4Q19 and Fiscal 2019 Results Overview Investor Presentation
Transcript of 4Q19 and Fiscal 2019 Results Overview Investor Presentation
4Q19 and Fiscal 2019 Results OverviewInvestor PresentationFebruary 5, 2020
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Legal Disclaimer
Forward-Looking Statements
This presentation includes “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that
do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “outlook,” “should,” “seeks,”
“intends,” “trends,” “plans,” “estimates,” “projects” or “anticipates” or similar expressions that concern our strategy, plans, expectations or intentions. All statements made relating to our estimated and
projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results are forward-looking statements. These forward-looking statements are subject to risks, uncertainties
and other factors that may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-
looking statements. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our
assumptions are reasonable, it is very difficult to predict the effect of known factors, and, of course, it is impossible to anticipate all factors that could affect our actual results. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or
conditions described in such statements or our objectives and plans will be realized. Important factors could affect our results and could cause results to differ materially from those expressed in our
forward-looking statements, including but not limited to the factors discussed in the section entitled “Risk Factors” in Summit Materials, Inc.’s (“Summit Inc.”) Annual Report on Form 10-K for the fiscal
year ended December 29, 2018, as filed with the Securities and Exchange Commission (the “SEC”), any factors discussed in the section entitled “Risk Factors” in any of our subsequently SEC
filings, including our Annual Report on Form 10-K for the fiscal year ended December 28, 2019, which is expected to be filed on or about the date of this presentation, and the following: our
dependence on the construction industry and the strength of the local economies in which we operate; the cyclical nature of our business; risks related to weather and seasonality; risks associated
with our capital-intensive business; competition within our local markets; our ability to execute on our acquisition strategy, successfully integrate acquisitions with our existing operations and retain
key employees of acquired businesses; our dependence on securing and permitting aggregate reserves in strategically located areas; declines in public infrastructure construction and delays or
reductions in governmental funding, including the funding by transportation authorities and other state agencies; environmental, health, safety and climate change laws or governmental requirements
or policies concerning zoning and land use; costs associated with pending or future litigation; shortages of or increases in prices for commodities, labor and other production and delivery inputs;
conditions in the credit markets; our ability to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us; material costs and
losses as a result of claims that our products do not meet regulatory requirements or contractual specifications; cancellation of a significant number of contracts or our disqualification from bidding for
new contracts; special hazards related to our operations that may cause personal injury or property damage not covered by insurance; our substantial current level of indebtedness, including our
exposure to variable rate risk; our dependence on senior management and other key personnel, and our ability to retain and attract qualified personnel; supply constraints or significant price
fluctuations in electricity and the petroleum-based resources that we use, including diesel fuel and liquid asphalt; climate change and climate change legislation or regulation; unexpected operational
difficulties; interruptions in our information technology systems and infrastructure, including cybersecurity and data leakage; and potential labor disputes, strikes and other forms of work stoppage and
other union activities. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary
statements. Any forward-looking statement that we make herein speaks only as of the date of this presentation. We undertake no obligation to publicly update or revise any forward-looking statement
as a result of new information, future events or otherwise, except as required by law.
Non-GAAP Financial Measures
Included in this presentation are certain non-GAAP financial measures, such as Adjusted EBITDA, Adjusted EBITDA Margin, Further Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted
(Diluted) Earnings Per Share, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Net Debt, Net Leverage, Free Cash Flow, and Cash Flow Return on Invested Capital, designed to
complement the financial information presented in accordance with U.S. GAAP because management believes such measures are useful to investors. These non-GAAP financial measures should
be considered only as supplemental to, and not superior to, financial measures provided in accordance with GAAP. Please refer to the appendix of this presentation for a reconciliation of the
historical non-GAAP financial measures included in this presentation to the most directly comparable financial measures prepared in accordance with GAAP.
Reconciliations of the non-GAAP measures used in this presentation are included or described in the tables attached to the appendix. Because GAAP financial measures on a forward-looking basis
are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures. For the same reasons we
are unable to address the probable significance of the unavailable information, which could be material to future results.
