SUM - Earnings call 4 2023 | Summit Materials, Inc.

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Operator

Thank you for standing by. My name is Christina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Summit Materials Fourth Quarter of 2023 Earnings Call. [Operator Instructions]

I will now turn the call over to Andy Larkin, Vice President of Investor Relations. your begin may you conference. Andy,

Andy Larkin

our to Hello, key by and issued an Materials results. financial detailing quarter investor presentation workbook, operating Summit year and a call XXXX highlighting accompanied release we and welcome full afternoon, results fourth Yesterday data. operating supplemental the conference is and financial and press Today's call.

All website. our Investor of Relations these materials can be found on

outside include of responses to Materials' are questions forward-looking may statements, and call nature which commentary Management's uncertain today's and Summit control. their by on

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

a and please factors with that see quarterly XX-Q, as report For report time Summit could differ, Factors of Risk annual to of on time filings section Form results of subsequent discussion from in our the Materials' the updated some XX-K cause to Form the SEC. latest actual on

You can call historical press today's of our release. financial in discussed non-GAAP measures find reconciliations in

CEO, high-level our our prepared our XXXX. a Today, will we for close financial to will review the that, Anne detailed for open discussion return line more begin will performance. then After Anderson, Noonan, commentary. our remarks Financial will with outlook Summit Anne Officer, Chief questions. on Scott with

time can other we time have accommodate one please available. limit as question, Out analysts analysts yourself we and of so we many respect possible to the to and for the have the in queue allotted, then as return

Anne. With that, turn over let me call the to

Anne Noonan

history. and Summit at welcome Thanks, a everyone today. very to exciting company's point our Andy, pivotal stands joining call the in and

we embarking into integrating all a not accelerated family. of lot be take of, the our and the dimensions, safety. I through least shortly, the in Argos to Our team and emphasis Summit Elevate XXXX, on but assets here achieved strategy specifics record is Summit you will have which Scott proud USA our performance across on is financial

leader industry being a commitment has shared enterprise in combined safety. to an The

undertaken We Since of Starting entered market, of portfolio putting a processes tools. well-being completed want first highlight everything completed the a at and portfolio divestitures, the the progress. to aggregates to as materials-led to targeted USA are people, and employees Argos beginning do. I X Slide effectively high-growth the And we our our of result, XXXX, communities areas tremendous into investing geographies, and of transformation. we optimize we've how bolt-on we've acquisitions forefront turn noncore in via to are with transformational health and continued in Phoenix to combination. X the

business of material from our only with now our is recall, dollars Cement. X lines when And or Summit. you initially business XX% of dominant launched result, materials roughly EBITDA Elevate if we out adjusted EBITDA coming of a either As every from XX Aggregates came

scale towards businesses shift intentional This significant us has our high-margin given industry. in upstream

enterprise. other As into the across we fourth collective and, in practice pools the whole our amongst largest talent tap aggregates synergies, deeper our best and spend U.S., the the can achieve cement scale sixth to things, sharing producer of knowledge largest deploy leverage

and to margins EBITDA commercial Summit's focus XXX thanks reporting every widespread operational points Second, by on solid and basis we grow adjusted able segment, a excellent in from to contributions were execution, excellence, XXXX. growing

to pressures the ahead. and put inflationary demand navigated improve in on year expansion continued earnings adeptly the us to has team deliver quality our Our footing of and dynamic margin conditions solid

aggregates-oriented M&A. an and aggressive pursuit with lastly, organizational well-equipped continue optimization sheet, a portfolio And can of focus we balance our on

and promising as a we have even an build endeavor robust growth deal business. pipeline to more higher We materials-led

new It's bolt-on our a M&A checks ambitions. profile. will expect our Phoenix that provides all template we in our boxes proprietary reserve extends and the presence and the corridor, we growth deal our ago, a attractive acquisition immediately a future just completed our builds major base, aggregates-centric among that isn't This week margin a talk. to platform, A strategically become for deal accretive

nonstrategic Furthermore, multiples, of million we markets. proceeds, transactions, generated These in in for dry mostly completed strong powder aggs subscale, fortifying opportunities. sheet $XX executed future QX, providing downstream at attractive assets in X balance an divestitures already additional and

overall is Slide scorecard considering evident Our progress when Summit more our X. on Elevate

our portfolio-enhancing net opportunities. allocation. a employed we've Summit acquisitions approach And balance For pro capital critically, our forma debt effectively remains stand-alone, fund X.Xx below on fully to which gives well the and to sheet and growth organic flexibility for Xx growth-oriented basis, at further EBITDA, net disciplined leverage a target, to ample

watermark, we a scrutinizes total ROIC, that our taking a criteria. Elevate And isn't at margin in return clear reaching XX.X%, sequentially hurdles, portfolio if we've For demonstrated proficiency points achievable by there and better points basis XXX then towards and every a financial owners for at assets. path these finding adding established one high against XXXX asset a and approach, XX basis new

EBITDA an the XXXX for in Adjusted the Summit will than demand. in you despite challenging a portfolio the profitability ago Scott basis through dynamics higher But mechanics. we XXX residential across performance margin and short, points cost XX.X%, record, strong walk all-time slowdown and period. was year have

with commitments. across and delivered teams of our who strategic All and footprint on goes our stayed one agility, admirably executed the incredible credit to each financial XXXX the focused,

approve I to who I transaction. hand Scott, our this overwhelmingly do to our earlier want voted extend gratitude to the it to Argos year shareholders, Before

not integration. we having merits deal shareholders of support the We your trust your aim to as continuously believe and a confidence a we is endorsement While own, stand earn resounding do granted each begin vote of day. our every from and their take on the for we our

walk I'll you through back XXXX Scott come that, the over to discuss to turn and I'll Scott? outlook. it then financials, With our to

