SUM - Earnings call 3 2021 | Summit Materials, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Summit Materials Third Quarter 2021 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Karli Anderson. Please go ahead.

Karli Anderson

Third Results Materials Call. Summit to Quarter Conference XXXX Welcome our release operating We press detailing financial issued a yesterday and results. control. all of financial This which, are call updated operating on key an to section and statements, of on presentation investor Summit are our and data, the uncertain and website. Management's Investors is accompanied forward-looking supplemental today's nature, by workbook call by our include of Materials their posted which outside responses commentary and questions highlighting may

these based vary and a Although are beliefs, actual material expectations statements management's current forward-looking on results in may way.

with of the annual SEC. to latest Factors For some a actual the of cause section that report results on discussion please Risk the see of filed factors Form Materials' could XX-K, Summit differ, is which

historical Noonan. find business financial Brian our call will reconciliations in today's release. Today's the remarks. concluding Anne our a Harris, begin Anne provide with financial can CEO, discussed Then of in our review, measures press and call a will CFO, provide will from non-GAAP update You

the then and We question limit we asks analysts Please your line as so possible questions. available. can for one many as in the the have accommodate return to we to then open queue time will

call to the turn I'll that, With Anne. over

Anne Noonan

you Good as Call. I'll Summit Quarter we at morning, start start everyone, Third thank our for safety. with today and joining XXXX Earnings all things

safety-first a zero-harm employees. all of among for mindset striving are We X,XXX Summit's

for assessing have and excellence, well to purposes. help as assessment of As tech-enabled center the that we transitioned with risk part our audit of of safety as oversight should tool a process risk

improvement. to and performance safety for committed expectations high setting are continuous We are

our adjusted theme of overview Summit an in basis results. leadership points be operating our financial of Net beginning let's XXX $XXX.X strategy prior period. profit the million by reflected and in turn expanded performance. an increase of third year our quarter is to cash margin and to Now X versus market Slide revenue The reflected X.X%, gross for Elevate

QX this discuss X factors I'll drove adjusted EBITDA that performance. increased X.X%.

a QX, commitment First especially growth we impact is ongoing In our business. how on team's with of having go market, value to excellence, we lines respect pricing. to reported pricing which real all in positive is commercial to

strong ex-urban includes in ability energy of operating demand strength dynamics conditions and the markets. normalized the in residential as is the we markets as and This letting and Lake more Missouri, a to ahead a serve, continued rural pursuit Kentucky third our and Second City such in inflation with far resumption markets combination of that such hedging persistent operational Houston. our program has of excellence. our and actions, pricing Salt And through thus been stay of and

presented a that current on in cost operating finer we supply environment. of chain mindful and are by To point the the very put topic, inflation challenges constraints

we price on in cost focused done very are that ensure We to mitigation execution QX. expand as to continue our margins and have we

can possible placed For the targeted the we assure not forward Summit that. we every purchased you early multiple We orders is markets. some to challenges example, acknowledge Summit immune for global economy, increases take in and energy to by address will that price presented that driven action but equipment,

wet expected volume working cement they and Ready-mix lower robust, X.X% X%. volumes volumes in was where increasing primarily were due fewer than aggregates QX had growth with volumes up to slightly in materials days. conditions Texas

mid-single-digit and from in cement asphalt. in primarily divestiture the pricing We aggregates, ready-mix, the modest were volumes Asphalt down reported combined gains with more growth of business. XX.X%, resulting

make all to Stepping picture, big we look across Summit back progress Elevate goals. the to continue at

leverage X.Xx First, X.Xx prior to our debt of to net the versus EBITDA, improved an improvement year.

down XXXX $XXX and third debt as we paid target Xx notes our our quarter. below in well now is in leverage million Our retired the

XX.X%. to a on increased EBITDA margin XX.X% we to adjusted trailing XXX in while points improved QX, our XX-month basis Next, basis,

Elevate divestitures Summit XXXX. X Horizon were These of progressing addition part are completed half our first is strategy. of the of X several in in currently strategic Summit the that to

and in to for through. asset-light higher exiting of are use proceeds the those some We process of drive converting an noncore positions, model market to nonleading businesses aggregates strategic more or pull generating

of All X% resulting meaningful year-end. ROIC, improvement are activities these X.X%, now at up in standing in from a at

asset-light Summit's principles in is approach efficiency. grounded of capital

has our narrow dispositions described, returning capital. to parts I focus addition disposition of just contribute to their These capital asset serve the are return business to broader increase Summit's divestitures ideas helping upon goal asset to In invested reducing the on our executing. management team our teams also we which our highest the and surfaced base,

outlook, As of we impact EBITDA to the foregone growth model full divested businesses. in million approximately position those conversion asset-light and our from profile company year absorb $X.X the organic evaluate we Summit's believe the

consideration Another Last million approximately with $XX involves which outlook performance. XXXX EBITDA. our reporting our included XX for comparing Summit provided year weeks, incremental of

quarter, fourth be By season that and need a XXXX can be XX-week contrast, weather, year. by short the And to mindful reporting of is cut uncertainty. in we construction any standard

are season. adjusted price northern consideration control factors, we full unchanged. operate our EBITDA While in and terms we leaving is and some control staying XXXX to guidance an realization year of we in always early very there of where end the of ability are risk self-help, In ahead backlogs are markets while by to team's strong, these what of can we very our encouraged inflation through

