Exhibit 99.1
Summit Materials, Inc. Reports Third Quarter 2020 Results
First Nine Months of 2020 Net Income Attributable to Summit Inc of $102.8 million
- 3Q Net Income Attributable to Summit Inc. of $90.7 million
- 3Q Aggregates volumes increased 3.1%
First Nine Months of 2020 Adjusted EBITDA up 4.1% to $354.4 million despite economic uncertainty from COVID-19
DENVER, CO. - (October 27, 2020) - Summit Materials, Inc. (NYSE: SUM, “Summit,” "Summit Inc." or the “Company”), a leading vertically integrated construction materials company, today announced results for the third quarter of 2020.
For the three months ended September 26, 2020, the Company reported net income attributable to Summit Inc. of $90.7 million, or $0.79 per basic share, compared to net income attributable to Summit Inc. of $55.8 million, or $0.50 per basic share in the comparable prior year period. Summit reported adjusted diluted net income of $63.9 million, or $0.55 per adjusted diluted share as compared to adjusted diluted net income of $58.2 million, or $0.50 per adjusted diluted share in the prior year period.
Summit's net revenue decreased 3.1% in the third quarter of 2020 to $645.2 million, compared to $665.8 million in the third quarter of 2019, on lower east segment and cement revenue relative to a year ago. Net revenue increased $38.5 million to $1,562.9 million in the nine months ended September 26, 2020, primarily resulting from organic growth in aggregates and ready-mix concrete. The Company reported operating income of $100.6 million in the third quarter 2020, compared to $130.9 million in the prior year period, as the third quarter 2020 included $10.6 million of CEO transition and related stock compensation adjustments.
Operating income increased by $5.3 million in the first nine months of 2020 as compared to the first nine months of 2019, primarily as net revenue gains exceeded increases in costs of revenue and general and administrative expenses. Summit's operating margin percentage for the three and nine months ended September 26, 2020 decreased to 15.6% from 19.7%, and increased to.10.2% from 10.1%, respectively, from the comparable period a year ago, due to the factors noted above.
Net income attributable to Summit Inc., which included the reversal of an unrecognized tax benefit, increased 62.7% in the third quarter to $90.7 million as compared to $55.8 million. Net income attributable to Summit, Inc. was $102.8 million for the nine months ended September 26, 2020. Adjusted EBITDA decreased 8.1% in the third quarter to $177.7 million as compared to $193.3 million in 2019, and for the first nine months of 2020 Adjusted EBITDA increased 4.1% to $354.4 million.
For the three months ended September 26, 2020, sales volumes increased 3.1% in aggregates, and decreased 1.0% in ready-mix concrete, 6.4% in asphalt and 11.3% in cement relative to the same period last year. Average selling prices in the third quarter of 2020 decreased 2.2% in aggregates, and increased 0.5% in cement, 4.6% in ready-mix concrete and were flat in asphalt relative to the prior year period. We had organic price growth across all lines of business during the third quarter of 2020.
Anne Noonan, CEO of Summit Materials, commented, "Our West segment performance was the highlight of the quarter, delivering 16.5% growth in Adjusted EBITDA in Q3, as migration trends favor certain US central and western suburban and exurban markets that we serve. Company-wide, our adjusted cash gross profit margin has held steady. We are focused on consistent organic growth with investment in greenfields and Summit end markets that are underpinned by strong growth fundamentals. Sustainable organic growth serves as a foundation to support strategic acquisitions, such as, Multisources of Texas, and Valley Gravel of British Columbia, which we completed in the third quarter while keeping our leverage ratio steady at 3.5x. Most importantly, we continue to vigilantly practice safety and distancing protocols in response to the COVID-19 outbreak."
As of September 26, 2020, the Company had $288.8 million in cash and $1.9 billion in debt outstanding. The Company's $345 million revolving credit facility has $329 million available after letters of credit. For the nine months ended September 26, 2020, cash flow provided by operations was $218.0 million while cash paid for capital equipment was $140.0 million. Brian Harris, CFO of Summit Materials added, "During Q3, we strengthened our balance sheet by redeeming all of the outstanding $650 million 6.125% notes due 2023, which was our nearest term maturity, with proceeds from our issuance of $700 million of 5.250% notes due 2029. Summit reported over $617 million in available liquidity at quarter end."
Given the uncertainties relating to COVID-19, Summit is not providing Adjusted EBITDA guidance at this time. Noonan continued, "We continue to believe that it is prudent to forego providing guidance pending better visibility into the ultimate resumption of normal business conditions."
The Company is expanding its previously announced 2020 capital expenditure guidance to $175 million to $185 million, including $50 million to $60 million for greenfield projects. This is an increase from the Company's previous guidance of $145 million to $160 million.
Third Quarter 2020 | Results by Line of Business
Aggregates Business: Aggregates net revenues decreased by $1.1 million to $136.4 million in the third quarter 2020 when compared to the prior year period. Aggregates adjusted cash gross profit margin decreased to 64.2% in the third quarter 2020 as compared to 68.6% in the third quarter 2019 on differences in product mix. Aggregates sales volumes increased 3.1% in the third quarter 2020 when compared to the
prior-year period on higher volumes in Texas, partially offset by lower volumes in Missouri, Kentucky, and British Columbia. Average selling prices for aggregates decreased 2.2% in the third quarter 2020. On a mix-adjusted basis, Summit estimates that aggregates prices have increased by approximately 2.1% year-to-date in 2020.
Cement Business: Cement segment net revenues decreased 14.3% to $84.9 million in the third quarter 2020, when compared to the prior-year period, on lower sales volume of cement. Cement adjusted cash gross profit margin decreased to 45.1% in the third quarter, compared to 46.0% in the prior year period, as lower volumes resulted in higher unit plant costs. In addition, our solid waste processing facility continued to undergo repairs related to an explosion that occurred in April 2020. The Adjusted EBITDA impact from the down time at the facility was approximately $4.3 million in the third quarter. Organic sales volume of cement decreased 11.3% in the third quarter and organic average selling prices increased 0.5% when compared to the prior year period.