Scott Anderson

a pick year. Slide quarter I'll both performance on the financial Thanks, and where X, fourth see up for the Anne. you record-breaking full

each momentum In profit footprint. line lines QX, of of less and XX.X%, quarter cash XX.X% pricing increased business, by and net Fourth revenue severe weather year-to-date adjusted a our growth accommodating the cost reflecting across and EBITDA ongoing increased inflation. acquisition compounding business, combination XX.X%, benefits, and in parts driven of gross impact of respectively, primarily in pricing, volume adjusted most of

For records all-time and Summit execution with Commercial the the thrust EBITDA set growth as together up XX.X%. adjusted growth full pricing Excellence down for and were year, X.X% primary P&L inflation-justified the revenue of of net

excellence runway Additionally, we've our significant to we imperative. although believe is operational witnessed this program bear fruit, start on organizational there

volumes X, business of line in year-on-year relative quarter improving line fourth to each Slide which show trends on of business. QX Unpacking

partially sequential improvement season beginning dry and to While in for mild we in extended and key responsible conditions the volumes. was see weather markets improve, do our demand construction

areas portfolio Texas, exceptionally activity into and Utah strength, Specifically, more allowed dry for of particular had weather that December.

our Cement Also a of difficult comparison particularly QX note, business. for was

in volumes. margin a XX%, recall, more you'll we it profile. negative of you This on which imported If see, XX% our our roughly impact favorable volumes. than of year, we for has QX But 'XX, imports by QX has reduced as Cement's benefits mix

On acutely, Aggregates. line the pocket namely and of tracked end-market organic most year, non-res Cement business in our by expectations, our with the ready-mix sluggish and light impacted followed by volumes full demand residential air

on and as on North asphalt basis Asphalt, the investments. growth and a organically in from primary double-digit full other XX.X% volume ongoing our hand, Intermountain year public benefited Texas robust the West experienced increased infrastructure markets

and obvious, to business across enduring pricing One, highlight. X. cost are things I'd a our trends and lines pricing combined has performance be operating Slide like are constructive go-to-market Local to environment. of factors on X There we drive should demand, across to and commercial markets. what Turning in and execution our exceptional

Aggregates resilient. growth the And sequential gains the markets, Texas been price favorable prior West. The realization second, does in Intermountain our have supply-demand growth increased in impacts. would and year with between moderation impact, Northern sequentially over Absent XXXX, markets. customer XX% in price QX. well achieved QX and sales up conditions despite more a in by QX our $X XX.X% and remained Cement average that XXXX, and pricing as as challenging Missouri in better in in price in Cement reflecting mix pricing nearly Houston closely reflect by cement North slight comparison, followed above-average realization

pass-through solid volume ready-mix Houston, markets. X Downstream ready-mix and in both the advantaged year. XX.X% Crucially, in supported Salt our pricing in Lake market our ready-mix achieving throughout up headwinds, with primary demonstrating XXXX despite pricing gains growth was XXXX ready-mix pricing attractive markets, pricing City and leadership

Asphalt pricing selection XXXX, job increased XX.X% in and strong and in the X.X% costs, input quarter reflecting improved pull-through. demand higher

snapshot, gross XX margins. adjusted Slide is a profit cash

with throughout from That portfolio and including the to Here, contend On effectively inflation. several of and buckets. cost variable for supply and fuels, quarter, year approximately we continued, cost X.X%, other in categories, cement basis a were see signaling inflation with cost ready-mix persistent increased said, elevated pace cost did fourth stiff basket and our full cost collectively, kiln cost of the energy margin our moderate if even achieve chain-related we headwinds components prolonged, cost expansion normalization able the a operation, curve. our

XXX Specific that are the as profile productivity the is add to That a XXXX. But in gains, points, to flag from greenfields, QX phase for not we points margin levels roughly have basis profitability basis excellence higher-margin percentage greater say Aggregates implementation points, and contribution important levels. through year-on-year ongoing still to to basis XXXX Aggregates, commercial points XXXX. is in added aggs to opportunity below and in we we our margin in it XX are recovery

continues point points to in On profit strong and XXX And XXXX. commercial in operational our in very to basis with fourth Cement, quarter, the relief the boost reduced Mississippi operate along River. margins cash gross that pricing provided a back, helped in high level combined legacy a November to some basis imports at XXX business margin Cement execution Stepping year-on-year. Summit and leading improvement with rain

we in generate coming this confidence to performance playbook apply look cement years. our provides as synergies proven expertise and Our momentum Elevate to and the

basis, margins asphalt year-over-year levels, asphalt, liquid on ready-mix QX a grew basis moderated XXX margins Despite effectively including points. margins as and year year costs, escalated. this sustaining while full energy-related prior product Downstream

share, margin XX% diluted initial G&A $X.XX more expansion on with and than expense expenses as or out Slide which XX Closing offset interest XXXX an earnings gross in the on increased increased year. comment adjusted for per

profile, is warranted, the sizable by BB+ of extension, in cash leverage flow Argos flow This, but a move to XXXX, In it recent flow, QX. free alongside a And in we felt our generation manageable nonetheless Enhancing from component S&P operating took as of step-up. the powered a transaction. terms Global, step-up the cash core cash prompted a upgrade appreciated. was free

and finally, to shares forward. moving million combination This use further shares Argos And in up-sea a Class A relation being, retire time XXX.X of transaction, for includes to with XXX XXX,XXX after the please in the structure count efforts issued LP share and units. million

a for enterprise and of XXXX. Anne to back it turn discussion our I'll ahead to that, With a look combined