X.X%, a ago Revenue Asphalt Asphalt wet in Ready-Mix in X.X% versus the in primarily conditions, XXXX Turning more level. to divestiture-driven segments third Slide year We QX a offset Paving and EBITDA, quarter Cement a and by X net was in fewer for Texas, The respectively, Aggregates quarter. East West year and decrease nice in ago to available resulted the and than growth saw jobs. Ready-Mix reported performance complete revenue versus revenues. quarter. down rebound segment and Moreover, days at adjusted the in and

to concrete all lines pricing of Net volume were XX.X%, across and our from ready-mix aggregates farm business. Despite net higher this, growth respectively. as year adjusted the revenue for quarter. offset ago partially in relative the was East segment XX.X% on volumes fewer projects well excellent This up delivered East EBITDA, asphalt performance growth benefited by lower and revenue as and wind which

our adjusted strong and X.X% volume finally, as And improvement. X% revenue at drive EBITDA XX% business quarter higher gains net growth pricing organic Cement had a helped

Our Green is recycling America full facility, which cement operational up ramping plants, fuel now to alternative provides one our of and production. for

that strategic as Turning X will of year to priorities the this strategy. Slide X, earlier laid out see Elevate you part Summit our key we

simply completed rural this where year our and divestitures position enhancing Summit not be to have where we September path included not we is #X ex-urban a will a update you #X aim results. leadership not when on grow through invest did situation did and quarter market of clear First businesses in we business. positions. several the have to The ideal and the we currently or of owner each more divestitures and have markets Summit can as progress improve or was report We leading that in our we forward process, financial

some of ideal pillar. which These our approach, the converted the we asset-light businesses owner. to an divestitures were where We not is asset-intensive were second strategic

both coming and as aggregates we see However, our impact the on ROIC asset-light strong they start margins. favorable will deals impact to retained position. those quarters, In the you a of have still

a integrated production. grow SASB-compliant you'll opportunities that Our reaching with to social socially some We of early In as solution believe to responsibility innovation recently compliance reducing creation construction pillar we emissions, to waste are goal took to, step and although SASB And social our early, a is at the that aimed notable initiatives significant provider. critical first taking from that responsibility still point we third our is material vision water for and cement we our accomplishments first emissions sustainability be impact. strategic presents report, towards our responsible report. baseline release to the value it's completing including several approach most business, including have find the

We our executive gas potentially landfill gender we achieved Board business the Kansas at among network. in parity underway with on expand And to and landfills have officers. scoping to are solution methane in the additional that capturing

by we journey, to reduction and still So our are in we the to us challenges encouraged progress strategy plan the future while thus impact in sustainability tackle targets front of and XXXX. far in as it's early eager publish our

business fourth business-critical adjusted centers EBITDA our our performance Summit partnerships, around services we is to Utilizing these and innovation. to and advance Underpinning enablers our of us the Together, priority university enhance industry will priorities finally, standardization Enterprise. achieve products including move target. and and plan are our strategic portfolio enhance enablers, across And capabilities efforts. strategic these to help critical excellence

and see in where over introduced that On graphic Investor strategic X X, Slide execution Summit a that We're our X, building Day Elevate Elevate shedding we you the underperforming are our on and practices during focus Slide Horizon expertise. innovation you'll plan business standardizing deliverables and X, On Summit social summarizes scorecard. tomorrow's cultivating horizons. we noncore Summit a full the best with responsibility and/or across businesses, see

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that up where XX% is than asset-light capital greater points is XX XX than quarter it portfolio and QX. better versus model an believe strategic goal sense, invested acting pursuing maximizing Our ROIC achievable. our by actively conducting X.X% utilization and and on of asset third basis regular on points return makes reviews, of We basis year-end

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results closer to the our getting to Summit play continue QX game. our objectives, long us Elevate While are we

we Although progress, future be have not the path notched linear. always may good

and essential promise in and we our improvement operate shareholders. the can leverage, we adjusted team, as business view a steady that we align with as how net However, EBITDA interest margin to ROIC

Slide optimization X our we've On goals. of on track snapshot progress, provided X, portfolio remain while our we with Horizon a

or We goal noncore to halfway divest assets. XX our to roughly are XX towards underperforming

report. have We currently and we on update each completion in when quarter process, divestitures several will we

To generated $XXX.X have divestitures date, in the million proceeds.