Products Business: Products net revenues were $321.8 million in the third quarter 2020, compared to $324.7 million in the prior year period. Products adjusted cash gross profit margin increased to 25.4% in the third quarter, versus 24.4% in the prior year period. Our organic average sales price for ready-mix concrete increased 4.6% and organic sales volumes of ready-mix concrete decreased 1.0%, as higher volumes in residential construction markets were offset by flat to slightly lower volumes in other parts of Texas (Permian) and Kentucky. Our organic average sales price for asphalt was flat, while asphalt organic sales volumes decreased 6.4%, as lower volume in Kentucky was offset by higher volumes in North Texas and Kansas.
Third Quarter 2020 | Results By Reporting Segment
Net revenue decreased by 3.1% to $645.2 million in the third quarter 2020, versus $665.8 million in the prior year period. The reduction in net revenue was primarily attributable to lower volume of cement, asphalt, ready-mix concrete and aggregates, partially offset by higher cement and ready-mix concrete prices. Aggregates reported average selling prices declined 2.2% in the third quarter 2020 relative to the prior year, but on a product mix adjusted basis, year to date aggregates pricing has increased approximately 2.1%. The Company reported operating income of $100.6 million in the third quarter 2020, compared to $130.9 million in the prior year period.
Net income increased to $92.8 million in the third quarter of 2020, which included a $32.9 million reversal of an unrecognized tax benefit, compared to income of $58.2 million in the prior year period. Adjusted EBITDA decreased 8.1% to $177.7 million in the third quarter of 2020, compared to $193.3 million in the prior year period on lower revenue.
West Segment: The West Segment reported operating income of $72.3 million in the third quarter 2020, compared to $58.5 million in the prior year period. Adjusted EBITDA increased to $95.5 million in the third quarter 2020, compared to $81.9 million in the prior year period. Improvements in operating income reflected increased demand for aggregates and ready-mix concrete in Utah and Texas. Aggregates revenue in the third quarter increased 12.2% over the prior year period, while organic average sales prices increased 4.4%. Ready-mix concrete revenue in the third quarter 2020 increased 3.6% over the prior year period, as organic volumes decreased 0.3% and were offset as organic average sales prices increased 3.9%, reflecting favorable market conditions in Utah and Texas. Asphalt revenue increased by 1.4% in the third quarter 2020 over the prior year period. While asphalt volumes decreased 1.0%, particularly in British Columbia, organic sales prices increased 2.4%, particularly in parts of Texas. The Company completed the acquisition of Multisources of Houston, Texas and Valley Gravel of Abbotsford, British Columbia, in the third quarter, both of which are primarily aggregates businesses.
East Segment: The East Segment reported operating income of $29.3 million in the third quarter 2020, compared to $55.5 million in the prior year period as lower asphalt revenues due to the ongoing fiscal constraints in Kentucky more than offset strength in ready-mix concrete. Adjusted EBITDA decreased to $56.9 million in the third quarter 2020, compared to $76.8 million in the prior year period. Aggregates revenue decreased 7.2%, resulting in part from a 5.6% decrease in organic volumes, notably in Kentucky and also in Missouri, where the Company was involved in significant floor repair work a year ago and operations have since returned to normal run rates. Aggregates average selling prices decreased 2.2% on a difference in product mix from the year-ago quarter. Ready-mix concrete revenue increased 3.6% as organic average selling prices increased 6.8% due in part to wind farm work in Kansas. Asphalt revenue decreased 30.7% as organic volumes decreased 17.8% on a lower contribution from Kentucky, while organic average selling prices decreased 7.0%.
Cement Segment: The Cement Segment reported operating income of $24.0 million in the third quarter 2020, compared to $31.5 million in the prior year period. The segment reported organic sales volumes and organic average selling prices decreased 11.3% and increased 0.5%, respectively, during the third quarter 2020 as compared to the prior year period. Adjusted EBITDA decreased to $35.1 million in the third quarter 2020, compared to $42.7 million in the prior year period as lower volumes resulted in higher unit plant costs. In addition, our solid waste processing facility continued to undergo repairs related to an explosion that occurred in April 2020. The Adjusted EBITDA impact from the down time at the facility was approximately $4.3 million in the third quarter.
Liquidity and Capital Resources
As of September 26, 2020, the Company had cash on hand of $288.8 million and borrowing capacity under its $345 million revolving credit facility of $329 million. The borrowing capacity on the revolving credit facility is currently fully available to the Company within the terms and covenant requirements of its credit agreement. As of September 26, 2020, the Company had $1.9 billion in debt outstanding.
Financial Outlook
The Company is expanding its previously announced 2020 capital expenditure guidance to $175 million to $185 million, including $50 million to $60 million for greenfield projects. This is an increase from the Company's previous guidance of $145 million to $160 million.
Webcast and Conference Call Information
Summit Materials will conduct a conference call on Wednesday, October 28, 2020, at 11:00 a.m. eastern time (9:00 a.m. mountain time) to review the Company’s third quarter 2020 financial results, discuss recent events and conduct a question-and-answer session.
A webcast of the conference call and accompanying presentation materials will be available in the Investors section of Summit’s website at investors.summit-materials.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.
To participate in the live teleconference on October 28, 2020:
Domestic Live: 1-877-823-8690
International Live: 1-825-312-2236
Conference ID: 6168543
Password: Summit
To listen to a replay of the teleconference, which will be available through November 4, 2020:
Domestic Replay: 1-800-585-8367
International Replay: 1-416-621-4642
Conference ID: 6168543
About Summit Materials
Summit Materials is a leading vertically integrated materials-based company that supplies aggregates, cement, ready-mix concrete and asphalt in the United States and British Columbia, Canada. Summit is a geographically diverse, materials-based business of scale that offers customers a single-source provider of construction materials and related downstream products in the public infrastructure, residential and nonresidential end markets. Summit has a strong track record of successful acquisitions since its founding and continues to pursue growth opportunities in new and existing markets. For more information about Summit Materials, please visit www.summit-materials.com.
