.

In addition, adjusted EBITDA increased 149.1 percent to $16.4 million in the first quarter, compared to $6.6 million in the same period last year.

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