just our of over are goal we stated halfway $XXX million. towards So

capital markets entering or enabling proceeds and leverage, strategic reducing which long-term of use growth objectives. priority priorities, will allocation ultimately our expanding flexibility, M&A Our follow maximizing on center through our

are pursuing growth in that sustainable an strategy, focused connective Jefferson between Northern example we XX, marketed underpinned markets. Stone where fundamentals Picture will markets its Slide investor that priority an Strategically aggregates by Products, its And and strong hosted in that of of Georgia, XX location a provides our growth. aggregates tour greenfield on on as Slide position finally, we development on foster Quarry is Summit September. Georgia located is terrific ex-urban a and tissue rural organic are

plant production giving developed manage a plant also plant site clean, we acreage, and to plant to a At labor-efficient inventory water best benefits. discharge. adjust so well-situated for employees address was us can unit low working turns minimize is runoff The optimize several production changes cost in a Jefferson, maximize and entire demand customers. optimize and designed is environment very put waste water graded quickly design and and The usable market, we flexible high-growth minimize capital. to The to site in

$XX million greenfields. for complement cumulative spending part in EBITDA approximately in at growth. generated these $XX adjusted will of Expected Summit XXXX they investment our It provide a avenue sustainable XXXX. $XXX by of full to as from that operation, long-term approximately greenfield is of once in million These on existing $XX annualized generate million are XXXX $XX on and with organic estimated basis projects million an another is capital projects million business greenfields

call financial to a results. over With turn that, Brian I'll our discussion of the for

Brian Harris

X.X% Slide Anne. On third you, aggregates, on $XXX.X a conditions. and ready-mix ago or provided to million bridge revenue the our net XXXX XXXX in increased to QX Thank XXXX. of comparing XX, we've net quarter Summit's year QX the revenue compared third $XXX.X of and quarter in concrete pricing XXXX growth favorable relative to revenue due higher to million to market $XX cement million

benefit of asphalt from organic the revenue associated and $XX.X and volumes. for did see paving year the Lake West of prior in still that last strong acquisitions operations third Salt impacted for declined ready-mix offset year. revenue working days in in and the of still an across aggregates Houston our in We the quarter higher reflected quarter by as particularly Our and million aggregates in which demand were strongest million volume and fewer most British versus ready-mix, We residential demand with closed incremental City Columbia areas. Texas, Texas price $X.X markets and with being

Our East year reflecting ready-mix asphalt organic most Kentucky, paving net million a well as ago, revenue $XX.X Virginia and in segment's on up to and higher Kansas relative aggregates, higher notably strong of was revenue by volumes, XXXX. wind gains did revenue, not recur pricing lines primarily business. was by as partially driven that in concrete XXXX across lower all growth farm This Kansas offset projects

volumes. year higher up quarter million net mid-single-digit revenue in was the growth segment's $X.X pricing relative or X% and Our on prior QX Cement to

bridge what We reflecting of year our the ahead instances, EBITDA of at standard growth the to In are lower adjusted segments quarter cost cost QX $XXX.X sales. million, shown, EBITDA pricing be pass-through component but our intense Cement X.X% period. offset for cost revenue. inferred XX. ended Slide West which we materials, ago, EBITDA East comparable focus at the in our XX% segment our that XXXX to performance Not pricing executing more is in QX from relative than largest up adjusted of is a Turning on and on roughly can single cost an some of the

of which manage conditions together without cost used these have of coal labor through turnover roughly and of complement question markets Whether headwinds. driving like labor are cost XX% our market challenging. In prices, other or revenue, tight areas of higher levels tools gas it's escalating energy, and diesel, comprised natural to the we full

For price. all, key smartly offsets, take us, that moving swiftly above exposures to means and sourcing hedging productivity

that supply intensify and XXXX these the of To critical evolve, could strategy our continue people that be continues that part built light clear, Elevate of as headwinds and and into investments to make think many we as persist cost that therefore the agility, wise we've capabilities. Summit excellent head commercial global with that muscle our that we of in issues exit remain It's we unresolved. especially and operate we in will XXXX, chain to

the pricing mid-single-digit business organic average concrete have Likewise, Slide in price XX, ready-mix with to due business. while primarily divestiture. X.X% was price trends ready-mix, of of X% to higher, all consistent where normal pricing business. and provide and seasonality asphalt has down across growth X.X%, and to Turning strong aggregates, we of growth inflected year-to-date aggregates, volume the asphalt prices QX increased volume is by volume growth of cement Year-to-date, up with line lines with a year-to-date. cement been organic while X.X% selling

and than adjusted see contraction and offset gross XX. We've of Slide and an margin in than expanded more and quarterly adjusted profit of to margins significant on the basis points line the cement comparison which our cash products line aggregates have across QX year-to-date There, expanded XXX points to Turning periods. business. you'll by provided basis Likewise, points business. by XXX margins basis our materials XXXX more year-to-date our cash comparable services, basis expansion QX driven year-to-date. XXX by we've relative margin Notably, gross for both