Non-GAAP Financial Measures
The Securities and Exchange Commission (“SEC”) regulates the use of “non-GAAP financial measures,” such as Adjusted Net Income (Loss), Adjusted Diluted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Free Cash Flow, Net Leverage and Net Debt which are derived on the basis of methodologies other than in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). We have provided these measures because, among other things, we believe that they provide investors with additional information to measure our performance, evaluate our ability to service our debt and evaluate certain flexibility under our restrictive covenants. Our Adjusted Net Income (Loss), Adjusted Diluted Net Income, Adjusted Diluted EPS, Adjusted EBITDA, Further Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Free Cash Flow, Net Leverage and Net Debt may vary from the use of such terms by others and should not be considered as alternatives to or more important than net income (loss), operating income (loss), revenue or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or to cash flows as measures of liquidity.
Adjusted EBITDA, Adjusted EBITDA Margin, and other non-GAAP measures have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP. Some of the limitations of Adjusted EBITDA are that these measures do not reflect: (i) our cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) changes in, or cash requirements for, our working capital needs; (iii) interest expense or cash requirements necessary to service interest and principal payments on our debt; and (iv) income tax payments we are required to make. Because of these limitations, we rely primarily on our U.S. GAAP results and use Adjusted EBITDA, Adjusted EBITDA Margin and other non-GAAP measures on a supplemental basis.
Adjusted EBITDA, Further Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Cash Gross Profit, Adjusted Cash Gross Profit Margin, Adjusted Net Income (Loss), Adjusted Diluted Net Income, Adjusted Diluted EPS, Free Cash Flow, Net Leverage and Net Debt reflect additional ways of viewing aspects of our business that, when viewed with our GAAP results and the accompanying reconciliations to U.S. GAAP financial measures included in the tables attached to this press release, may provide a more complete understanding of factors and trends affecting our business. We strongly encourage investors to review our consolidated financial statements in their entirety and not rely on any single financial measure. Reconciliations of the non-GAAP measures used in this press release are included in the attached tables. 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.
Cautionary Statement Regarding Forward-Looking Statements
This press release 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,” “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 Inc.’s Annual Report on Form 10-K for the fiscal year ended December 28, 2019 and Quarterly Report on Form 10-Q for the fiscal period ended March 28, 2020, each as filed with the SEC, and any factors discussed in the section entitled “Risk Factors” in any of our subsequently filed SEC filings.
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| - | | the impact of the COVID-19 pandemic, or any similar crisis, on our business; |
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| - | | our dependence on the construction industry and the strength of the local economies in which we operate; |
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| - | | the cyclical nature of our business; |
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| - | | risks related to weather and seasonality; |
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| - | | risks associated with our capital-intensive business; |
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| - | | competition within our local markets; |
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| - | | our ability to execute on our acquisition strategy, successfully integrate acquisitions with our existing operations and retain key employees of acquired businesses; |
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| - | | our dependence on securing and permitting aggregate reserves in strategically located areas; |
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| - | | declines in public infrastructure construction and delays or reductions in governmental funding, including the funding by transportation authorities and other state agencies; |
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| - | | our reliance on private investment in infrastructure, which may be adversely affected by periods of economic stagnation and recession; |
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| - | | environmental, health, safety and climate change laws or governmental requirements or policies concerning zoning and land use; |
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| - | | costs associated with pending and future litigation; |
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| - | | rising prices for commodities, labor and other production and delivery inputs as a result of inflation or otherwise; |
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| - | | conditions in the credit markets; |
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| - | | our ability to accurately estimate the overall risks, requirements or costs when we bid on or negotiate contracts that are ultimately awarded to us; |
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| - | | material costs and losses as a result of claims that our products do not meet regulatory requirements or contractual specifications; |
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| - | | cancellation of a significant number of contracts or our disqualification from bidding for new contracts; |
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| - | | special hazards related to our operations that may cause personal injury or property damage not covered by insurance; |
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| - | | unexpected factors affecting self-insurance claims and reserve estimates; |
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| - | | our substantial current level of indebtedness, including our exposure to variable interest rate risk; |
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| - | | our dependence on senior management and other key personnel, and our ability to retain and attract qualified personnel; |
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| - | | supply constraints or significant price fluctuations in the electricity and petroleum-based resources that we use, including diesel and liquid asphalt; |
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| - | | climate change and climate change legislation or regulations; |
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| - | | unexpected operational difficulties; |
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| - | | interruptions in our information technology systems and infrastructure; including cybersecurity and data leakage risks; and |
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| - | | potential labor disputes, strikes, other forms of work stoppage or 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 press release. 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.