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Conference Call Agenda
Safe Harbor Disclosure
Karli Anderson, VP Investor Relations
Business Update
Tom Hill, CEO
Financial Update
Brian Harris, CFO
Management Outlook
Tom Hill, CEO
Q&A
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Business Update
Tom Hill, CEO
✓ Operating Income of $59.9 million, more than double Q4 2018
✓ Adjusted EBITDA of $121.1 million, up 29.6%
✓ Net Leverage Improved to 3.6x at Year-end
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✓ Net Revenue of $2.0 billion, up 6.4%
✓ Free Cash Flow of $180.9 million, up $170.5 million from 2018
Record Annual Results in 2019Volume and Price Growth in All Lines of Business, Led by Aggregates
✓ Adjusted EBITDA of $461.5 million, up 13.6%
✓ Operating Income of $213.6 million, up 31.4%
✓ Net Revenue of $506.3 million, up 13.7%
2019 Results compared to 2018
Q4 2019 Results Compared to Q4 2018
✓ Net Income of $59.1 million, up 74.2%
✓ Net Income of $36.4 million, compared to a loss of $18.6 million in Q4 2018
2020 Outlook
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2019 Performance & 2020 Outlook
Pricing
Margins
Costs
• Aggregates up 6.5% and Asphalt pricing up 6.2%
• Adjusted for mix, aggregates pricing increased ~4%
Margin Recovery
• Pricing caught up to 2017-18 cost acceleration
Lean processes & purchasing improvements
— Dredge loss & higher cement distribution costs
2019 Performance
• Mid-single digits price increases in Aggregates & RMC
• Cautiously optimistic on Cement pricing
Margin Improvement Potential
• Contribution from 2019 project investments
• Sustained price enhancement
• Proactive cost management
Performance improvements implemented
— Slight headwind from higher benefits and insurance
Volume• Aggregates up 9.5%, Cement up 2.8%
• Adjusting for mix, aggregates up 6%
• Low single digits volume increases expected in all lines
of business
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Outlook by End-Market
• Single family housing starts at their highest level since 2007(1), providing for a cautious but healthy outlook
• Supply and home ownership remain well below their peaks and historical averages
• Employment, interest rates and affordability favor a growing housing market in the near term
• After a soft start to 2019, architectural billings increased late in the year, led by the South, West, and Midwest(2)
• AIA chief economist “…recent fears about a downturn in construction activity have largely subsided”(3)
• We focus on low-rise commercial that follows residential development; less exposure to volatile high-rise construction
• 2020 Forecast public highway, street and related work expected to grow 6% in 2020 over 2019 spending(3)
• States continue to implement self-funding mechanisms:
o 27 states (11 Summit states) raised or adjusted gas taxes since 2013(4)
o 89% of state and local transportation investment ballot measures were approved in the November 2019 election (4)
• ARTBA forecasts 2.6% CAGR for U.S. highway, bridge and related construction spend through 2024(4)
Outlook Supported by Resurgence of Residential and Public Demand, Likely to Benefit Aggregates
(1) Source: US Census Bureau, January 17, 2020.
(2) Source: AIA Architectural Billings Index November 2019;
(3) Source: AIA Architectural Billings Index, December 2019;
(4) Source: ARTBA - 2020 Transportation Construction Market Forecast.
Residential
Non-
Residential
Public
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Greenfields
Projects
• 5 completed Aggregates Greenfields to date
• Utah, Texas (2 projects), Georgia, Missouri
• 3 Aggregates Greenfields under development
• Georgia (2 projects), Carolinas
• Greenfields spending:
• $25MM in 2019
• ~$65-$80MM in 2020
• ~$10-$15MM in 2021
• ~450 million tons of reserves
Recently acquired Aggregates property in Missouri
$0
$10
$20
$30
$40
$50
$0
$50
$100
$150
$200
$250
2014-2018 2019 2020 2021 2022 2023 2024
Greenfields Estimated CapEx and Forecast Adjusted EBITDA ($MM)
CapEx Incremental Incremental Adjusted EBITDA
~$45MM Adjusted
EBITDA per year
expected on
investment of
~$230MM
Cap
Ex
($M
M)
Adjusted E
BIT
DA
($MM
)
Recently commissioned crushing plant, Georgia, October 2019
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Financial Update
Brian Harris, CFO
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Net Revenue Bridge 2019 Increase led by Organic Growth
Net Revenue by Reporting Segment – 2018 vs. 2019 ($MM)
$1,909.3
$2,030.6
$41.2
$9.2
$82.1
$17.8
$9.9
$38.8
2018 West - Sale (1) West - Organic West - Acquisition East - Organic East - Acquisition Cement - Organic 2019
(1) Revenue from a West Segment non-core business sold in September 2018.
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Adjusted EBITDA Bridge2019 Increase led by Organic Growth
2019 Adjusted EBITDA vs. 2018 Adjusted EBITDA ($MM)
Organic growth in the East and West Segment Offset Higher Variable Costs in our Cement Business
$406.3
$461.5
$13.6
$2.4
$45.5
$4.1 $8.0 $2.4
2018 West - Organic West - Acquisition East - Organic East - Acquisition Cement - Organic Corp - Organic 2019
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Key Performance IndicatorsGAAP Financial Metrics
Net Revenue ($MM) Operating Income ($MM)
Net Income - Summit Inc. ($MM) Basic Earnings Per Share(1)
(1) Diluted share count includes all outstanding Class A common stock and LP Units not held by Summit Inc.
$445.1 $506.3
$1,909.3 $2,030.6
4Q18 4Q19 2018 2019
$28.5
$59.9
$162.5
$213.6
4Q18 4Q19 2018 2019
$(19.2)
$35.7 $33.9
$59.1
4Q18 4Q19 2018 2019
$(0.17)
$0.32 $0.30
$0.53
4Q18 4Q19 2018 2019
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Key Performance IndicatorsNon-GAAP Financial Metrics
Adj. Cash Gross Profit ($MM)
& Margin (%)(1,2)
Adj. Diluted Earnings Per Share (1,4)
Adj. EBITDA ($MM)
& Margin (%)(1,3)
(1) See appendix for reconciliation of these non-GAAP metrics to the most comparable GAAP metrics
(2) Adjusted Cash Gross Profit Margin is defined as Adjusted Cash Gross Profit divided by Net Revenue
(3) Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Net Revenue
(4) Adjusted diluted share count includes all outstanding Class A common stock and LP Units not held by Summit Inc.