in primarily well expansion conditions see EBITDA respectively. $X.XX This and reflects our with by points, adjusted year-to-date profit inflation expansion QX cost year driven ago pricing adjusted adjusted On financial significant points and provide basis margin a expanding XX, adjusted we XXXX the And versus performance. input markets. adjusted XXX period, the year Slide margins of than demand mentioned non-GAAP profit margin basis margin to the favorable higher of respectively, margin of margin and just We I the growth as relative points, period. as $X.XX achieved basis, was similar operating XXX margin measures. gross cash primarily XXX and end EPS with in quarter trends you XXX summary our ago a gross basis On third EBITDA

summary to Slide structure. of see Turning you'll XX, a capital Summit's

QX marking XXXX Xx QX has debt financial leverage to leverage over below our rapidly reduce from using balance allowed Our by X.Xx, in $XX lowest Opportunistic expense Summit's and our solid annually falling QX ratio XXXX, history net from our X.Xx paydown and X.Xx down ratio divestiture together performance, proceeds, and XXXX leverage interest the with is us target. million sheet. improve

capital placing had business Our together on quarter means million revolver providing a end Summit liquidity, position our in which nearly undrawn the broader to available grow was cash the That flexibility of range $XXX.X financial million. strong footing while allocation to from with pursue Summit opportunities. $XXX

housekeeping item units. earnings use diluted which adjusted per count share LP share, a finally, X.X shares million purposes XXX.X and includes Class million And million, calculating of a XXX.X the A for please of

call close. And let back with me that, to to turn Anne the

Anne Noonan

Thanks, certain Brian. outlook which adjusted outlook unchanged our . a asset-light X week our is On the impacted an from model the few we provided businesses smaller We businesses support profile to extra of EBITDA for conversion XXXX. in believe Slide growth QX, reporting current of our divestiture of organic comparison and earnings an assets this last difficult wet the guidance year XX, conditions and call. despite our we that on and provided the year,

which, XXXX. we expect generate of X% For EBITDA to midpoint million, of XXXX, at $XXX represents growth adjusted to million its $XXX over

be spend which on greenfields. to will $XX related million to to $XXX of $XX expect million to million $XXX CapEx, We million

see or XXXX thus year-end. less through those out as we far more and expected, played continuing has trends

basis. year aggregates, to to in expect We a business cement pricing increases low and and single-digit lines increases those volume ready-mix full mid-single-digit for low on continue of

volumes a pricing on be asphalt to due divestiture. lower relatively to expect We flat

incrementally for end our become has more positive. And our outlook markets

demand green we some strong. seeing lags stimulus the through picking which case as infrastructure that horizon potential federal any is impact in and remain the In dollars construction, residential slowdown activity, nonresidential, on side, as we typically shoots And don't states, public Kentucky, to see residential we're emerge up. the price. is on both volume see as spending dynamics are starting to remain to will have bullish positively flow and Regarding the

and our Concluding economic the Thanks market them, our Since the Slide Elevate strategy pandemic have very employees really this XX. navigated we stepped constraints and drive earlier focused challenging and on XXXX metrics: COVID X significant capital; progress labor commercial up. have XXXX. excellence are that strong against motivated on that announcing leverage, on are can conditions, is operational and to laser into year, invested successfully net to to we return carry evident progress margin. velocity EBITDA exit with This close we

consistent strategic Summit Our and teams market making deliver approach the run. build Elevate asset-light, our are of objectives and collectively, innovation to responsibility leadership, reality. to will goals believe committed and our firmly a social more are the over long the aligned we returns tomorrow future-fit behind We stakeholders our greater and Summit of

who We your very stakeholders. important with I opening that our thanks to opinions wanted it's extend the loop believe continuing special a our recent in to a We perception Before and feedback value continuous forward Q&A, to study. have participated to those dialogue. look

to Now go please questions. Operator, your we'd be happy take ahead.

Operator

Stanley [Operator Stifel. first comes question And your Elliott Instructions] with from

Stanley Elliott

improving at demand think assume one had how markets about with Kind given continue. that early year? the if Curious we're any into next thoughts seeing you what next pricing on would that here outlook, into you're year, pricing to would momentum of the looking strong

Anne Noonan

encouraged we're we to of all the pricing, pricing QX strong that we by markets. And demand our continue clearly, very in of growth about see When lines across sequentially. all had and we in businesses think

commercial mid-single-digit said, we primarily our look we really actually by at of QX low price driven aggregates point digit we the And we to as working is Eastern I going pricing pricing are on team, will pricing. in exactly XXXX, In strong regions. increased position saw our excellence. the this across . we to not by double had give into say QX, in guidance out some time. as in we're our a So at where board, execution

think well into we underpinned as go continue by execution. very And demand we're As strong strong I dynamics this as will focus. XXXX, we

So I continued in this value pricing, price our area, focus you if of the the They've of has cost take and have account support, the management cetera. margins I been and into of proud really demand can team throughout expect I'm they a price had on strategic and think headwinds momentum. backlogs And something lot expand strong as not also et managed the XXXX but through very inflation, execution faced execution. to only this

Stanley Elliott

Perfect. on the on And Elevate the congratulations strategy. Great news. success

Anne Noonan

Thanks, Stanley.