Anne Noonan

Scott. Thanks,

our accomplished And XXXX month. would to a clearly been and a running Slide and Let's start while working resetting share the on completed details we and the a in we USA on the January just have together. to IT XX, looks our XX. business to what diligently quickly in our month's position operations towards portfolio since bringing at by Day, over I Investor teams more what On new and procurement looks transaction hit pro like. next From forma like lot and be we've want sales, ground provide Argos integration

can diversified a relatively public you well nonresidential. As residential even and we split with between see, remain

benefiting private fluctuation are migration by reduce presence By increasing our is that mix Southeast and reduce and in positive our as towards public as in substantial quarter-to-quarter geographic higher extension, the enhanced Our we markets, trends. from states investments, significantly earnings. and, year-round tilted well seasonality growth

profit by approximately is our XX% cement with materials, towards profits, as And aggregates our expect, at and mix would XX%. downstream approximately of followed making XX%, geared gross up you cash at

of materials XX% you move overall business. the EBITDA, to that down As adjusted mix approaches

line operating through-cycle portfolio, resiliency. with this our that strategy, markets and have provide and is advantaged economic accelerated in diversification Bottom that durability and helps are growing we've new materials-led end-market

Xx clearly have EBITDA original expectations price assets year $X.X with is We the post-synergy confidence favorable multiple margin be that they Relative platform achieved by plan. adjusted outperformed nearly of headline integration weather, a of growth overall after complete and of performance. an and EBITDA billion, Argos will $XXX our we strong at Xx. the very our multiple attractive strong million and The to very our Aided XX.X%. even closed a for over just greater purchase

margin $XXX from million, in XX% pro was Together, XXXX and the cement EBITDA approximately forma EBITDA million. And the XX.X%. XX% the was remaining Of from was our adjusted XXXX coming $XXX generated combined ready-mix.

say new generated the XX% for roughly QX, very cadence XX% but XX% to XX% quarterly the year. be in QX Using nevertheless, round how will likely seasonality, enterprise I in and to in is think inform the these to be will QX. the shift in the Given upcoming our and composition to emphasized, EBITDA balanced. numbers, roughly QX, of be of are aim more should about

Now let's having baseline, XXXX look reset in ahead. broad strokes our

Our end. to core official is Inclusive at are to guide least high drivers: [$X.XXX First, generate at low $XXX the XXXX we range the million operational in at X billion] EBITDA million expect in this $XX synergies. end

align coming We into from detail perspective path. from synergies uncovered on was will where are nearly But We more and mirrors of optimization. the ready-mix with Day now, in least the what anticipate target glide for or XX% the procurement and synergies the first our expectations quickly during go Investor Furthermore, total commitment at overall to our our relatively of at deliver synergies current diligence. synergy to come our within XXXX cement well $XX closely XX months. as form these as PLC million

second the pricing The of core portfolio. driver momentum across is the persistence

on our markets. X, of line every business. implemented price Overall, good you and in the Summit January seeing footprint are As increases very in traction we across we know,

Our level. approach the market-specific contemplates conditions and local value factors demand pricing at

digits As designed start such, our range to from did digit areas to aggregates margin in be the and double price increases year. to mid-single are some accretive

early additional actioned to although incorporates are for we Importantly, certainly actions is too provide what today's the probability high a us date, guide and those horizon, there we think only it's on specifics. have to that pricing

On the points vary and Argos markets starting river Cement, legacy our our between footprint.

Northern recall, execution river our traction per as expect. experiencing along the pricing with markets and you than you is If ton, better X Southern January was would $XX reasonably markets, that proceeding well

to growth varying have and consecutive execution we Mid-Atlantic, arms and to customer years understand as opportunity is, What are the double-digit encounter sharp year. start we of least Southeast means fully along better we in around of near-term markets our pricing to wrap and the the existing from likely applying these segmentation our pricing anticipate noise river discipline. the rest contracts In value degrees, at upside some customer pricing this demonstrated we said, gains. to markets portfolio, the trail commercial with That our

our to the move swiftly new value apply of the will cement We markets to within same standard pricing portfolio.

execute Mid-Atlantic to work value the the adjustments unique and opportunity bring fully take reflect with first Southeast will We to to we the our marketplace. customers appropriately to pricing

The cost our third on component is slow, pitch is moderate of categories outlook will inflation the cost pace And ahead. our to most inflation difficult cost cost anticipate the curve while the of trends. of across of that downward year in confident We project. to we're

color we more as provide move we'll the through So year.

productivity we us, line together in positive to price/cost margin gains, is XXXX. initiatives Fourth, strong getting in so we relationship, These take capabilities, serious anticipate our and XXXX to drive hold a year. excellence XXXX. operational the Aggregates that feet We our under really spent expansion bottom to expected this can talent savings building drop with

with believe our And however, we dynamic the the move will on as improve market our by demand on by mind, will on XX X vary have residential view market. finally, beginning can In through we that Slide and the demand underlying we this end trends end-markets year. and outlook. environment, geographic With characterized in whole

figure supply believe reduced is persistent housing. long-run hasn't on investment like relative From And to last household have a XXXXs, per X,XXX than stepped the roughly U.S. Our starts XXXX of U.S. and we per XXXX housing the to we X,XXX starts between housing the case U.S. as to XX view down we there to over consistently housing starts changed. years, substantial nation, produced average others, And XXXX. has XXXX That in and XX support XX the more Since households. compelling and XX households. produced formation. a

constrained. Our clearly supply is

not does up. and certainly aging is Our existing to inventory be letting demand appear

end Taken million units. housing day, in the supply. renewed to to a of that the debate at million U.S. in that to severe gap, shortage housing commitment rebuild of or X together, address Experts we these need if can shortfall U.S. our X factors But the order point is a system

down. long-term more are supply On up trajectory right, well to declines the below a and the picture months one If residential are is is X moderating, Consumer costs coming short-term the is sequentially and sentiment hand, equilibrium of months. of clouded. X healthy permitting and homebuilder to improved, construction has

the historically in On remains our remains hand, nationwide residential major MSAs. overhang poor most affordability a and other of significant and

to uncertainty, But be different growth. On balance, path to may a and we to on signaling market. from look appear indicators market are recovery then path reduced that and

unique large-scale recovery. a Salt For headwinds. Lake higher a and example, builders more Phoenix, of by favorable facing create economic and contrast, affordability factors, Houston's for proportion rules are conditions swift the zoning stiffer