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
($ in thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended | | | | Nine months ended | | |
| | | September 26, | | September 28, | | September 26, | | September 28, |
| | | 2020 | | 2019 | | 2020 | | 2019 |
| | | | | | | | |
| Revenue: | | | | | | | | |
| Product | | $ | 540,904 | | | $ | 554,721 | | | $ | 1,334,471 | | | $ | 1,293,999 | |
| Service | | 104,342 | | | 111,126 | | | 228,421 | | | 230,389 | |
| Net revenue | | 645,246 | | | 665,847 | | | 1,562,892 | | | 1,524,388 | |
| Delivery and subcontract revenue | | 64,373 | | | 66,235 | | | 144,926 | | | 141,224 | |
| Total revenue | | 709,619 | | | 732,082 | | | 1,707,818 | | | 1,665,612 | |
| Cost of revenue (excluding items shown separately below): | | | | | | | | |
| Product | | 331,853 | | | 338,119 | | | 857,912 | | | 846,702 | |
| Service | | 72,778 | | | 78,625 | | | 162,479 | | | 167,550 | |
| Net cost of revenue | | 404,631 | | | 416,744 | | | 1,020,391 | | | 1,014,252 | |
| Delivery and subcontract cost | | 64,373 | | | 66,235 | | | 144,926 | | | 141,224 | |
| Total cost of revenue | | 469,004 | | | 482,979 | | | 1,165,317 | | | 1,155,476 | |
| General and administrative expenses | | 81,499 | | | 62,344 | | | 218,267 | | | 190,915 | |
| Depreciation, depletion, amortization and accretion | | 58,054 | | | 55,127 | | | 163,760 | | | 164,140 | |
| Transaction costs | | 445 | | | 751 | | | 1,517 | | | 1,449 | |
| Operating income | | 100,617 | | | 130,881 | | | 158,957 | | | 153,632 | |
| Interest expense | | 24,623 | | | 28,917 | | | 78,049 | | | 88,423 | |
| Loss on debt financings | | 4,064 | | | — | | | 4,064 | | | 14,565 | |
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| Other income, net | | (1,226) | | | (1,875) | | | (2,753) | | | (8,354) | |
| Income from operations before taxes | | 73,156 | | | 103,839 | | | 79,597 | | | 58,998 | |
| Income tax (benefit) expense | | (19,613) | | | 45,602 | | | (25,333) | | | 34,272 | |
| Net income | | 92,769 | | | 58,237 | | | 104,930 | | | 24,726 | |
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| Net income attributable to Summit Holdings (1) | | 2,039 | | | 2,480 | | | 2,115 | | | 1,331 | |
| Net income attributable to Summit Holdings | | $ | 90,730 | | | $ | 55,757 | | | $ | 102,815 | | | $ | 23,395 | |
| Earnings per share of Class A common stock: | | | | | | | | |
| Basic | | $ | 0.79 | | | $ | 0.50 | | | $ | 0.90 | | | $ | 0.21 | |
| Diluted | | $ | 0.79 | | | $ | 0.48 | | | $ | 0.90 | | | $ | 0.21 | |
| Weighted average shares of Class A common stock: | | | | | | | | |
| Basic | | 114,116,564 | | | 112,179,137 | | | 113,943,292 | | | 112,020,275 | |
| Diluted | | 114,472,171 | | | 115,505,122 | | | 114,457,276 | | | 112,497,610 | |
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(1) Represents portion of business owned by pre-IPO investors rather than by Summit.
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
($ in thousands, except share and per share amounts)
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| | | September 26, | | December 28, |
| | | 2020 | | 2019 |
| | | (unaudited) | | (audited) |
| Assets | | | | |
| Current assets: | | | | |
| Cash and cash equivalents | | $ | 288,757 | | | $ | 311,319 | |
| Accounts receivable, net | | 309,377 | | | 253,256 | |
| Costs and estimated earnings in excess of billings | | 44,001 | | | 13,088 | |
| Inventories | | 209,774 | | | 204,787 | |
| Other current assets | | 13,632 | | | 13,831 | |
| Total current assets | | 865,541 | | | 796,281 | |
| Property, plant and equipment, less accumulated depreciation, depletion and amortization (September 26, 2020 - $1,088,710 and December 28, 2019 - $955,815) | | 1,763,066 | | | 1,747,449 | |
| Goodwill | | 1,303,086 | | | 1,199,699 | |
| Intangible assets, less accumulated amortization (September 26, 2020 - $12,467 and December 28, 2019 - $10,366) | | 37,923 | | | 23,498 | |
| Deferred tax assets, less valuation allowance (September 26, 2020 - $1,675 and December 28, 2019 - $1,675) | | 241,900 | | | 212,333 | |
| Operating lease right-of-use assets | | 28,551 | | | 32,777 | |
| Other assets | | 52,103 | | | 55,519 | |
| Total assets | | $ | 4,292,170 | | | $ | 4,067,556 | |
| Liabilities and Stockholders’ Equity | | | | |
| Current liabilities: | | | | |
| Current portion of debt | | $ | 7,942 | | | $ | 7,942 | |
| Current portion of acquisition-related liabilities | | 31,968 | | | 32,700 | |
| Accounts payable | | 149,475 | | | 116,359 | |
| Accrued expenses | | 144,064 | | | 120,005 | |
| Current operating lease liabilities | | 8,193 | | | 8,427 | |
| Billings in excess of costs and estimated earnings | | 14,225 | | | 13,864 | |
| Total current liabilities | | 355,867 | | | 299,297 | |
| Long-term debt | | 1,893,212 | | | 1,851,057 | |
| Acquisition-related liabilities | | 12,876 | | | 19,801 | |
| Tax receivable agreement liability | | 327,957 | | | 326,965 | |
| Noncurrent operating lease liabilities | | 21,327 | | | 25,381 | |
| Other noncurrent liabilities | | 111,435 | | | 100,282 | |
| Total liabilities | | 2,722,674 | | | 2,622,783 | |
| Stockholders’ equity: | | | | |
| Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 114,123,911 and 113,309,385 shares issued and outstanding as of September 26, 2020 and December 28, 2019, respectively | | 1,142 | | | 1,134 | |
| Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 99 shares issued and outstanding as of September 26, 2020 and December 28, 2019 | | — | | | — | |
| Additional paid-in capital | | 1,257,506 | | | 1,234,020 | |
| Accumulated earnings | | 291,620 | | | 188,805 | |
| Accumulated other comprehensive income | | 975 | | | 3,448 | |
| Stockholders’ equity | | 1,551,243 | | | 1,427,407 | |
| Noncontrolling interest in Summit Holdings | | 18,253 | | | 17,366 | |
| Total stockholders’ equity | | 1,569,496 | | | 1,444,773 | |
| Total liabilities and stockholders’ equity | | $ | 4,292,170 | | | $ | 4,067,556 | |
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
($ in thousands)
| | | | | | | | | | | | | | |
| | | Nine months ended | | |