Operator

next from Trey with Stephens question Grooms Your Inc. comes

Trey Grooms

pricing guess, benefit impact was mix we there -- the question there? a that saw maybe out in is So And there my first had put was the I Or around off, some August slight where sequential cement the some there there? improvement the quarter. increase you from

of of cement course, for -- you early the or for doing announcements 'XX look you're frame pricing time then, we talk time well. pretty And the into the Can about January as January healthy some into frame? heard we've what announcements as

Anne Noonan

testament Sure, to again, is Trey. very a cement And this by by team. our we're pricing. execution the the encouraged And

. We last did increases heavy As Southern. the our take customer pricing. was on very and there increase. focus our some cement January announced very segmentation a that here onto in report, price not increases, well it that in Northern in on chose about team price had again, our focus a in driving $X at some time the continue heavy to a regions with we we competitors excellence. push value pushback was our and did And talked midyear $X and there And commercial on and quarterly

best pricing what had cement quarters. you for XX basically which increase were here, X.X% saw which we most year-to-date and by the performance a X% of QX is in notably in we've increase, very year-over-year, And actually encouraged a so is

encouraged execution team here. by very our the by we're So

price healthy And January strong increases announce XXXX, increase said, Again, you've price to dynamics on in season supported by in increase across very as board, on but momentum team addition And very and cement. in to the increases we focused that, the is as we're cement. go midyear price there's a gone with $XX demand we've into continued we've price the done. our early in the the price out that

Operator

Citi question is Group. Anthony with next from Pettinari Your

Asher Sohnen

This Sohnen filling is for Anthony. Asher in

So when the your And range of of outlined you left it. kind bottom margin end the towards first Horizon timing at EBITDA -- then just I moving additional any X if of the finished in still X? maybe is to Horizon that Horizon wondering you're your visibility -- you on was close of was flexible. going timing the the on X to and the air? so horizons, when Or be up

Anne Noonan

Yes.

I priorities look our and X is, at think overall is little, strategy, that about let's we remind So our you asset think when the leadership, the we leadership, example. moving different strategic actually as reluctance timing our of on all to which which horizon ESG they're our market at light, paces, said market has from a because right? overlap put horizons for will each our been beginning innovation,

in Our dilutive businesses. or noncore about nonstrategic X focus here businesses Horizon divesting has been

market to it's there, much that about continuing move #X discipline, but areas. driving and in or growth X rural have to ex-urban that portfolio Horizon we be more really into As #X

us Asset remarks drive said been or critical my to focus, asset light in shareholder that in makes dispositions, will Horizon to continue for That through an whether as be divestitures I has a X. small value. prepared focus sense absolute

really X priorities, just of As the we strategic they're getting look the timing going. other at

go to in to forward much really capabilities. more on strategic industry out, Baseline get As look our innovation, a and SASB-compliant. XXXX out, we're we the strategic we're major ESG you Horizon one milestone first I had getting priorities, building our here a we results-oriented a baseline X into just in ESG as really targeted, our map our getting to in road of said we part, in with and for

Asher, if done So the because think is to continuous other starts is horizons it, to about -- we on I ends how about the strategy would period what a it. how it over think and think about X- think it's X-year about you is that we horizon a want And overlapping. haven't

Operator

Morgan is Stanley. with Courtney Yakavonis question next from Your

Courtney O'Brien

it's to go the our just after Maybe if EBITDA -- 'XX we kind down seems back it leaving the implying step the of can unchanged numbers year-over-year. in quarter, a like guidance growth for beating

out can walk dynamics to walk If But kind if XXXX? -- us quarter lapping just through have impacting be called of compare and we year just growth obviously of in you that . you the divestitures. some should are know and how EBITDA about the can us thinking the that the you how I XX-week of through would fourth the

Anne Noonan

Sure. thanks And Courtney. the question, for

As we rest year, about believe really think and our of the realistic guidance it's for we objective. the

to midpoint If at That our $XXX you if quarter, would the year-to-date imply they're take fourth $XXX.X million our you in million in numbers, EBITDA. went our of guidance.

we Now there's this our that that EBITDA. $XX in XXrd range. X of XXXX factors accounts kept One, we had comping in for have about talked realistic we've a that week We're against us within that comments. million prepared won't in XXXX

said annualized $XX that $X.X an we've accounts million EBITDA completed, basis, well. that is of million and revenue about our Secondly, actually on before divestitures for we as

QX. we're wildcard, is a the absorbing factor, the other And then our factor those of impact guidance. without in business weather particularly basically in this always is So the changing is which

a And cut season. our snap cold short so can

thought the said, it being and to by we and it very team. we have that are objective our keep was pricing, momentum So just is. realistic both demand guidance in execution That that encouraged our where by we

how negativity any business around into can believe and the I I not of So XXXX. how would kind moving into we performing execute read it is

Courtney O'Brien

Is in the safe to the say also all reiteration? Okay. side And you out or line coming cost that That's call on in really energy. expectations at headwinds didn't then are material it given those helpful. with your