Adj. Diluted Net Income ($MM)(1)
34.3%
$145.8 $185.7
$625.2 $695.8
4Q18 4Q19 2018 2019
32.8%36.7%
$93.4 $121.1
$406.3
$461.5
4Q18 4Q19 2018 2019
$(18.6)
$71.5
$17.4
$108.8
4Q18 4Q19 2018 2019
$(0.16)
$0.62
$0.15
$0.94
4Q18 4Q19 2018 2019
32.7%
21.0%23.9%
21.3%
22.7%
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Average Selling Price, Excluding Acquisitions
(year-over-year % change)
Average Selling Price, Including Acquisitions
(year-over-year % change)
Sales Volume, Excluding Acquisitions
(year-over-year % change)
Sales Volume, Including Acquisitions
(year-over-year % change)
Aggregates Cement
Aggregates Cement Ready-Mix
ConcreteAsphalt Aggregates Cement
Ready-Mix
Concrete Asphalt
2018 2019
Aggregates Cement
Price and Volume Analysis
3.3%
0.6%
6.5%
1.7%3.0%
0.6%
7.0%
1.7%
-0.1%
-8.6%
0.2%
-0.4%
9.5%
2.8%
0.1%
2.6%
14.2%
-8.6%
16.1%
2.7%
13.3%
2.8%0.6%
3.0%
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Adjusted Cash Gross Margin ScorecardAggregates steady, Cement recovering, Products & Services improving
Aggregates Business
Adjusted Cash Gross Profit Margin (%)(1,2)
Cement Segment
Adjusted Cash Gross Profit Margin (%)(1,2)
Products Business
Adjusted Cash Gross Profit Margin (%)(1,2)
Services Business
Adjusted Cash Gross Profit Margin (%)(1,2)
(1) See reconciliations of Adjusted Cash Gross Profit Margin in the appendix
(2) Adjusted Cash Gross Profit Margin is defined as Adjusted Cash Gross Profit divided by Net Revenue. In this presentation of the data, Adjusted Cash Gross Profit is
calculated by line of business, less net cost of revenue by line of business
46.4% 45.4% 44.3%40.3%
4Q18 4Q19 2018 2019
54.8%61.9%
59.4% 60.2%
4Q18 4Q19 2018 2019
21.6%23.9%
21.1% 22.1%
4Q18 4Q19 2018 2019
22.8%
29.3%
24.2% 25.4%
4Q18 4Q19 2018 2019
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Capital Allocation & Leverage
Capital Allocation Balanced Between Organic & Acquisition(1) CapEx % of Net Revenue Returning to Target of 7-8%
De-levered By Nearly 1 Full Turn at Year End 2019 from a Year Ago
Reduced Leverage Through EBITDA Recovery & Disciplined Use of Capital
($MM)
7% 7%
10%11%
12%
9%
7%
2014 2015 2016 2017 2018 2019
2019 reported Capex of $177MM was 9% of net revenue; deducting capex related to greenfield it was 7%
3.9X 3.9X
3.4X
4.5X
3.6X
4Q15 4Q16 4Q17 4Q18 4Q19
$409 $528
$369 $410 $283
$39
$76
$89
$153 $194
$221
$177
$485
$617
$522
$604
$503
$217
2014 2015 2016 2017 2018 2019
Acquisitions & Acq. Related Payments CapEx
(1) Acquisitions & Acquisition Related Payments are the sum of acquisitions net of cash acquired and payments on acquisition-related liabilities.
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Management Outlook
Tom Hill, CEO
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Management Outlook2020 growth will build on late 2019 momentum
Aggregates: low single digits volume growth and mid single digits price growth
Cement: low single digits volume and price growth
2020 Outlook
2020 Adjusted EBITDA Guidance 460-500($MM) 2020 Cap Ex Guidance Range 185-205($MM)
Products & Services: Margin improvement through price and volume
Leverage: Low 3’s based on the midpoint of 2020 adjusted EBITDA guidance
$185
$65$80
$205
Total - Low End Greenfields Low Greenfields High Total Cap Ex -High End
Estimated Greenfields Cap Ex
is embedded within
Total Cap Ex Range
Upsides & Downsides: Cement pricing, weather conditions, level of flood repair work
$461.5 $460
$480
$500
$350.0
$370.0
$390.0
$410.0
$430.0
$450.0
$470.0
$490.0
$510.0
2019 Actual 2020 Low 2020 Mid 2020 High
8% y/y growth to high end
4.8%
10.2%9.4%
6.6%
10.2%
DEC '15 DEC '16 DEC '17 DEC '18 DEC '19
Cash Flow Return on Invested Capital (CFROIC)(1) is above historical peer average
Starting 2020 from a Position of Strength
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De-levered By Nearly 1 Full Turn at Year End 2019 from a Year Ago
Net Debt to Adjusted EBITDA ratio
3.9x 3.9x
3.4x
4.5x
3.6x
4Q15 4Q16 4Q17 4Q18 4Q19
9.2%
Peer avg Why we are set up for success in 2020:
✓ Financial ratios significantly improved from a year ago
✓ Margin expansion through performance improvement
✓ Greenfields program generating Adjusted EBITDA
✓ Favorable end-market indicators
✓ Active M&A Pipeline
✓ Construction cycle positive outlook
(1) Cash Flow Return on Invested Capital (“CFROIC”) is calculated as Net cash provided by operating activities, divided by Total invested capital. Total invested capital is calculated as the sum of Total
debt, including current portion of long-term debt, excluding original issuance premium or discount and deferred financing costs, and Total stockholder’s equity. Peer average includes Martin Marietta
Materials and Vulcan Materials for the fiscal years ended 2014 through 2018. Source: Factset.