So recovery. while slower we're a in cautiously optimistic, we are factoring

we In summary, demand that X%, and we Judging for mortgage stance of until planning residential that relief, are trend residential recent XX% see as greater for if maintaining get performance in But by a should under towards modest X%, flattish unlock fact this locked rates our regarding activity XXXX. at year. nearly until in is think, we there, are homeowners overall. rates the we history interest outlook rate

we experienced non-res than growth more activity. may we us, footprint markets heavy for are For the and nonresidential, where from are that in specific moderated carry light into playing message And is project our That benefiting the headline This on by matters. be and Slide pipeline IRA and XX, by XXXX is in offset trends XXXX. means sluggish investment. really should CHIPs

states. Summit top in occurring is investment announced the of XX% nearly fact, In

energy are should in concentrated Arizona focus into years in the Timely the in Kansas, investment robust infrastructure benefiting In investments in we come our pay as pipeline ahead with seeing semiconductor data X is Phoenix. new is our Similarly, dividends to currently Sunbelt. energy investments that ongoing alternative centers And in in the also the pipeline. build platform the Carolinas green project energy really projects out remains Southeast. in Georgia, and in footprint

made indirect Elsewhere, have warehousing in it competition our us, of may, whereby has But a component major end overbuilt of platforms. any for of may other a been increase an lot the however, It country. not for users. impact it's

standards non-res it office tighter activity trends, retail, the like verticals and and for is in XXXX. expect residential be to recover remain light outlook lastly, credit premature in recent for And to lodging. dormant to it Between would

light not made roughly half So as to of undersell its impact, historically has non-res commercial up our business.

this not a particularly ready-mix and insignificant So headwind, our markets. in represents cement

So overall, the outlook end high the expectations. representing organic for likely flat of current non-res, demand with our is mixed volumes

for then end-market. the public And

We will on leading consistently a activity. come our provide back to indicators infrastructure X to comprehensive view

average. DOT our varying which are the above show XX which collectively Slide X profiles top degrees strength state national of budgets, XX%, but up is

exposure which our DOT public asphalt XXXX. our not heavier amongst in even weighted notably in funding with includes and operations. our in strong is areas XXXX witnessing comprise asphalt is and volume than Importantly, states more a XX% step-up of This is towards disproportionately Texas,

second indicator The is states. awards top highway and our paving for

December, states. As trailing for of paving and other the growth of awards highway versus have year XX% period, more than the basis, ago all twice comparable on XX-month a increased rate

ready-mix. in either look we is the up activity. like backlogs, maintaining levels, then healthy backlog of and like these And And in asphalt, activity or aggregates is truest our substantially, indicator as at are very upcoming

think for green, public to growth we expect volumes all digits or mid-single better fair indicators with it's So XXXX. flashing in

measured around path a with interest with expectation start which moves we guarded And and Summing I than we stance at future flat this setting year. XXXX, the to rather Fed conditions much comfortable year-to-date think and on for it optimism on depending year start prognosticating are of rates. up, demand volume around incorporates slow our organic impact fully a weather rates, taking a

feel At and comfortable and we the day, gap XXXX. a year price the delivering strong ahead, very for achieving cost, controlling end EBITDA we growth between about of can, the what positive

capital to on Slide now Turning XX. allocation

CapEx. as You'll This $XXX for either at our our is to the time. approximately a the cases, turnarounds targeted the CapEx avoid assets. to spend to the guide improve commitment percentage unplanned million plants of in before and to over initiative. to term, forward or ready-mix our revenue is stepping aligns we've $XXX In with cement our Much the profitability Argos specific in keep run assist net in designed of fleet is XX% These CapEx that see more proportion downtime. winter investment called near it in investments carry at modernization between down profitably are high-return both to legacy million necessary

free XX% of net at enterprise XX% that XXXX. a revenue, increase reducing with actually per see share drive should improved we in intensity. You'll more to or help this capital are flow profitability, Together cash

overall thesis value and creation greater M&A, growth This aggs-oriented while and is all reinvest conversion aggressively in increase central to effectively leverage. will optionality generation pursue as cash our CapEx to our our flow accretive managing

of Summit is objective. priorities a allocation front of in and with growth set opportunities a underscore our growth that compelling company us, capital

near-term free our flow balance sheet. priorities and the our delivering innovation. market as only cash and a portfolio These strengthen large-scale are committed reiterating commitments, of optimize easy aggregate on synergy companies: Slide of sight and But decisions actions X enhanced goals can by XX. growth, our and the Summit be priorities lose on it Elevate and the integrating asset-light, accelerating to X further of to integration, are. our to profile already we using sustainability fuel fortified the guide what our In midst an leadership, organization safely an close I'll priorities

execute As can confident for and stronger create our are Summit, stakeholders shareholders. we value industry-leading we deliver collectively Summit and employees, our we a

for questions. line that, open With operator ask the to I'll the

Operator

first Stanley from Your Stifel. of the [Operator question Elliott from line Instructions] comes

Stanley Elliott

mentioned to takes of kind a Very help of to potentially the aggregate the on you us possibly on you a and buildup? basis profile point you Scott, versus points kind sort Could the side. might high of with Congratulations mentioned it more get on the of we exciting. what adding puts margin deal. the to as end of how

Anne Noonan

Yes.