Anne Noonan

believe little bit original made that we some in we in talk cost were here the what prudent through that give Brian more and around we And XXXX, gave us the elements our you that in a be. about we that. some talk comfort to and would of we if cost So estimates you can guidance of budget

excellence say will will goal is that on we whole driving you will through some has And as ahead I been remarks, to have. vigilant I Brian excellence. inflation, my commercial always What prepared very to and of of hedging this. operational are focused keep price looking the continue around talk XXXX, our into said in be we

long ahead cost We've on to energy value to pricing. bought have buying our as continue to chain mitigate also our and doing items team that we make lead that some cement ahead sure for well as is everything do we're kilns our proactively supply

you a impact as put of we couple things an that thinking budget share together to of around one our point kind would So is our QX. XXXX, just is in more we of to

basis. If very In and So if you a that of it X the have a look performance, Utah was Mississippi to our had normally XXXX. second typical QX EBITDA in at we recall, opened earlier. QX the reality, we X%, driven was annualized by and X on an River factor main strong accounts up X% XXXX, step was in didn't our QX, one, it winter; weeks in factors: basically and back

So were in to drive faster we able cement. markets Those did huge to factors our product move QX. really a

about XXXX. as So considering we're we think going into that

The that supply to reference made I is other we're constraints. thinking factor chain that

actively moving on preventative we in thinking our our equipment have and mobile into we think the are new have chain. on to and -- factor capital and supply about delays how our products in costs what look at delayed, today cost that might If impact we from repair our maintenance orders, XXXX So and particular. have we and growth equipment that gets

our just with kind you. that's sharing So thinking of

to give Brian your on with to cost help some specifics that you, over Courtney, it turn to question. our going might I'm

Brian Harris

purchase third is And significant input ones our of those increases, question, year and parties. we've thanks and seen that know, market to cement, cement Courtney. cost Lake the Yes. that portion in cost pretty cost so you the a total producers in is our primarily always market. pass parties for of the this we some of is Thanks, Yes, Anne, markets for of biggest our goal on Salt And cost from and as third the from sales. we purchases is XX% Houston the cement materials, large the where big purchased

passing cement increases on. we've in So successful, those I been price think,

others, are obviously Texas drivers drivers we've at XX% a peak, right demand quite Wages national now, respond we've in strong those of again, there in is think, to there, and had think, cost. to and the for managed, where overall its Lake is market. is, the Salt challenges particularly I I again, notably demands. salaries very shortage our the and where about There markets of well. And

on side, then have we and hedging our energy about of what the purchase of cost, And through June October fuel the our costs us a be. certainty And diesel purchased. through gives but the XX% lowest fuel to whole our about possible frame, in going of the prepurchased. lot around months of sort to got That XX% doesn't it we is give in manage cost for We've already September, the forward us necessarily a time peak XXXX program.

way can So that's and think have we an input be our we certainty effective volatile to costs, manage around what cost. a

be input And then quite utilize our like with and current contracts environment. to manage coal, very inflationary to with costs, can things vendors, working we're which on natural try these the we in hard them gas, again,

So bit how a color managing hopefully, base. we're you little cost that that of gives behind

Operator

is Shmois Loop Your next Capital. from question with Garik

Garik Shmois

broader on pretty a in more change could like your with public. quarters. you you been trends looks maintaining there's service any that you're wondering if end consistent expand service? bit thoughts But on incremental different non-res, markets the commentary and your seems curious markets different It those across that residential, little just end volume you if guidance, Just prior as

Anne Noonan

Sure, Garik.

bring Let markets. you through our me various kind end of

continues is with -- was we and million So that point X.X of U.S. reference. records supply residential. at homes as If the X.XX homes, bottom hit. is gap lows robust. XXXX, at all-time be summary million of between They're very between in been sales demand and to a residential look Overall, let's start have national, at line

Kansas we take few Dallas stats, Virginia, City, If Houston, Salt in up our Fort And they at at XX%; XX%; August we states, X. if year-to-date, XX% XX%. look City keenly, which it's you is a just Worth Lake look give are about XX%; top ranges; the we is our the to very

in All on growth above of XX% and Kentucky growth are other all year-to-date the double states our in Carolinas residential. digit,

we're in seeing that continue and not XXXX. believe numbers, averages national to into will our and state and we're So continue a and slowing, we seeing have both we that

from ABI up construction gears September The to shift then nonresidential is in of of indices trends the nonres kind I September August. XX% was up activity, nonres, Dodge we're around encouraging XX.X% seeing If versus some in XX.X% up which year-to-date to X%.

about it's residential wind said and our that, positive will non-res believe lumpy. than will we we've that we and of our So are been It's were before going follow always said our a in believe we XXXX. light nonres into happens farms lower that within in we've this we there's talked the enough be hardest It that lag But 'XX. predict. to year. 'XX, in Indeed,

we So bullish and even non-res. remain bullish on medium-term long-term

I across continued has across seeing a Public, in as board. lot say look states confidence the we strength. more we're the our shown would board