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APPENDIX
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Aggregates Pricing Has Proven to be Resilient Throughout Periods of Demand CyclicalityConsumption and Consumption per Capita Remain Below Long-Term Trendlines and Price has Increased 70 of last 75 Years (1)
EXHIBIT 1Favorable Industry Dynamics—Consumption & Price
Cement Outlook Supported by Below Trendline Consumption, High Cost of Entry and Demand Nearing CapacityConsumption and Consumption per Capita Remain Below Long-Term Trendlines(1)
(1) Source: USGS and PCA.
-
2.0
4.0
6.0
8.0
10.0
12.0
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1903
1906
1909
1912
1915
1918
1921
1924
1927
1930
1933
1936
1939
1942
1945
1948
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
Consumption 116 Yr. Consumption Trendline Consumption per Capita 116 Yr. Consumption per Capita Trendline
-
0.10
0.20
0.30
0.40
0.50
0.60
-
25,000
50,000
75,000
100,000
125,000
150,000
1900
1903
1906
1909
1912
1915
1918
1921
1924
1927
1930
1933
1936
1939
1942
1945
1948
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
Consumption 118 Yr. Consumption Trendline Consumption per Capita 118 Yr. per Capita Trendline
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EXHIBIT 2Long-Term Residential Fundamentals Remain Intact
(1) Source: JBREC.
(2) Source: Moody’s.
(3) Source: JBREC. Long-term averages vary by market (Minneapolis-Saint Paul and Lexington since 2007, all others since 2006).
Single Family Housing Starts/Permits In SUM Metro Markets
2018E vs. Peak . . . Weighted Average of 41% Below(2)
• Mortgage rates remain low relative to historical rates
• Permits, starts and sales remain below historical averages on a national level
• Home ownership remains below the historical average
• New housing demand exceeds new supply supported by low unemployment, housing formation rates and pent up millennial demand
• Survey of housing industry executives reports reflects that most do not expect to reach 1.5 million permits until 2022+(1)
Slow Recovery to Date, Certain Markets Starting to Overheat . . . But Fundamentals Are In Place for Extended, Steady Growth(1)
Estimated Months of Supply In SUM Metro Markets
Dec-18 vs. Long-Term Average . . . Average of 47% Below(3)
41% Below
28% Below43% Below
33% Below
46% Below
50% Below
42% Below
72% Below
52% Below
Houston DFW Las Vegas MSP KC SLC Wilmington Lexington U.S.
Dec-18 Variance to Long-Term Average
28% Below
27% Below
69% Below
59% Below
59% Below
13% Below
33% Below 65% Below
-
10,000
20,000
30,000
40,000
50,000
60,000
Houston DFW Las Vegas MSP KC SLC Wilmington Lexington
2018E Variance to Peak
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EXHIBIT 3Positive Outlook For Infrastructure Funding
(1) Source: FHWA, ARBTA, Bloomberg.
(2) ARTBA - 2020 Transportation Construction Market Forecast
Federal Highway Program Could See a ~5% CAGR, 2017-2022
($B) FAST Act Authorization and Additional Appropriations(1)
U.S. Construction Spending Forecast On Highway, Street, Bridge & Tunnel Related Work
Spending Rebounded in 2019 with Stable Growth Forecasted through 2023(2)
$43.3 $48.3 $49.4 $49.6
$54.4 $55.5
FY '17 Enacted FY'18 Enacted FY '19 FAST Act + AdditionalAppropriations
FY' 20 FAST Act + AdditionalAppropriations
FY '21 Projected (ARTBA) FY '22 Projected(ARTBA)
$89.4 $96.9 $98.9 $94.5 $92.3 $101.7 $106.9 $110.0 $113.3 $115.8
$52.3 $57.4 $61.6 $65.2 $67.5
$69.1 $71.8 $73.8 $75.4 $77.0
2014 2015 2016 2017 2018E 2019F 2020F 2021F 2022F 2023F
Public Highway, Steet, Bridge & Tunnel Private Highway, Street & Bridge
$141.7
$154.3
+8.9%
$160.5
+4.0%
$156.7
-.05%
$159.8
+.1%
$170.8
+6.9%
$178.7
+4.6%
$183.8
+2.9%
$188.7
+2.7%
$192.8
+2.2%
PrivatePublic
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% of Total Revenue(1)
Public vs. Private (%)(1)
Public Outlook
(Positive/Neutral/Negative)
Texas Missouri
(1) For the full-year 2019.
