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Financial report summary
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U.S. ConcreteRisks
- Our business depends on activity within the construction industry and the strength of the economies in which we operate.
- Our industry is cyclical and requires significant working capital to fund operations.
- Weather can materially affect our business and we are subject to seasonality.
- Our industry is capital intensive and we have significant fixed and semi‑fixed costs. Therefore, our profitability is sensitive to changes in volume.
- Within our local markets, we operate in a highly competitive industry.
- The success of our business depends in part on our ability to execute on our acquisition and portfolio optimization strategy.
- The success of our business depends on our ability to successfully integrate acquisitions.
- Our long‑term success is dependent upon securing and permitting aggregate reserves in strategically located areas. The inability to secure and permit such reserves could negatively affect our earnings in the future.
- Our business could be impacted by rising interest rates.
- A decline in public infrastructure construction and reductions in governmental funding could adversely affect our earnings in the future.
- Our business relies on private investment in infrastructure, and periods of economic stagnation or recession may adversely affect our earnings in the future.
- Environmental, health and safety laws and regulations and any changes to, or liabilities or litigation arising under, such laws and regulations could have a material adverse effect on our financial condition, results of operations and liquidity.
- Shortages of, or increases in prices for, commodities, labor and other production and delivery inputs, including as a result of inflation, could restrict our ability to operate our business and could have significant impacts on our operating costs.
- If we are unable to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us, we may achieve lower than anticipated profits or incur contract losses.
- We could incur material costs and losses as a result of claims that our products do not meet regulatory requirements or contractual specifications.
- The cancellation of a significant number of contracts or our disqualification from bidding for new contracts could have a material adverse effect on our financial condition, results of operations and liquidity.
- Our operations are subject to special hazards that may cause personal injury or property damage, subjecting us to liabilities and possible losses, including punitive damages, which may not be covered by insurance.
- Unexpected factors affecting self‑insurance claims and reserve estimates could adversely affect our business.
- Our debt could adversely affect our financial condition, our ability to raise additional capital to fund our operations, our ability to operate our business, our ability to react to changes in the economy or our industry and our ability to pay our debts, which could divert our cash flow from operations to debt payments.
- Despite our current level of indebtedness, we and our subsidiaries may still incur substantially more debt. This could reduce our ability to satisfy our current obligations and further exacerbate the risks to our financial condition described above.
- The indentures governing the Senior Notes and the Credit Agreement contain covenants and provisions that are restrictive.
- Our success is dependent on our senior management team and our ability to retain qualified personnel.
- We use large amounts of coal, electricity, diesel fuel, natural gas, liquid asphalt and other petroleum‑based resources that are subject to potential reliability issues, supply constraints and significant price fluctuation, which could have a material adverse effect on our financial condition, results of operations and liquidity.
- Climate change and climate change legislation or regulations may adversely affect our business.
- Our business is subject to evolving corporate governance and corporate disclosure regulations and expectations, including with respect to environmental, social and governance matters, that could expose us to numerous risks.
- Unexpected operational difficulties at our facilities could disrupt operations, raise costs, and reduce revenue and earnings in the affected locations.
- We may incur significant costs in connection with pending and future litigation.
- We are dependent on information technology. Our systems and infrastructure face certain risks, including cyber security risks and data leakage risks.
- Labor disputes, strikes, other forms of work stoppage or slowdown or other union activities could disrupt operations of our businesses.
- Tax increases and changes in tax rules may adversely affect our financial results.
- Summit Inc.’s only material asset is its interest in Summit Holdings, and it is accordingly dependent upon distributions from Summit Holdings to pay taxes, make payments under the TRA and pay dividends.
- The market price of shares of our Class A common stock has fluctuated significantly, which could cause the value of your investment to decline.
- Future issuance of additional Class A common stock, or securities convertible or exchangeable for Class A common stock, may adversely affect the market price of the shares of our Class A common stock.
- Anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.
Management Discussion
- (1)Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures that we find helpful in monitoring the performance of our business. See “Non-GAAP Performance Measures” below for the definitions of Adjusted EBITDA and Adjusted EBITDA Margin and for a reconciliation of Adjusted EBITDA to net income, which is the most directly comparable GAAP measure.
- Net revenue increased $220.7 million in the year ended December 30, 2023, primarily resulting from increases in our average sales prices and our acquisition program, which more than offset a $73.5 million decrease in net revenues due to divestitures. Of the increase in net revenue, $102.8 million was from increased sales of materials, $101.3 million from increased sales of products and $16.5 million from increased service revenue. We generated organic volume growth of 10.1% in asphalt, offset by a decrease of 3.1%, 6.8% and 12.2% in aggregates, cement and ready-mix concrete, respectively, during 2023 over the prior year period. We had organic price growth in our aggregates, cement, ready-mix and asphalt lines of business of 14.2%, 13.2%, 10.7% and 13.9%, respectively, during 2023.
- Operating income increased by $41.6 million in 2023 as compared to 2022, as increases in revenue exceeded inflationary impacts on our cost of revenue and more than offset higher general and administrative expenses resulting from adjustments to estimates of health care and short term incentive amounts and $25.6 million of transaction and integration costs related to our combination with Argos USA.