| | | September 26, | | September 28, |
| | | 2020 | | 2019 |
| Cash flow from operating activities: | | | | |
| Net income | | $ | 104,930 | | | $ | 24,726 | |
| Adjustments to reconcile net income to net cash used in operating activities: | | | | |
| Depreciation, depletion, amortization and accretion | | 164,397 | | | 166,997 | |
| Share-based compensation expense | | 23,119 | | | 15,424 | |
| Net gain on asset disposals | | (5,746) | | | (8,030) | |
| Non-cash loss on debt financings | | 4,064 | | | 2,850 | |
| Change in deferred tax asset, net | | (28,968) | | | 32,736 | |
| Other | | 760 | | | (1,609) | |
| Decrease (increase) in operating assets, net of acquisitions and dispositions: | | | | |
| Accounts receivable, net | | (48,361) | | | (121,196) | |
| Inventories | | (2,829) | | | 16,296 | |
| Costs and estimated earnings in excess of billings | | (30,912) | | | (31,085) | |
| Other current assets | | (75) | | | 5,635 | |
| Other assets | | 8,367 | | | 4,992 | |
| (Decrease) increase in operating liabilities, net of acquisitions and dispositions: | | | | |
| Accounts payable | | 21,729 | | | 52,423 | |
| Accrued expenses | | 3,164 | | | 8,447 | |
| Billings in excess of costs and estimated earnings | | 395 | | | 618 | |
| Tax receivable agreement liability | | 993 | | | 424 | |
| Other liabilities | | 3,012 | | | (5,805) | |
| Net cash provided by operating activities | | 218,039 | | | 163,843 | |
| Cash flow from investing activities: | | | | |
| Acquisitions, net of cash acquired | | (123,195) | | | (2,842) | |
| Purchases of property, plant and equipment | | (140,006) | | | (139,762) | |
| Proceeds from the sale of property, plant and equipment | | 8,848 | | | 13,035 | |
| | | | |
| Other | | 1,395 | | | (207) | |
| Net cash used for investing activities | | (252,958) | | | (129,776) | |
| Cash flow from financing activities: | | | | |
| | | | |
| | | | |
| Proceeds from debt issuances | | 700,000 | | | 300,000 | |
| Debt issuance costs | | (9,565) | | | (6,312) | |
| Payments on debt | | (666,892) | | | (264,906) | |
| | | | |
| Payments on acquisition-related liabilities | | (10,391) | | | (11,000) | |
| | | | |
| Proceeds from stock option exercises | | 329 | | | 2,559 | |
| Other | | (908) | | | (501) | |
| Net cash provided by financing activities | | 12,573 | | | 19,840 | |
| Impact of foreign currency on cash | | (216) | | | 174 | |
| Net (decrease) increase in cash | | (22,562) | | | 54,081 | |
| Cash and cash equivalents—beginning of period | | 311,319 | | | 128,508 | |
| Cash and cash equivalents—end of period | | $ | 288,757 | | | $ | 182,589 | |
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Revenue Data by Segment and Line of Business
($ in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended | | | | Nine months ended | | | | | | |
| | | September 26, | | September 28, | | September 26, | | September 28, | | | | |
| | | 2020 | | 2019 | | 2020 | | 2019 | | | | |
| Segment Net Revenue: | | | | | | | | | | | | |
| West | | $ | 351,510 | | | $ | 331,501 | | | $ | 835,026 | | | $ | 773,036 | | | | | |
| East | | 208,862 | | | 235,355 | | | 529,405 | | | 530,508 | | | | | |
| Cement | | 84,874 | | | 98,991 | | | 198,461 | | | 220,844 | | | | | |
| Net Revenue | | $ | 645,246 | | | $ | 665,847 | | | $ | 1,562,892 | | | $ | 1,524,388 | | | | | |
| | | | | | | | | | | | |
| Line of Business - Net Revenue: | | | | | | | | | | | | |
| Materials | | | | | | | | | | | | |
| Aggregates | | $ | 136,396 | | | $ | 137,528 | | | $ | 362,546 | | | $ | 354,050 | | | | | |
| Cement (1) | | 82,698 | | | 92,482 | | | 188,854 | | | 202,780 | | | | | |
| Products | | 321,810 | | | 324,711 | | | 783,071 | | | 737,169 | | | | | |
| Total Materials and Products | | 540,904 | | | 554,721 | | | 1,334,471 | | | 1,293,999 | | | | | |
| Services | | 104,342 | | | 111,126 | | | 228,421 | | | 230,389 | | | | | |
| Net Revenue | | $ | 645,246 | | | $ | 665,847 | | | $ | 1,562,892 | | | $ | 1,524,388 | | | | | |
| | | | | | | | | | | | |
| Line of Business - Net Cost of Revenue: | | | | | | | | | | | | |
| Materials | | | | | | | | | | | | |
| Aggregates | | $ | 48,829 | | | $ | 43,156 | | | $ | 146,015 | | | $ | 142,698 | | | | | |
| Cement | | 44,445 | | | 46,960 | | | 115,987 | | | 117,423 | | | | | |
| Products | | 240,084 | | | 245,396 | | | 596,672 | | | 579,286 | | | | | |
| Total Materials and Products | | 333,358 | | | 335,512 | | | 858,674 | | | 839,407 | | | | | |
| Services | | 71,273 | | | 81,232 | | | 161,717 | | | 174,845 | | | | | |
| Net Cost of Revenue | | $ | 404,631 | | | $ | 416,744 | | | $ | 1,020,391 | | | $ | 1,014,252 | | | | | |
| | | | | | | | | | | | |
| Line of Business - Adjusted Cash Gross Profit (2): | | | | | | | | | | | | |
| Materials | | | | | | | | | | | | |
| Aggregates | | $ | 87,567 | | | $ | 94,372 | | | $ | 216,531 | | | $ | 211,352 | | | | | |
| Cement (3) | | 38,253 | | | 45,522 | | | 72,867 | | | 85,357 | | | | | |
| Products | | 81,726 | | | 79,315 | | | 186,399 | | | 157,883 | | | | | |
| Total Materials and Products | | 207,546 | | | 219,209 | | | 475,797 | | | 454,592 | | | | | |
| Services | | 33,069 | | | 29,894 | | | 66,704 | | | 55,544 | | | | | |
| Adjusted Cash Gross Profit | | $ | 240,615 | | | $ | 249,103 | | | $ | 542,501 | | | $ | 510,136 | | | | | |
| | | | | | | | | | | | |
| Adjusted Cash Gross Profit Margin (2) | | | | | | | | | | | | |
| Materials | | | | | | | | | | | | |
| Aggregates | | 64.2 | % | | 68.6 | % | | 59.7 | % | | 59.7 | % | | | | |
| Cement (3) | | 45.1 | % | | 46.0 | % | | 36.7 | % | | 38.7 | % | | | | |
| Products | | 25.4 | % | | 24.4 | % | | 23.8 | % | | 21.4 | % | | | | |
| Services | | 31.7 | % | | 26.9 | % | | 29.2 | % | | 24.1 | % | | | | |
| Total Adjusted Cash Gross Profit Margin | | 37.3 | % | | 37.4 | % | | 34.7 | % | | 33.5 | % | | | | |
________________________________________________________
(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 is 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 is defined as cement adjusted cash gross profit divided by cement segment net revenue.