So $XXX has of budget their $XXX Kansas UDOT to Texas, XX% a XXXX. lettings result year-on-year. that per in was fiscal additional that biggest on will a at of XX% That's is million million $XX that over year spending in March, for gas in put Missouri, in roads tax XXXX UDOT. XXXX. legislature one bridges. from gone and increase our in in estimated million to up states, a $XXX the had $XXX of allotted surplus is million Virginia billion. are and XXXX was

we has long, and our had take really we're strength states year exploit spending a budget, South talked our focused and increased growth major our a billion; around billion be in Carolina that with Quarry, its in where to prepared of our North and And we've we then some $XX growth, continued in program Kentucky's of where remarks, total backlogs about if one, total we greenfields, quoted tax, definitely in will organic very spending we've has growth position Carolina but billion; excess Georgia spending, mobility surplus $X where reduced seeing has we're our all business; in Kentucky. $X.X great as gas Jefferson lettings

see very continuing is we XXXX. and resilient right into So bottom that demand line is now,

Operator

Phil with is question next Ng Your from Jefferies.

Collin Verron

This is aggregates actually the in gross Collin on for Phil. I just want quarter. to the touch margin profit on

a us puts quantify aggregates just we costs takes gross of some expanding everyone rising Can the and has maybe and those cash guys margin going forward? that of ton some great improvement how through job did and bridge despite gross that inflationary of that about margin just you drivers? seen. per gross should those profit And think You walk

Anne Noonan

I'll bridge of just give you some high-level through comments Collin. and a then this, you on Brian will kind bring

said, price East. strong digit ranges We've job in team had So aggregates. our as and I've has done a very execution, year-on-year in on overall, are increases the double the price great

us team's margins our operational Additionally, that excellence we've by cost allowed on time. and then containment over cost and huge focus that demand, had been has reduction plus expand to have underpinned strength continued

bit Brian, you through want that. bring color maybe So more little a to to

Brian Harris

question. really what of when get what our when quarter, price, happens volume the usually for is and quarter. the is get of to we hope you biggest thanks year, season month the Collin, typically and which that's combination both Yes. It's the September biggest third and that biggest in we the

and is average. that saw in on growth we aggregates, volume X% X% So price, selling average over X%

ended significantly one quarters business time. with higher so our is fact variable on matter is in of that margins incremental for volume there we of So that than up certain pockets really long is truly we've strongest where we the course, seen are every the XX%, of what a and variable. the cost And of locations helpful. that. And aggregates, Not about -- had

growth underlying this you drives kind of when the that's high margins. what see those incremental so margins And start single-digit really to volume and

is and what So those price drove higher. volume really

Operator

question with Research. is Tanners from Timna Wolfe next Your

Timna Tanners

wanted to market. in little the bit zero a I on cement

are them long sounds like as the we've time. been it conditions a tight in So as

and to also potential what side, could your continuing and a would from you're for seeing strong? wanted see Just this any do the and unusually expand if actually be Is as I elaborate competitors? -- see a more on this be you you on strong So bit little supply detail expanding to supply great.

Anne Noonan

Yes.

when As strong that at rather evidenced on And cement We've volume our dynamics market, tight execution numbers we price and reflect now. stickiness evidenced that look right that. we definitely, in the are said, price. also seen demand, we've seen demand in supply

focus on to think supply work side, been excellence piece every since our we As a out ongoing of singly year. single incremental an operational last capacity about of focus every been are team and of ton get the continuing that's has key out we to plants,

has chain Additionally, working side to entire sure our been network, the to that supply we're key a make do our through supply area. optimizing

to of plants. import said, out as is our amount That comes we being volume our demands. about customers' our what think profitable have imports to you If supplement further expansion, a bought small of as meet not ongoing volume

time. point So we margins where margin our over we the are to the that absolutely maintain secure can limiting profile and

will of current emphasis, have the So to if see our expansion, would improvement around we expansion and believe commercial to much to market. I dynamics will this in a continue we broader be supply have excellence, demand our we plant. any capacity and you To think get strong, business. in in being additional emphasis to about operationally drive margins pricing volumes our continue excellent form in our do

too important from we Green which up and facility, didn't the our but in and business, is is we're comments back speak Recycling running, improvement think expansion very for our also we here, our cement much America our Additionally, it our America of to in Recycling but Green in ESG, ongoing an business. facility our doing

doing X% of that to We help our that's also cement, additional have been the the installation that's in to supplement order time. our going Portland we've Cement capacity and over about

will as operational that our very on excellence. we so help -- focus But and move value, much And that. improve on through really, is capacity pricing

Timna Tanners

ahead. before stimulus it and it That's helpful. tight infrastructure long assuming happens, just It's runway happens could a be the Yes.

Brian Harris

Thank Yes. you.