been trailing we here, set there on a of view Aggregates year that the some We've point in on largely we've XX%. op margin that wins where has ended been target gone of XX%. pricing progress with the from you cash a profit aggs quarters in saw, we a had excellence driven X and adjusted bit We And by XX-month cost expansion. of So as as through. last started in a of to above of We've et XX%, gross playing inflation, cetera. bump margin catch-up

But the that's have X or key are think leadership, XXXX, drivers aggregates local forward. there are And It our mentality increase. environment right pricing we've very you has been in now cost And is core continue of are of the driven right inflation. to XXXX. strong. #X value market Stanley, Elevate And constructive markets. price doesn't in you And pricing seen is that by, very we be all what we'll a as only tenet the very out Supply-demand into it's strong strong. as guide years. throughout go strategy for There's January as moving have we dynamics know, and persistent very price our #X one our increases a mid

the is push which will -- part the you push point which I to, will op end and or to a us the acceleration from difference is XXXX, an excellence. that But which XXXX, high other us

bottom brought amount Chief the you our improvement expect year, double our Moore, made of we aggs. continuous add this million more actually Operations Marshall we on events know, $XX line as our year. to continuous and progress from we'll So improvement And last in events. to We resources. Officer, We've dropped

aggs so what higher And us that's end the that will of to push profile.

in increase aggs expect XXXX. we our So expansion to

Operator

Garik question comes of Shmois next the Capital Your from Loop Research. from line

Garik Shmois

if Argos could And year? secured the throughout called to closing much provide that $XX wondering of the how if shortly to speak you pacing out, after occur expect that color of million. you maybe could that on deal? here synergies you balance you the some been the has was I operational How

Anne Noonan

Okay.

high level. just start me a let So at

million, $XX we're very that. the ability in our So confident deliver to

the first If our recall million you we year the had proxy. actually in proxy, in $XX for

So closely we've together got We've our had very operational validation synergies. working workshops. our but teams nothing of on

the very be think actual first really next encouraged the The of in We're can is come if ready-mix. synergies by so a SG&A we perspective roll pacing scale from a to of opportunity you about from synergies, lot in amount you which have And our what will the synergies, expect in and procurement. ready-mix. will

ongoing have program and on ready-mix. will complete, improve margin has expansion the We that fleet modernization will Argos that started and

together moving very ready-mix, teams then like in move actively technology enhancements bringing all quickly we That's And the to footprint, improving delivery, the and in load-and-go. in are can putting quickly ready-mix.

more will Argos key versus improve on our importantly, productivity, relying operational from which our that costs, is efficiency. in imports, to domestically assets expand focus the equipment very reduce for legacy will XXXX, this, cement and confident increase to have And we're Cement, produced the ability the our and margins. most allow us

that talk occur we're how in, throughout very million. the that around confident you all want maybe might to pacing to $XX of So Scott, year?

Scott Anderson

Yes.

But little in of to business guidance very what obviously, throughout aligning the operational and of think time now, are going provide to I with the we here it's year, of a activities the the year. mentioned, But ramp but really up kind progress. right the we're it say, of that. pacing engaged So EBITDA the Garik, I when see seeing year. beginning, performance phasing Anne you as teams we on need quarterly the don't the would necessarily And mirror or throughout

Anne Noonan

after digging to just been our folks. commercial procurement in opportunities. pull-through up would have on update But had into will one is, some additional of asked opportunities you I synergies, they Garik by Day. thing more encouraged really our Investor we workshops coming you with things We'll close, specific, the with that but other details opportunities, The value And all add, operational extremely immediately I've of that represent the additionally, pricing upside. aggs and been

But the move all we're having some all, million confident as is pretty that upside secure, and in of through integration I $XX would we very say period.

Operator

question? that complete does your Sir,

Garik Shmois

you. Thank does. it Yes,

Operator

comes Phil question Ng from next from Your Jefferies.

Philip Ng

certainly the the magnitude Atlantic think of of to of first do Free Mid-Atlantic value work around magnitude brought you on in the imports? Canal, guide has impressive. and these in tick Panama Southeast, market any through some guess Sea question tightening increase know cash cement kind and to I around is terms quarter. my that's been And it'll pricing? of the more good see up been Red the flow is timing long your really you anticipate terms of announced. of Congrats in I in kind the of -- solid very How price contracts as region and color kind well?

Anne Noonan

Yes.

pricing. of cement Let back kind me step on

last So as I take prepared done a Summit said in the customers And comments, midyear out business, the and X price legacy $XX price hold strong we've won't we relatively execution done we out double-digit for in demonstrated went allow, has we as increase. the years. increase will a last ton, as just years, price demand, we Phil, a X have our team if

segmentation principles in our in really solid legacy customer our pricing Summit. we're and on and So value secure

will working contracts, with As come Argos. comes off expect to bit we the as in said in to we that. working through different and and which a on of be There, my some I are little have game legacy longer-term value that, go a pricing customers prepared of will those teams -- comments, 'XX, principles it we're our rolling through when

optimize and we power if And started this than you kind have expect to customers can customer you would back a customer less have. basically discipline buyers, Summit you also segmentation, customer -- to our of on journey remember, customers mix. on look by our reliant becoming if that customer work go through how same We with as you larger

So to that's a little time. take bit going of

Argos January robust There on side. legacy the is the increases Summit side price that impact immediate some on just were as

Now just in of pricing lot had remember, a [indiscernible]. so on really done. increases high Summit the pricing do that catch-up is there of a we business. strong be price had very We've to some Argos costs, that. high base heavy upside believe But supported barge There's secure legacy

and think large terms catch-up in So catch customer the pricing on it about rolling January. off, of segmentation contracts --

every business. year double-digit digits be high for and is were probably we'd like think I do cement estimate in we day, the a 'XX of end single our good 'XX? the But At

Philip Ng

Any color import dynamic? on the

Anne Noonan

Yes.