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Volume and Price Statistics
(Units in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended | | | | Nine months ended | | |
| Total Volume | | September 26, 2020 | | September 28, 2019 | | September 26, 2020 | | September 28, 2019 |
| Aggregates (tons) | | 16,383 | | | 15,895 | | | 42,476 | | | 40,630 | |
| Cement (tons) | | 733 | | | 826 | | | 1,686 | | | 1,821 | |
| Ready-mix concrete (cubic yards) | | 1,531 | | | 1,546 | | | 4,217 | | | 4,035 | |
| Asphalt (tons) | | 2,118 | | | 2,263 | | | 4,281 | | | 4,280 | |
| | | | | | | | |
| | | Three months ended | | | | Nine months ended | | |
| Pricing | | September 26, 2020 | | September 28, 2019 | | September 26, 2020 | | September 28, 2019 |
| Aggregates (per ton) | | $ | 10.89 | | | $ | 11.13 | | | $ | 10.96 | | | $ | 11.01 | |
| Cement (per ton) | | 116.17 | | | 115.54 | | | 116.22 | | | 114.95 | |
| Ready-mix concrete (per cubic yards) | | 117.12 | | | 111.94 | | | 115.97 | | | 110.22 | |
| Asphalt (per ton) | | 60.40 | | | 60.40 | | | 59.69 | | | 59.00 | |
| | | | | | | | |
| | Three months ended | | | | Nine months ended | | |
| | Percentage Change in | | | | Percentage Change in | | |
| Year over Year Comparison | | Volume | | Pricing | | Volume | | Pricing |
| Aggregates (per ton) | | 3.1 | % | | (2.2) | % | | 4.5 | % | | (0.5) | % |
| Cement (per ton) | | (11.3) | % | | 0.5 | % | | (7.4) | % | | 1.1 | % |
| Ready-mix concrete (per cubic yards) | | (1.0) | % | | 4.6 | % | | 4.5 | % | | 5.2 | % |
| Asphalt (per ton) | | (6.4) | % | | — | % | | — | % | | 1.2 | % |
| | | | | | | | |
| | Three months ended | | | | Nine months ended | | |
| | Percentage Change in | | | | Percentage Change in | | |
| Year over Year Comparison (Excluding acquisitions) | | Volume | | Pricing | | Volume | | Pricing |
| Aggregates (per ton) | | (5.1) | % | | 0.5 | % | | 1.3 | % | | 0.6 | % |
| Cement (per ton) | | (11.3) | % | | 0.5 | % | | (7.4) | % | | 1.1 | % |
| Ready-mix concrete (per cubic yards) | | (1.0) | % | | 4.6 | % | | 4.5 | % | | 5.2 | % |
| Asphalt (per ton) | | (6.4) | % | | — | % | | — | % | | 1.2 | % |
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Reconciliations of Gross Revenue to Net Revenue by Line of Business
($ and Units in thousands, except pricing information)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended September 26, 2020 | | | | | | | | |
| | | | | | | Gross Revenue | | Intercompany | | Net |
| | | Volumes | | Pricing | | by Product | | Elimination/Delivery | | Revenue |
| Aggregates | | 16,383 | | | $ | 10.89 | | | $ | 178,377 | | | $ | (41,981) | | | $ | 136,396 | |
| Cement | | 733 | | | 116.17 | | | 85,108 | | | (2,410) | | | 82,698 | |
| Materials | | | | | | $ | 263,485 | | | $ | (44,391) | | | $ | 219,094 | |
| Ready-mix concrete | | 1,531 | | | 117.12 | | | 179,261 | | | (137) | | | 179,124 | |
| Asphalt | | 2,118 | | | 60.40 | | | 127,919 | | | (406) | | | 127,513 | |
| Other Products | | | | | | 107,745 | | | (92,572) | | | 15,173 | |
| Products | | | | | | $ | 414,925 | | | $ | (93,115) | | | $ | 321,810 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine months ended September 26, 2020 | | | | | | | | |
| | | | | | Gross Revenue | | Intercompany | | Net |
| | Volumes | | Pricing | | by Product | | Elimination/Delivery | | Revenue |
| Aggregates | | 42,476 | | | $ | 10.96 | | | $ | 465,498 | | | $ | (102,952) | | | $ | 362,546 | |
| Cement | | 1,686 | | | 116.22 | | | 195,972 | | | (7,118) | | | 188,854 | |
| Materials | | | | | | $ | 661,470 | | | $ | (110,070) | | | $ | 551,400 | |
| Ready-mix concrete | | 4,217 | | | 115.97 | | | 489,034 | | | (324) | | | 488,710 | |
| Asphalt | | 4,281 | | | 59.69 | | | 255,535 | | | (634) | | | 254,901 | |
| Other Products | | | | | | 275,566 | | | (236,106) | | | 39,460 | |
| Products | | | | | | $ | 1,020,135 | | | $ | (237,064) | | | $ | 783,071 | |
SUMMIT MATERIALS, INC. AND SUBSIDIARIES
Unaudited Reconciliations of Non-GAAP Financial Measures
($ in thousands, except share and per share amounts)
The tables below reconcile our net income to Adjusted EBITDA by segment for the three and nine months ended September 26, 2020 and September 28, 2019.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of Net Income (Loss) to Adjusted EBITDA | | Three months ended September 26, 2020 | | | | | | | | |
| by Segment | | West | | East | | Cement | | Corporate | | Consolidated |
| ($ in thousands) | | | | | | | | | | |
| Net income (loss) | | $ | 72,871 | | $ | 31,013 | | $ | 27,324 | | $ | (38,439) | | $ | 92,769 |
| Interest (income) expense | | (1,192) | | (649) | | (3,393) | | 29,857 | | 24,623 |
| Income tax expense (benefit) | | 937 | | (193) | | — | | (20,357) | | (19,613) |