Private Outlook
(Positive/Neutral/Negative) +
++
+
EXHIBIT 4 Balanced Private-Public Revenue Profile
SUM’s Top 5 State Markets
Top 5 State Markets = 64% of Total Company Revenue in FY ‘19
Kansas
=
Utah
+
+
23%13% 12% 8%
2/3 Residential & Commercial and 1/3 Public Revenue Profile
=
40%60%
25%
75%
46%54%
32%
68%
Kentucky
70%
30%
22% 10%
+
==
7%
EXHIBIT 5Capital Structure Overview – 76.5% Fixed / 23.5% Floating Rate Borrowings
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(2)
(2)
(2)
(2)
Summit Materials, LLC Financials
Capital Structure Slide
($ in Millions) Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19 Int. Rates2 Maturity
Cash $128.5 $64.8 $67.7 $182.6 $311.3 1.75% n/a
Debt:
Revolver1 -- -- -- -- -- 5.01% Feb-2024
Senior Secured Term Loans $630.6 $627.4 $625.8 $625.8 $624.3 3.70% Nov-2024
Capital Leases and Other $49.1 $55.3 $58.9 $56.4 $56.4 5.50% Various
Senior Secured Debt $679.7 $682.7 $684.8 $682.2 $680.7 3.85%
Acq.-related Liab. $77.1 $72.0 $71.2 $70.5 $47.9 10.00% Various
5.125% Senior Notes $300.0 $300.0 $300.0 $300.0 $300.0 5.125% Jun-2025
8.5% Senior Notes $250.0 $0.0 $0.0 $0.0 $0.0 8.50% n/a
6.5% Senior Notes $0.0 $300.0 $300.0 $300.0 $300.0 6.50% Mar-2027
6.125% Senior Notes $650.0 $650.0 $650.0 $650.0 $650.0 6.125% Jul-2023
Senior Unsecured Debt $1,277.1 $1,322.0 $1,321.2 $1,320.5 $1,297.9 6.12%
Total Debt $1,956.9 $2,004.7 $2,005.9 $2,002.8 $1,978.5 5.34%
Net Debt $1,828.3 $1,939.9 $1,938.3 $1,820.2 $1,667.2
Est. Annual Cash Int. Run Rate $115.2 $114.5 $113.9 $111.5 $107.4
LTM Further Adj. EBITDA $408.4 $408.4 $411.9 $434.0 $461.5
Net Senior Secured Leverage 1.3x 1.5x 1.5x 1.2x 0.8x
Total Net Leverage 4.5x 4.8x 4.7x 4.2x 3.6x
1 Revolver Capacity post-usage for (undrawn) Letters of Credit is $329.8M as of 12/28/19
2 All rates as-of 12/28/2019; the Cash rate is our money-market cash-equivalent investment; Revolver is 75/25 1mL vs. Base
EXHIBIT 6Reconciliation of Operating Income to Adjusted Cash Gross Profit
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(1) Adjusted Cash Gross Profit Margin defined as Adjusted Cash Gross Profit divided by Net Revenue
December 28, December 29, December 28, December 29,
Reconciliation of Operating Income to Adjusted Cash Gross Profit 2019 2018 2019 2018
($ in thousands)
Operating income $ 59,926 $ 28,545 $ 213,558 $ 162,466
General and administrative expenses 72,011 62,634 262,926 253,609
Depreciation, depletion, amortization and accretion 52,962 54,247 217,102 204,910
Transaction costs 773 421 2,222 4,238
Adjusted Cash Gross Profit (exclusive of items shown separately) $ 185,672 $ 145,847 $ 695,808 $ 625,223
Adjusted Cash Gross Profit Margin (exclusive of items shown separately) (1) 36.7% 32.8% 34.3% 32.7%
Three months ended Year ended
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EXHIBIT 7Reconciliation of Gross Revenue to Net Revenue by LOB
Volumes
Aggregates 13,325 $ 10.95 $ 145,868 $ (30,248) $ 115,620
Cement 574 115.27 66,196 (2,741) 63,455
Materials $ 212,064 $ (32,989) $ 179,075
Ready-mix concrete 1,431 114.21 163,466 (102) 163,364
Asphalt 1,288 58.73 75,654 (68) 75,586
Other Products 91,295 (78,857) 12,438
Products $ 330,415 $ (79,027) $ 251,388
Three months ended December 28, 2019
Gross Revenue Intercompany Net
Elimination/Delivery Revenue Pricing by Product
Volumes
Aggregates 53,954 $ 10.99 $ 593,027 $ (123,357) $ 469,670
Cement 2,395 115.03 275,530 (9,295) 266,235
Materials $ 868,557 $ (132,652) $ 735,905
Ready-mix concrete 5,466 111.27 608,168 (546) 607,622
Asphalt 5,568 58.93 328,165 (213) 327,952
Other Products 377,900 (324,917) 52,983
Products $ 1,314,233 $ (325,676) $ 988,557
Year ended December 28, 2019
Gross Revenue Intercompany Net
Elimination/Delivery RevenuePricing by Product
EXHIBIT 8Reconciliation of Net Income (Loss) to Further Adjusted EBITDA
27
(1) Last twelve month (“LTM”) information corresponding to fiscal years (i.e., the periods ended December 29, 2018, December 30, 2017, December 31, 2016 and January 2, 2016 reflects our audited historical results for such fiscal years presented in accordance with U.S. GAAP. Information presented for other LTM periods (i.e., September 29, 2018, June 30, 2018, March 31, 2018, September, 30, 2017, July 1, 2017 and April 1, 2017) reflect unaudited trailing four quarter financial information calculated by starting with the results from the most recent audited fiscal year included in such LTM period and then (x) adding quarterly information for subsequent fiscal quarters and (y) subtracting quarterly information for the corresponding prior year period. For example, LTM September 29, 2018 has been calculated by starting with the data from the twelve months ended December 30, 2017 and then adding data for the nine months ended September 29, 2018, followed by subtracting data for the nine months ended September, 30, 2017. This presentation is not in accordance with U.S. GAAP. However, we believe this information is useful to investors as we use it to evaluate our financial performance for ongoing planning purposes, including a continuous assessment of our financial performance in comparison to budgets and internal projections. We also use such LTM financial data to test compliance with covenants under our senior secured credit facilities. This presentation has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Please see our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q for the relevant periods for the historical amounts used to calculate the LTM information presented.
(2) In the first quarter of 2018, we negotiated a $6.9 million reduction in the amount of a contingent liability from one of our acquisitions. As we had passed the period to revise the opening balance sheet for this acquisition, the adjustment was recorded as other income.