The So legacy come Louisiana, at in. Southeast, which you imports, business, really if know, business, you the XX%, where into X% the only those XX% as -- look of come that and nice X% markets. only Summit is in at business, to things existing to the similarly, you imports look if Summit to one Mid-Atlantic the and exist Argos actually imports has total U.S.,

we're exposed not So import heavy overall.

profitability operational in say around that's reasons. strong expansion, would just EBITDA focused in much but X on growth expansion very synergies on the confident are our on we're the more cement. in I discussed, and those business cement landing business Argos also the And we of margin XXXX pricing So our for we

Operator

the Thompson line comes question Thalhimer Davis. of next from Your from Adam

Adam Thalhimer

they actually standstill Anne, at Or provision? a expect with high in talk market? the next relationship over is level, Summit few And can Argos to about you that the the could buy open and a you years? under then, shares Argos trend how

Anne Noonan

Yes.

the it's still of I've every members, shareholders at of all they're strong. to relationship there. on come personally more something been strategy our The I've Argos the have are deal of XX%, a encouraged latter the integrated wouldn't of out integrating we've Board one teams out to This extremely own to is ready-mix, teams, to have importantly, extremely see. is out been has a X have a well. all plants this we point. the cement are without But teams our And the united So get the together, little the as challenge. XX% I company. We're frankly, But that. This very X-year the relationship very X company. standstill. on is new which, most part,

people I engagement out of And on teams would creativity enthusiasm, say the the and side, is that's very encouraging. coming those

synergies On the validation the been the has no commercial gotten only from upside business side. side, of surprises, we've

and expect the I to they and Argos this want very growth. to in long-term be relationship. the got U.S. a And So participate here sustainable in because

is long-term can that you Adam. partnership a this So expect,

Operator

comes line Citigroup. Anthony Your of from next Pettinari question the from

Anthony Pettinari

what was implied the at wondering proxy, just in in driving seems maybe I'm related a maybe Argos expected. a And in then XXXX the below touch guide that I If you the XXXX did XX% proxy, the discussed at the And was that. it wondering was. much than question, looks versus what I anything midpoint why there or had was and maybe if look performance like forecast you better

Anne Noonan

Okay. I'll talk have and I'll the then address maybe the guide, XXXX the XXXX. latter part that, of Scott be actually Would that okay?

Scott Anderson

Sure.

Anne Noonan

All right.

slightly, we point -- that that brought was to also side, time remember, in And the place. would I basically divestitures January We've fine-tuned XXXX that the that's now and we've EBITDA. ballpark would -- the I and things have since and I've in a the as got overall, mid-XXXX, think to I in guide, down it's you is dyssynergies. the in done which $X able were guess proxy, we really been put say let's [indiscernible]. X the XX in billion -- about guide still on So Summit had

number that has so been refined. And

is look the the around of then factor price more total at, bottoms-up legacy analysis third Argos And now volume encourage to a I'd Anthony, done you business. and we've

that And overall so I you midpoint. number. say upside would on confident guide the we guide. the there guide want in put that's about what Scott, overall that we're to that very our anything, got And is skew in to do out would XXXX? we've talk if us

Scott Anderson

through. some carry in to right, the momentum don't for see they really I that Argos we come Argos the But because their I traction. Yes, excellence us, was take didn't strong own to similar our really, to journey finished to momentum in want excited And back op XXXs modernization, 'XX. expectation. just of low Anthony, we're really they that number. of September, we have that until got And pricing you're thought it And was January, million as fleet as kind speculate really know going well started but $XXX their XXXX, at the to on, to starting into coming

Anne Noonan

and I'd on entity XX.X% to of combined margin we've in was Yes. total of Anthony, the entire about. million to, excellence, EBITDA. XXXX of that bringing to delivering XX% that confident I very be And in number XX% aggs that portfolio, is we're mean that other across $XX talked price/cost by the synergies cost driven you op will point And the thing a a pro range basis. forma the

portfolio and will we path upside. see a So pretty only optimization then clear provide

we're key on. leverage this to talking X So point for the starting about that XXXX that jumping really elements on business off we down growing talked gives us point about a nice the

Operator

from Davidson. the Your Thielman of from line D.A. comes next question Brent

Brent Thielman

the it CapEx clear for clear to in one of targeting cadence to spread But year, this front-end or we're some It me out. loaded if mentioned -- think wasn't it talk could quite step-up the You Scott, winter me. just CapEx I on about the you more that? wasn't turnarounds.

Scott Anderson

You Brent. bet,

think year looked the in half the maintaining the talked revenue. out, just kind to really, drive being be we about of that kind say front, like Brent, tell So the of that, you phasing, when towards there's really. XX% you about really if But our the when reasons of to of of the front. net year. weighted that, it we've first don't half we threshold would of XX-XX, here, can it, XX% of called back And think the I at CapEx, provide the X goal I will a you phasing but you, of

shutdown were First plant plant that's occurring. the the when is shutdowns --

returns And the money can as to in part that as so putting the growth and just is those the want those work us just we we're we early get deployment. then really We capital that CapEx So profitability operating that can projects. for performance to and early the in into plants raise the the get really on year year. second OEE to

So really, that's what you're looking at.

that the and push get as can we to want of will We early year in capital. the use

Operator

of from Hughes from line comes Truist. Keith the question next Your

Keith Hughes

came end-market hear you 'XX? a When I what the unit is products flat over that right? 'XX, different view, in change differences of did kind your look think like there And you up for you were think will scenario I unit amongst of going

Anne Noonan

Yes.

the So into of end-markets I'll question, then Keith. level, across go of let and kind your just you give line me high address business at a to high level