| Depreciation, depletion and amortization | | 22,973 | | 22,346 | | 11,066 | | 979 | | 57,364 |
| EBITDA | | $ | 95,589 | | $ | 52,517 | | $ | 34,997 | | $ | (27,960) | | $ | 155,143 |
| Accretion | | 144 | | 457 | | 89 | | — | | 690 |
| Loss on debt financings | | — | | — | | — | | 4,064 | | 4,064 |
| | | | | | | | | | |
| | | | | | | | | | |
| Transaction costs | | — | | — | | — | | 445 | | 445 |
| Non-cash compensation | | — | | — | | — | | 13,322 | | 13,322 |
| Other | | (263) | | 3,969 | | — | | 377 | | 4,083 |
| Adjusted EBITDA | | $ | 95,470 | | $ | 56,943 | | $ | 35,086 | | $ | (9,752) | | $ | 177,747 |
| Adjusted EBITDA Margin (1) | | 27.2 | % | | 27.3 | % | | 41.3 | % | | | | 27.5 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of Net Income (Loss) to Adjusted EBITDA | | Three months ended September 28, 2019 | | | | | | | | |
| by Segment | | West | | East | | Cement | | Corporate | | Consolidated |
| ($ in thousands) | | | | | | | | | | |
| Net income (loss) | | $ | 56,829 | | | $ | 56,640 | | | $ | 34,303 | | | $ | (89,535) | | | $ | 58,237 | |
| Interest expense (income) | | 411 | | | 182 | | | (2,731) | | | 31,055 | | | 28,917 | |
| Income tax expense | | 1,144 | | | 26 | | | — | | | 44,432 | | | 45,602 | |
| Depreciation, depletion and amortization | | 23,171 | | | 19,406 | | | 10,957 | | | 1,041 | | | 54,575 | |
| EBITDA | | $ | 81,555 | | | $ | 76,254 | | | $ | 42,529 | | | $ | (13,007) | | | $ | 187,331 | |
| Accretion | | 136 | | | 262 | | | 154 | | | — | | | 552 | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Transaction costs | | 1 | | | — | | | — | | | 750 | | | 751 | |
| Non-cash compensation | | — | | | — | | | — | | | 4,819 | | | 4,819 | |
| Other | | 244 | | | 309 | | | — | | | (689) | | | (136) | |
| Adjusted EBITDA | | $ | 81,936 | | | $ | 76,825 | | | $ | 42,683 | | | $ | (8,127) | | | $ | 193,317 | |
| Adjusted EBITDA Margin (1) | | 24.7 | % | | 32.6 | % | | 43.1 | % | | | | 29.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of Net Income (Loss) to Adjusted EBITDA | | Nine months ended September 26, 2020 | | | | | | | | |
| by Segment | | West | | East | | Cement | | Corporate | | Consolidated |
| ($ in thousands) | | | | | | | | | | |
| Net income (loss) | | $ | 130,409 | | | $ | 52,152 | | | $ | 44,432 | | | $ | (122,063) | | | $ | 104,930 | |
| Interest (income) expense | | (2,479) | | | (1,651) | | | (9,685) | | | 91,864 | | | 78,049 | |
| Income tax expense (benefit) | | 1,524 | | | (358) | | | — | | | (26,499) | | | (25,333) | |
| Depreciation, depletion and amortization | | 66,707 | | | 64,080 | | | 28,165 | | | 2,960 | | | 161,912 | |
| EBITDA | | $ | 196,161 | | | $ | 114,223 | | | $ | 62,912 | | | $ | (53,738) | | | $ | 319,558 | |
| Accretion | | 375 | | | 1,213 | | | 260 | | | — | | | 1,848 | |
| Loss on debt financings | | — | | | — | | | — | | | 4,064 | | | 4,064 | |
| | | | | | | | | | |
| | | | | | | | | | |
| Transaction costs | | — | | | — | | | — | | | 1,517 | | | 1,517 | |
| Non-cash compensation | | — | | | — | | | — | | | 23,119 | | | 23,119 | |
| Other | | 345 | | | 4,464 | | | — | | | (522) | | | 4,287 | |
| Adjusted EBITDA | | $ | 196,881 | | | $ | 119,900 | | | $ | 63,172 | | | $ | (25,560) | | | $ | 354,393 | |
| Adjusted EBITDA Margin (1) | | 23.6 | % | | 22.6 | % | | 31.8 | % | | | | 22.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Reconciliation of Net Income (Loss) to Adjusted EBITDA | | Nine months ended September 28, 2019 | | | | | | | | |
| by Segment | | West | | East | | Cement | | Corporate | | Consolidated |
| ($ in thousands) | | | | | | | | | | |
| Net income (loss) | | $ | 78,016 | | | $ | 73,448 | | | $ | 51,652 | | | $ | (178,390) | | | $ | 24,726 | |
| Interest expense (income) | | 1,905 | | | 2,237 | | | (7,395) | | | 91,676 | | | 88,423 | |
| Income tax expense | | 1,478 | | | 144 | | | — | | | 32,650 | | | 34,272 | |
| Depreciation, depletion and amortization | | 69,751 | | | 58,851 | | | 30,830 | | | 2,985 | | | 162,417 | |
| EBITDA | | $ | 151,150 | | | $ | 134,680 | | | $ | 75,087 | | | $ | (51,079) | | | $ | 309,838 | |
| Accretion | | 405 | | | 868 | | | 450 | | | — | | | 1,723 | |
| Loss on debt financings | | — | | | — | | | — | | | 14,565 | | | 14,565 | |
| | | | | | | | | | |
| | | | | | | | | | |
| Transaction costs | | 12 | | | — | | | — | | | 1,437 | | | 1,449 | |
| Non-cash compensation | | — | | | — | | | — | | | 15,424 | | | 15,424 | |
| Other | | (513) | | | (1,069) | | | — | | | (1,046) | | | (2,628) | |
| Adjusted EBITDA | | $ | 151,054 | | | $ | 134,479 | | | $ | 75,537 | | | $ | (20,699) | | | $ | 340,371 | |
| Adjusted EBITDA Margin (1) | | 19.5 | % | | 25.3 | % | | 34.2 | % | | | | 22.3 | % |
________________________________________________
(1) Adjusted EBITDA Margin is defined as Adjusted EBITDA as a percentage of net revenue.