(3) EBITDA for certain completed acquisitions, net of dispositions, is pro forma for all acquisitions completed as of the date listed. (4) Further Adjusted EBITDA is calculated using trailing four quarter financial data to test compliance with covenants under our senior secured credit facilities(5) Adjusted EBITDA Margin defined as Adjusted EBITDA as a percentage of net revenue(6) Net Leverage defined as net debt divided by Further Adjusted EBITDA
($ in millions) December 28, December 29, December 28, September 28, June 29, March 30, December 29, September 29, June 30, March 31, December 30, September 30, July 1, April 1, December 31, January 2,
2019 2018 2019 2019 2019 2019 2018 2018 2018 2018 2017 2017 2017 2017 2016 2016
Net income (loss) 36$ (19)$ 61$ 6$ 22$ 21$ 36$ 99$ 110$ 125$ 126 87$ 64$ 34$ 46$ 1$
Interest expense 28 30 117 118 118 118 117 115 115 112 109 105 101 101 98 85
Income tax (benefit) expense (17) 43 17 78 53 48 60 229 (290) (299) (284) (494) 5 1 (5) (18)
Depreciation, depletion, amortization, and accretion expense 53 54 217 218 217 214 205 197 192 187 180 174 164 157 149 120
IPO/ Legacy equity modification costs - - - - - - - - - - - - 13 37 37 28
Loss on debt financings - - 15 15 15 15 - 5 5 5 5 - - - - 72
Gain on sale of business - - - - (12) (12) (12) (12) - - - - - - - -
Goodwill impairment - - - - - - - - - - 0 - - - - -
Tax receivable agreement expense (benefit) 16 (23) 16 (23) (23) (23) (23) (232) 269 271 271 518 17 15 15 -
Acquisition transaction expenses 1 - 2 2 2 3 4 5 6 8 8 8 7 5 7 10
Non-cash compensation 5 6 20 21 22 23 25 27 26 25 21 18 17 15 13 5
Other (2) (1) 2 (4) (1) (2) - (6) (6) (5) (6) - 8 9 12 11 (15)
Adjusted EBITDA 121$ 93$ 461$ 434$ 412$ 407$ 406$ 427$ 428$ 428$ 436$ 424$ 397$ 377$ 371$ 288$
EBITDA for certain completed acquisitions (3) - - - 1 2 6 11 22 17 25 25 21 11 20
Further Adjusted EBITDA (4) 461$ 434$ 412$ 408$ 408$ 433$ 439$ 450$ 453$ 449$ 422$ 398$ 382$ 308$
Net Revenue 506$ 445$ 2,031$ 1,969$ 1,929$ 1,925$ 1,909$ 1,905$ 1,854$ 1,783$ 1,752$ 1,699$ 1,605$ 1,539$ 1,488$ 1,290$
Adjusted EBITDA Margin (5) 23.9% 21.0% 22.7% 22.0% 21.4% 21.2% 21.3% 22.4% 23.1% 24.0% 24.9% 24.9% 24.7% 24.5% 25.0% 22.3%
Net Debt 1,667$ 1,820$ 1,938$ 1,940$ 1,828$ 1,845$ 1,866$ 1,760$ 1,551$ 1,639$ 1,570$ 1,468$ 1,483$ 1,205$
Total Net Leverage (6) 3.6x 4.2x 4.7x 4.8x 4.5x 4.3x 4.3x 3.9x 3.4x 3.7x 3.7x 3.7x 3.9x 3.9x
Three months ended Last Twelve Months Ended (1)
EXHIBIT 9Non-GAAP Reconciliation of Long-Term Debt to Net Debt
28
Reconciliation of Long-term Debt to Net Debt
($ in millions) Q4'19 Q3'19 Q2'19 Q1'19 Q4'18 Q3'18 Q2'18 Q1'18 Q4'17 Q3'17 Q2'17 Q1'17 Q4'16
Long-term debt, including current portion 1,874$ 1,876$ 1,876$ 1,877$ 1,831$ 1,831$ 1,832$ 1,834$ 1,835$ 1,835$ 1,837$ 1,539$ 1,540$
Acquisition related liabilities 48 71 71 72 77 37 38 60 64 53 48 44 47
Finance leases and other 56 56 59 56 49 42 46 44 36 38 38 41 39
Less: Cash and cash equivalents (311) (183) (68) (65) (129) (65) (50) (178) (384) (287) (353) (156) (143)
Net debt 1,667$ 1,820$ 1,938$ 1,940$ 1,828$ 1,845$ 1,866$ 1,760$ 1,551$ 1,639$ 1,570$ 1,468$ 1,483$
EXHIBIT 10Non-GAAP Reconciliation of Net Income (Loss) to Adj. EBITDA
29(1) Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of net revenue
Reconciliation of Net Income (Loss) to Adjusted
EBITDA by Segment
($ in thousands)
Net income (loss) $ 30,735 $ 32,859 $ 23,828 $ (51,025) $ 36,397
Interest expense (income) (171) (463) (3,094) 31,814 28,086
Income tax expense 440 (411) — (17,200) (17,171)
Depreciation, depletion and amortization 22,986 21,411 7,061 1,011 52,469
EBITDA $ 53,990 $ 53,396 $ 27,795 $ (35,400) $ 99,781
Accretion 114 273 106 — 493
Loss on debt financings — — — — —
Tax receivable agreement benefit — — — 16,237 16,237
Transaction costs 84 — — 689 773
Non-cash compensation — — — 4,979 4,979
Other (278) (523) — (371) (1,172)
Adjusted EBITDA $ 53,910 $ 53,146 $ 27,901 $ (13,866) $ 121,091
Adjusted EBITDA Margin (1) 21.6% 28.5% 39.9% 23.9%
Three months ended December 28, 2019
East Cement Corporate ConsolidatedWest
Reconciliation of Net Income (Loss) to Adjusted
EBITDA by Segment
($ in thousands)
Net income (loss) $ 11,738 $ 16,451 $ 21,461 $ (68,277) $ (18,627)
Interest expense 950 1,094 (2,021) 29,909 29,932
Income tax expense (benefit) (81) 27 — 43,552 43,498
Depreciation, depletion and amortization 23,627 20,191 9,345 703 53,866
EBITDA $ 36,234 $ 37,763 $ 28,785 $ 5,887 $ 108,669
Accretion 138 260 (17) — 381
Loss on debt financings — — — — —