So you're overall. flattish of kind We as correct. across came

being dormant heavy So that up of light weak. flattish. made stronger, being really and Nonresidential, residential is being

mid-single kind of say digit down or So we on the to higher. And flat then nonresidential. public

down, high how overall. nonresidential. of flat. asphalt actual I aggregates then So out flat about digits in and of We lines in that And going and ready-mix mid-single heavy Cement plays of we talk it to terms would that's be our because talk think volumes being about to business, it's

going to So on well imports cement. less we're have as

more domestically have produced. we'll So

more margin cement imports, lesser it. how look I is reliant So on would business at higher

what would guarded will residential pent-up I approach said are in call X%. get, to one my really said, taking being a say because that volumes, I and as I on we would Now on to could interest if demand say pop there's is, side, that prepared rates I there comments,

that had that So to kind tempered up weather. is of to January an there opportunity lot definitely That's a against side. the swing for we the right of

here. Now at did a our significant portfolio. a of but And bit a of good in from really dormant which nonresidential, weather, our up pretty a teams is hole picking are we we much start also part have

think our team would by a react That's to overall, what a because very as on appropriate guarded cautious stance way. portfolio optimization. of op of volume expansion, would the can control. focusing price, on pricing the and from we on in effect to synergies that end, our about that I excellence, kick volumes in focusing and -- Controlling But actions. see a potential you and at started And margin allows upside we aggs that compounding then as have strong focusing should

Operator

MacGregor question David comes Research. from the Longbow of next line from Your

Joseph Nolan

and bit little XX% we just has wondering wondering, to and lower a XXXX or of that first was the whether that EBITDA that a was quarter. I I might specific is you weather Joe whether about the was of the this a long-term more bit Nolan due This first in for view quarter skewed year? weather, talked on seen just David. was see

Scott Anderson

Yes, Joe, take I'll one. that

feel February everybody back. January was time enough to impacts felt think weather And We rough. got think right, You're still that I to build that hold that to like for things. still We we're the going XX%. January. We

outlook. our change necessarily wouldn't it So

complementary to a the that the to in Argos, it's QX. kind history, addition now look of was Summit legacy you in And X% of with X% the seasonality. more And

it to So think now that back XX% at But up and hold Joe. this on XX%. pushing still that point, plan I to we're getting we

Operator

comes the question from Noah from next Merkousko Your line of Stephens.

Noah Merkousko

the on strong results. Congrats

were a see continue here. onetime in one really infrastructure big I'd we as like rate, look asphalt volumes plays is one something can through in there. big strong The XX.X%. the quarter, 'XX? volumes strong growth that a really something Or that, role is guess, up imagine we I Just quick driving project?

Anne Noonan

had absolutely Yes. high. was Noah, But We weather. right, was I weather. it favorable you're QX, it very really mean

tell crew ton we that's our still the I of can we a asphalt. guys, have on do every were road, out backlogs, had you. with And all we So which in

that So asphalt on weather. very just you'll QX a full particularly our heavy got was XX%. see year because basis organic growth, up like in we favorable But an on

Scott Anderson

Once in a call the while good weather... we've got to out

Noah Merkousko

about mid- the up answer to I single-digit Keith's that, And think it. asphalt the of to in thinking Got if I'm high question, me but wrong, volumes kind range? correct

Anne Noonan

you Yes, that. at can look it

that increase have we a slug a because in. the to in I in, we see asphalt XXXX a always saw big would in pipeline be say, very we and first said of the and of of repair where beneficiary had to very We of Now the significant first on comp being half, tough would the started infrastructure rebuild dollars come 'XX. come we

we really are is what to you go expect, funding. can public 'XX, healthy as have we that tied asphalt healthy aggregates but to And so all backlogs, that also Noah, really backlogs

Noah Merkousko

Got good of rest with it. That year. . all makes the sense. luck And the

Operator

of line Group. Thompson Your the Kathryn question comes next from Thompson from Research

Kathryn Thompson

along touching integration But with your is portfolio? pace the then and now relatively how noncore priorities? focused mix kind Argos And parts finish you One, continuous X, for lifting over of with commentary greater tied with with or the about that, but pruning line, -- that's are X that of on And the line, geographic over drivers Summit. that Argos? the on changed that. the and that within has of pruning is what your you're just some behind the finish on assets, Argos heavy You've type getting

Anne Noonan

Thanks for question, Kathryn. the

will not we every have for is driven and So project always a around we've know, priority that our financial we as as that metrics -- Summit's said. we've are talked portfolio you about continue And a to Summit, Elevate yes, process, way. we be optimization reaching

said we EBITDA So margin. want to XX%, over ROIC we've and we're portfolio above XX% the pushing

that we So better those every yet don't a at owner, Argos find And Summit, clear scrutinized assets. again metrics, and asset is and path demonstrated if quarter. to fourth legacy we've a see will that here of includes we in kind the

I overall will say change strategy. doesn't it our

strategy Obviously, time, the and that become at us was to Our materials-led. over Argos to really end-markets. growth for acquisition that XX%. We've us more part got overall allowed to materials moving for of good a increase all our

exposure seasonality by high-growth business the that's getting our MSAs that geographies and combination, and have in Southeast. this been less further Our having fortified into to

have said around new going also we is pruning our we're to And platforms. grow

So was was going reserve the in platform. think that aggs said Arizona corridor to a XX-year and build very acquisition did quarter we high-growth out were It adding where important. we this about we

in pruning the geographies, where of nonstrategic some noncore. And focused and they're not we're and frankly, were

strategy. X, X of have list to Tier and the list we that align X very they also with on our materials-led that and ongoing our So keep are this divestiture meet still targets strategically financial

Kathryn Thompson

you top those And just just follow-up are -- on able X to share, if a -- that, referenced? what [since] the you're criteria

Anne Noonan

The top materials-led. X criteria,

Kathryn Thompson

Okay, yes.