The table below reconciles our net income attributable to Summit Materials, Inc. to adjusted diluted net income per share for the three and nine months ended September 26, 2020 and September 28, 2019. The per share amount of the net income attributable to Summit Materials, Inc. presented in the table is calculated using the total equity interests for the purpose of reconciling to adjusted diluted net income per share.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended | | | | | | | | Nine months ended | | | | | | |
| | | September 26, 2020 | | | | September 28, 2019 | | | | September 26, 2020 | | | | September 28, 2019 | | |
| Reconciliation of Net Income Per Share to Adjusted Diluted EPS | | Net Income | | Per Equity Unit | | Net Income | | Per Equity Unit | | Net Income | | Per Equity Unit | | Net Income | | Per Equity Unit |
| Net income attributable to Summit Materials, Inc. | | $ | 90,730 | | | $ | 0.77 | | | $ | 55,757 | | | $ | 0.48 | | | $ | 102,815 | | | $ | 0.88 | | | $ | 23,395 | | | $ | 0.20 | |
| Adjustments: | | | | | | | | | | | | | | | | |
| Net income attributable to noncontrolling interest | | 2,039 | | | 0.02 | | | 2,480 | | | 0.02 | | | 2,115 | | | 0.02 | | | 1,331 | | | 0.01 | |
| Adjustment to acquisition deferred liability | | — | | | — | | | — | | | — | | | — | | | — | | | (2,000) | | | (0.02) | |
| | | | | | | | | | | | | | | | |
| Loss on debt financings | | 4,064 | | | 0.04 | | | — | | | — | | | 4,064 | | | 0.03 | | | 14,565 | | | 0.13 | |
| Adjusted diluted net income before tax related adjustments | | 96,833 | | | 0.83 | | | 58,237 | | | 0.50 | | | 108,994 | | | 0.93 | | | 37,291 | | | 0.32 | |
| | | | | | | | | | | | | | | | |
| Changes in unrecognized tax benefits | | (32,885) | | | (0.28) | | | — | | | — | | | (42,422) | | | (0.36) | | | — | | | — | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Adjusted diluted net income | | $ | 63,948 | | | $ | 0.55 | | | $ | 58,237 | | | $ | 0.50 | | | $ | 66,572 | | | $ | 0.57 | | | $ | 37,291 | | | $ | 0.32 | |
| Weighted-average shares: | | | | | | | | | | | | | | | | |
| Basic Class A common stock | | 114,116,564 | | | | | 112,179,137 | | | | | 113,943,292 | | | | | 112,020,275 | | | |
| LP Units outstanding | | 3,053,115 | | | | | 3,368,058 | | | | | 3,086,820 | | | | | 3,404,231 | | | |
| Total equity units | | 117,169,679 | | | | | 115,547,195 | | | | | 117,030,112 | | | | | 115,424,506 | | | |
The following table reconciles operating income to Adjusted Cash Gross Profit and Adjusted Cash Gross Profit Margin for the three and nine months ended September 26, 2020 and September 28, 2019.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended | | | | Nine months ended | | |
| | | September 26, | | September 28, | | September 26, | | September 28, |
| Reconciliation of Operating Income to Adjusted Cash Gross Profit | | 2020 | | 2019 | | 2020 | | 2019 |
| ($ in thousands) | | | | | | | | |
| Operating income | | $ | 100,617 | | | $ | 130,881 | | | $ | 158,957 | | | $ | 153,632 | |
| General and administrative expenses | | 81,499 | | | 62,344 | | | 218,267 | | | 190,915 | |
| Depreciation, depletion, amortization and accretion | | 58,054 | | | 55,127 | | | 163,760 | | | 164,140 | |
| Transaction costs | | 445 | | | 751 | | | 1,517 | | | 1,449 | |
| Adjusted Cash Gross Profit (exclusive of items shown separately) | | $ | 240,615 | | | $ | 249,103 | | | $ | 542,501 | | | $ | 510,136 | |
| Adjusted Cash Gross Profit Margin (exclusive of items shown separately) (1) | | 37.3 | % | | 37.4 | % | | 34.7 | % | | 33.5 | % |
_______________________________________________________
(1) Adjusted Cash Gross Profit Margin is defined as Adjusted Cash Gross Profit as a percentage of net revenue.
The following table reconciles net cash provided by operating activities to free cash flow for the three and nine months ended September 26, 2020 and September 28, 2019.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended | | | | Nine months ended | | |
| | | September 26, | | September 28, | | September 26, | | September 28, |
| ($ in thousands) | | 2020 | | 2019 | | 2020 | | 2019 |
| Net income | | $ | 92,769 | | | $ | 58,237 | | | $ | 104,930 | | | $ | 24,726 | |
| Non-cash items | | 47,613 | | | 100,538 | | | 157,626 | | | 208,368 | |
| Net income adjusted for non-cash items | | 140,382 | | | 158,775 | | | 262,556 | | | 233,094 | |
| Change in working capital accounts | | 15,956 | | | (10,880) | | | (44,517) | | | (69,251) | |
| Net cash provided by operating activities | | 156,338 | | | 147,895 | | | 218,039 | | | 163,843 | |
| Capital expenditures, net of asset sales | | (32,041) | | | (29,163) | | | (131,158) | | | (126,727) | |
| Free cash flow | | $ | 124,297 | | | $ | 118,732 | | | $ | 86,881 | | | $ | 37,116 | |
Contact:
Karli Anderson
Vice President, Investor Relations
karli.anderson@summit-materials.com
303-515-5152