Tax receivable agreement expense — — — (22,684) (22,684)
Gain on sale of business — — — — —
Transaction costs 1 — — 420 421
Non-cash compensation — — — 5,545 5,545
Other 1,310 (488) — 247 1,069
Adjusted EBITDA $ 37,683 $ 37,535 $ 28,768 $ (10,585) $ 93,401
Adjusted EBITDA Margin (1) 17.2% 23.7% 42.7% 21.0%
Three months ended December 29, 2018
Corporate ConsolidatedWest East Cement
EXHIBIT 11Non-GAAP Reconciliation of Net Income (Loss) to Adj. EBITDA
30
(1) Adjusted EBITDA margin is defined as Adjusted EBITDA as a percentage of net revenue(2) In the year ended December 28, 2019, we negotiated a $2.0 million reduction in the amount of a contingent liability from one of our acquisitions. In the year ended December 29, 2018, we negotiated a $6.9 million reduction in
the amount of a contingent liability from one of our acquisitions. As we had passed the period to revise the opening balance sheet for this acquisition, the adjustment was recorded in the respective period as other income.
Reconciliation of Net Income (Loss) to Adjusted
EBITDA by Segment
($ in thousands)
Net loss $ 108,751 $ 106,307 $ 75,480 $ (229,415) $ 61,123
Interest expense (income) 1,734 1,774 (10,489) 123,490 116,509
Income tax expense (benefit) 1,918 (267) — 15,450 17,101
Depreciation, depletion and amortization 92,737 80,262 37,891 3,996 214,886
EBITDA $ 205,140 $ 188,076 $ 102,882 $ (86,479) $ 409,619
Accretion 519 1,141 556 — 2,216
Loss on debt financings — — — 14,565 14,565
Tax receivable agreement benefit — — — 16,237 16,237
Transaction costs 96 — — 2,126 2,222
Non-cash compensation — — — 20,403 20,403
Other (2) (791) (1,592) — (1,417) (3,800)
Adjusted EBITDA $ 204,964 $ 187,625 $ 103,438 $ (34,565) $ 461,462
Adjusted EBITDA Margin (1) 20.0% 26.2% 35.6% 22.7%
Year ended December 28, 2019
West East Cement Corporate Consolidated
Reconciliation of Net Income (Loss) to Adjusted
EBITDA by Segment
($ in thousands)
Net income (loss) $ 109,363 $ 58,579 $ 83,148 $ (214,760) $ 36,330
Interest expense (income) 5,064 3,491 (6,815) 114,808 116,548
Income tax expense 535 32 — 59,180 59,747
Depreciation, depletion and amortization 91,224 74,463 34,996 2,622 203,305
EBITDA $ 206,186 $ 136,565 $ 111,329 $ (38,150) $ 415,930
Accretion 570 970 65 — 1,605
Loss on debt financings — — — 149 149
Tax receivable agreement benefit — — — (22,684) (22,684)
Gain on sale of business (12,108) — — — (12,108)
Transaction costs (3) — — 4,241 4,238
Non-cash compensation — — — 25,378 25,378
Other (2) (5,646) 497 — (1,098) (6,247)
Adjusted EBITDA $ 188,999 $ 138,032 $ 111,394 $ (32,164) $ 406,261
Adjusted EBITDA Margin (1) 18.7% 22.4% 39.7% 21.3%
Year ended December 29, 2018
West East Cement Corporate Consolidated
EXHIBIT 12Non-GAAP Reconciliation of Net Income to Adj. Diluted Net Income
31
(In thousands, except share and per share amounts)
Net income (loss) attributable to Summit Materials, Inc. $ 35,671 $ 0.31 $ (19,163) $ (0.17) $ 59,066 $ 0.51 $ 33,906 $ 0.30
Adjustments:
Net income attributable to noncontrolling interest 726 0.01 536 0.01 2,057 0.02 2,424 0.02
Adjustment to acquisition deferred liability — — — — (2,000) (0.02) (6,947) (0.06)
Gain on sale of business — — — — — — (12,108) (0.11)
Loss on debt financings — — — — 14,565 0.13 149 —
Adjusted diluted net (loss) income before tax related adjustments 36,397 0.32 (18,627) (0.16) 73,688 0.64 17,424 0.15
Tax receiv able agreement (benefit) ex pense 16,237 0.14 (22,684) (0.20) 16,237 0.14 (22,684) (0.20)
Unrecognized tax benefits 18,885 0.16 22,663 0.20 18,885 0.16 22,663 0.20
Adjusted diluted net income (loss) $ 71,519 $ 0.62 $ (18,648) $ (0.16) $ 108,810 $ 0.94 $ 17,403 $ 0.15
Weighted-av erage shares:
Basic Class A common stock 112,755,444 111,656,069 112,204,067 111,380,175
LP Units outstanding 3,278,133 3,435,518 3,372,707 3,512,669
Total equity units 116,033,577 115,091,587 115,576,774 114,892,844
Three months ended Year endedReconciliation of Net Income (Loss) Per Share to
Adjusted Diluted EPS December 29, 2018 December 28, 2019 December 29, 2018December 28, 2019
Per Equity Unit Net Income Per Equity UnitNet Income Per Equity Unit Net Loss Per Equity Unit Net Income
EXHIBIT 13Non-GAAP Reconciliation of Adj. Cash Gross Profit by LOB
32
(1) Net revenue for the cement line of business excludes revenue associated with hazardous and non-hazardous waste, which is processed into fuel and used in the cement plants and is included in services net revenue. Additionally, net revenue from cement swaps and other cement-related products are included in products net revenue.