Okay.

and with Again, quarter I luck. else Just of if know along on there's congrats the that. best something Great. didn't

Operator

question line comes of from Sachs. next from Goldman Jerry Your the Revich

Jerry Revich

on the wonder gains you that in efficiency the the of over in coming the to pace turnover delivery both slow normalize, and could post-COVID that cost we're talk come to potential inflation inflation for ton down indicators what is normalized cement I you what I'm track, unit wondering range it see of extent and aggs for of other improved lead and terms labor-intensive in you generally low folks based is industries to as as seeing per things single-digit about and rates we equipment productivity just could just quarters? if cost and a result. possible,

Anne Noonan

inflation cost the and at I'll Scott looking take we're that for XXXX. let profile

Scott Anderson

Jerry. You bet,

margin of we to We've operational when see aggs bring down we aggressive expand a around you're right, in the cost. cost, that So got excellence. and think here opportunity pretty playbook

just that were -- look to got X% labor, you more double some and inflation the provide of think But X% come year, that we to But we're at we going which year, that on opportunity for for kind last off, model digits. looking against let of now that's up this me when bumping us. definitely it, side we've we're in to

our some good our through fuel, of in program the you us areas put hedging really on a other As go place. diesel has energy,

for So we got favorability on year. that next

that there. year, be for of matter easy got As And XX% already to $X gallon. an million a we can you some It would favorability up a it in be tailwind $X us. use see million easy me, hedged a about there, a fuel at right year savings $X.XX, gallons about average our would of to if we've XX diesel compare last we to for of you get come fact, $X.XX with million

of coming there. So just is overall though, do you year, down big high we've digits mid-single where cost, say kind at. the got And pieces some digits we really we're to last when of some single that from think moderating looking -- that's of the overall,

around And last get really year, one XX% supply I'm into parts, the of our closely. I But better watching one guess talking is equipment-related that. is we're talking now, was the we and repair more the And visibility say I'm the that maintenance, one digits. supply that get And the I business, COGS. right when last That's the a double would cost. I chain, overall subcontracting. mention as the chain Argos we'll

So that closely, now that an right that's double last in seeing that's more a maybe piece. digits. watching to high that early where we year big X% were one digits, mid- view. we're on And We're single

cost But that, this We're on that the gives going. be a year. X all in. we're where the last and little we're that definitely, coming you hopefully, to we've So aggs focused carrying expansion into going over context, Jerry, been margin quarters, on

Operator

the RBC Capital next Dahl comes your of And Markets. line from question Mike from

Michael Dahl

were? Argos quantifications but understand the in legacy the just the bridge Goodguys maybe Can a high-level to in more you've call help to obviously, maybe back dyssynergy on just point the out and And million is those guide contribution for that. finer some what synergies, around standalone assumed specifically Summit got put specify your Because you things. versus us little bit detail of $XX from a what

Anne Noonan

you let kind give of Well, overall. me the guide Yes.

if we about about So think -- essentially on the we've talked markets being flat volume.

about a the operational will So lot except be -- side, would you're cement So SG&A SSC million, that think right? side in more the synergies, ready-mix. they're $XX of it clearly the level. maybe and synergies, not going coming you see the not to our on Summit procurement, But and about the be from, they're if at in

ready-mix, cement Limestone have about those through Portland margins in. in being of if in OEE XXs, improvement completion a In putting ongoing lot fleet about And growing think you and XX%. low cement to confidence gets the the we modernization the

We have opportunity grow to there.

at you if just of got X% out a overall, growth look our the and to step exclude you back So the growth. guide, XX% divestitures,

a X. then between and Argos of big got the chunk in into million synergies, You side obviously business the $XX some the going shared

You should see growth in the growing, single-digit base high our guide. range businesses that's and

margin XX% first I dilution So of had actually coming in off the the as you say we at end the very would we're XX% there of XX%, in year which proxy the year. our confident to -- in recall

what's of the contribution business. have we're by flexibility, drive drive op price So greenfields ability synergies, the encouraged continued -- our will to improved excellence, deliver very of aggs to grow side our going Summit our and

you color, bit gives So that Mike. hopefully, a little more

Michael Dahl

It I follow-up? a does. in sneak Can

Anne Noonan

Sure. .

Michael Dahl

to the even I proxy it is on on below single digits guess in I which where high expected legacy if though $XXX plug the just of be quarter. the gets me Summit, you you'd kind [ the million ], in

pieces So place got on it is for just initiatives. that price volume? Because sounds and the you've conservatism margin in your like

Anne Noonan

Yes.

volume. on I'd is also But some So being pricing. There there. remember and upside we are guarded, say, conservative

across we've very have only first we platform. have any as midyear midyear been aggregates. and Summit do strong know, half not in we price at And you price Mike, pricing So the again on putting

the will are half, And have opportunity accustomed it. up pick demand believe cement, customers Our we'll to and to go I also. some in second there

Summit price and a as upside, it volume about particularly side. the on think So

Operator

you. And the Noonan, further to with no turn I'll back call questions, Anne over

Anne Noonan

Thank joining you. like thank I'd today. to for everyone our call

excited lay that Our us. team the be more couldn't Summit about opportunities of ahead

and commercial to Our be conditions high-quality productivity scenarios see against our collective operational through robust, goals. better and integration the demand opportunity focus strategic measures to remaining execution performance improving, safety efforts. our continues financial, We unique and on

intention have of We can value your ongoing always, every Investor and creation XX. or appreciate delivering And Summit meeting hope superior Day the XXXX for join have and shareholders commitments Materials. our March day. as our of you, great We a our you support on expect. us we Thank beating

Operator

Thank you. call. does conference conclude This today's

You may now disconnect.

Summit Materials (SUM) 15 Feb 242023 Q4 Earnings call transcript