Operator

D.A. is from Brent Davidson. question with Thielman next Your

Brent Thielman

here you here On greenfield, I the EBITDA to guess these get proposed the the addition few have what's identified that, especially interesting think in base. incremental deck? of of next we more years should sort the relative for aren't about I to And have. are of contributions that in to the slide or be exploring question the pretty you some capital freed-up with is, already opportunities the

any So there? thoughts

Anne Noonan

strong organic growth. that pricing on focus we've about dynamics great in Obviously, example managing great has a Yes. a in Quarry continue it continue is Brent. resource to a first investment to our Because where potential, And market that. our the we in important continues and focus is our we the for of allocation, our us. But high-margin sustain greenfields leverage, depleting It's done question, high-growth very a is expand to can to capital as Jefferson be that margins. think

investment do And will through opportunities plans, to refine our continue I that. And be constantly greenfield time. greenfield look say to our business, exploring we new continue we over as continues as we we'll strategic and are to that

XXXX, per growth as focus we As will continue it and by expect in is time $XX constant it's and business. should sustainable And we look be of on for this add over to that at million year, XXXX, a $XX the million. contribution organic our

Operator

Your next question is from Jerry Goldman Sachs. with Revich

Jerry Revich

buyback, stock you you financial ratio I'm as like look meet at your of And give acquisitions hitting thoughts what's items? look wondering Can us at this the out target. you on the pipeline find time that you before leverage look point? your folks would unable for M&A those cetera? Congratulations criteria, you to ramp if just ahead, you're line sort what around up et updated

Anne Noonan

encouraged are ratio, to very that greenfields, When we'll mentioned we've leverage performance that I capital had. we're I our think and we upon continue on about allocation, based improve And by obviously the are our Jerry. continue our we that to acquisition capital. an very and time to out over and pipeline to M&A a and develop M&A and sustaining on continue grow But have team. continue robust company, we focused Thanks, very

will in it sites key targets have growth, So and a be in a our continue working. focus we're that actively of organic we to number

#X ourselves to on position focus and #X, markets be that. our tried buyer to ex-urban have model of continues We or with to the and choice always be our rural as

cash that we put would use to rather regard. that So in

at we to said, all drive value capital of time. forms to that over look shareholders being allocation However, our

lot we right pipeline not have a we So line Jerry, in the believe because a there's that, now. time on

growth got question. our To that the business while for greenfield leverage. our your managing last addressed a investment I and continued Hopefully, focus question, lot a key us on of is

Operator

is with Davis. from question Thompson, next Your Thalhimer Adam

Adam Thalhimer

small, the of Similar be curious tuck-in I you quarter. how are I we question, but just we should if just by was dispositions done surprised next if guess. end Great a the acquisition? then And see announce year?

Anne Noonan

surprised. be wouldn't I

been have ready having have these we're the report focused nothing in have our but on active been at divestitures, time, very this X, We teams M&A we're side. -- getting point very we in Horizon on proceeds. that on deleveraging, some Truly to

of we our value drive So strategic have growth flexibility to shareholder and business. increased drive

in over report we organization. QX in #X I asset So divestiture -- and as them on part, adjacencies. them. we play have and we discipline would more disposition will of from report time, giving halfway and in our markets are those acquisitions divestitures #X and but talk forward on But where progress, our range will QX just rural And hopefully we the acquisitions about also within through to criteria actively being to some and ex-urban as aggs-led all very to about outs fit we we're have said, discipline and that look or you that anywhere bolt-in significant continue

Operator

Your with RBC is Dahl Mike next question Markets. Capital from

Michael Dahl

-- the purposes details roll, planning wondering for to little have as was the comments the appreciate some I and presumably And is cost to could -- about still more that the you of for these a hedging, back so far. made you the but around of hedges up. some if talk hedging, gone to Brian, helpful. and it's and then wanted I us costs I go

'XX So hedges expect your your cost to what 'XX? be would on based you versus average

Brian Harris

that XX% XX% hedged is we unhedged But So range would the portion, already which the for part has to buy unknown been locked to hedged. in at the spot is Obviously, we that be this in. approximately in continue that the for portion time. have which point on cost that a increase see material about to probably we're the so XX%, we've far, in roughly going portion of the

Operator

for We have will turn remarks. for the reached over our Anne call Q&A. back to I allotted closing time

Anne Noonan

form thereof. markets, combination coalescing First, the and and ready-mix asphalt megatrends place in require paving and rural and/or right are concrete, ex-urban time, key Summit the the all some of aggregates, Summit's in cement, at right is

each ratio, we Second, It Summit markedly are and we started. goals. ROIC . be leverage our for versus quarter, are we and a than now are And all more margin trajectory EBITDA upward reporting X our our third divestitures consecutive quarter halfway improved not Elevate our where goals may today Horizon of linear progress towards towards proceeds. but

strong, success the a the our execution for year in continued mitigation We focus strategic company fundamentals. growth with cost are sharp focus, on underpinned are continuing and up business XXXX. price setting with finishing With by strong we

you call, continued and conclude I'll and support questions. you your for Materials, that, thank of thank our With Summit your for

Operator

conference today's concludes this call. Thank gentlemen, for participating. you and Ladies

You may now disconnect.

Summit Materials (SUM) 4 Nov 212021 Q3 Earnings call transcript