(2) Adjusted cash gross profit calculated as net revenue by line of business less net cost of revenue by line of business. Adjusted cash gross profit margin is defined as adjusted cash gross profit divided by net revenue.(3) The cement adjusted cash gross profit includes the earnings from the waste processing operations, cement swaps and other products. Cement line of business adjusted cash gross profit margin defined as cement adjusted
cash gross profit divided by cement segment net revenue.
($ in thousands)
Segment Net Revenue:
West $ 249,694 $ 219,180 $ 1,022,730 $ 1,011,155
East 186,705 158,485 717,213 617,314
Cement 69,860 67,425 290,704 280,789
Net Revenue $ 506,259 $ 445,090 $ 2,030,647 $ 1,909,258
Line of Business - Net Revenue:
Materials
Aggregates $ 115,620 $ 93,063 $ 469,670 $ 373,824
Cement (1) 63,455 61,437 266,235 258,876
Products 251,388 216,063 988,557 967,459
Total Materials and Products 430,463 370,563 1,724,462 1,600,159
Serv ices 75,796 74,527 306,185 309,099
Net Revenue $ 506,259 $ 445,090 $ 2,030,647 $ 1,909,258
Line of Business - Net Cost of Revenue:
Materials
Aggregates $ 44,026 $ 42,091 $ 186,724 $ 151,838
Cement 31,726 30,156 149,149 134,597
Products 191,247 169,457 770,533 763,319
Total Materials and Products 266,999 241,704 1,106,406 1,049,754
Serv ices 53,588 57,539 228,433 234,281
Net Cost of Revenue $ 320,587 $ 299,243 $ 1,334,839 $ 1,284,035
Line of Business - Adjusted Cash Gross Profit (2):
Materials
Aggregates $ 71,594 $ 50,972 $ 282,946 $ 221,986
Cement (3) 31,729 31,281 117,086 124,279
Products 60,141 46,606 218,024 204,140
Serv ices 22,208 16,988 77,752 74,818
Adjusted Cash Gross Profit $ 185,672 $ 145,847 $ 695,808 $ 625,223
Adjusted Cash Gross Profit Margin (2)
Materials
Aggregates 61.9% 54.8% 60.2% 59.4%
Cement (3) 45.4% 46.4% 40.3% 44.3%
Products 23.9% 21.6% 22.1% 21.1%
Serv ices 29.3% 22.8% 25.4% 24.2%
Total Adjusted Cash Gross Profit Margin 36.7% 32.8% 34.3% 32.7%
December 29,
Year ended
2019 2018
December 28,
Three months ended
December 28, December 29,
2019 2018
EXHIBIT 14Non-GAAP Reconciliation of Free Cash Flow
33
($ in thousands)
Net income $ 36,397 $ (18,627) $ 61,123 $ 36,330
Non-cash items 41,330 104,714 249,698 263,565
Net income adjusted for non-cash items 77,727 86,087 310,821 299,895
Change in working capital accounts 95,614 52,724 26,363 (90,527)
Net cash provided by operating activities 173,341 138,811 337,184 209,368
Capital expenditures, net of asset sales (29,595) (33,724) (156,322) (199,050)
Free cash flow $ 143,746 $ 105,087 $ 180,862 $ 10,318
Year endedThree months ended
December 28, December 29,
2019 2018 2019 2018
December 28, December 29,
34
EXHIBIT 15Non-GAAP Reconciliation of Cash Flow Return on Invested Capital(CFROIC)
($ in thousands)
Net cash provided by operating activities $ 337,184 $ 209,368 $ 292,183 $ 244,863 $ 98,203
Total debt, including current portion of long-term debt,
excluding original issuance premium or discount and
deferred financing costs 1,874,255 1,830,611 1,835,375 1,540,250 1,296,750
Total stockholders’ equity 1,444,773 1,342,145 1,271,721 860,039 767,860
Total invested capital $ 3,319,028 $ 3,172,756 $ 3,107,096 $ 2,400,289 $ 2,064,610
Cash Flow Return on Invested Capital (1) 10.2% 6.6% 9.4% 10.2% 4.8%
Year ended
December 28,
2019
January 2,December 31,December 30,December 29,
2016201620172018
(1) Cash Flow Return on Invested Capital (“CFROIC”) is calculated as Net cash provided by operating activities, divided by Total invested capital. Total invested capital is calculated as the sum of Total debt, including current portion of
long-term debt, excluding original issuance premium or discount and deferred financing costs, and Total stockholder’s equity